Opposition Senators' Minority Report
Fringe Benefits Tax changes relating to charitable organisations
(Schedule 6)
Opposition Senators acknowledge charity worker concern at
the prospect their family payments would be cut by changes to the way income is
calculated for these payments.
From 1 July 2008, more fringe benefits are being included in
the income that is used to calculate family payments (Family Tax Benefit A and
B and Child Care Benefit). This has a significant impact for employees of some
charities.
The Coalition implemented this change in response to a
report in 2006 by experts on the Ministerial Taskforce on Child Support,
chaired by Professor Patrick Parkinson.[1]
That report recommended that calculations of income for child support should
include all fringe benefits, to ensure that parents couldn’t avoid their child
support obligations by converting normal income into fringe benefits.
The report also recommended that the method for calculating
child support be extended to the method for calculating family tax benefits, to
ensure consistency. It was argued that it would be complex to have different
methods for calculating child support and family payments.
The Coalition accepted both of these recommendations and
implemented them in legislation in 2006. [2]
At the time, the Labor Party supported the package of legislation that included
this change.
It is this broadening of the income definition for family
payments that caused concern. This change was done in the context of
substantial increases in child support measures and large increases in family
benefits during the term of the Howard Government.
Labor supported this measure. On 12 October 2006, the relevant Shadow Minister, Senator Evans, indicated support for the package of
changes that included this measure.[3]
The legislation was introduced on 14 September 2006 and was passed by the Parliament on 27 November 2006.
Labor also introduced legislation[4]
on 29 May 2008 that supports the 2006 change. The explanatory memorandum to the
Labor Bill:
- discusses the change to the calculation of income for family
payments;
- explicitly states that the change will result in higher
calculated incomes for some people; and
- gives a worked example of how the change produces a higher income
for the calculation of family payments.[5]
The Labor legislation allows Centrelink to use this higher
income to determine family payments. Without this change by Labor the payments
to some families would have been higher. Labor cannot therefore claim that this
change was all the former Government’s doing.
Opposition Senators note that whilst the Coalition’s 2006
change broadens the income that is used to calculate family payments, Labor’s
changes in the 2008 Budget do the same thing. The Government is proposing to
include salary sacrifice into superannuation and investment losses in the
calculation of income for family payments. The Government therefore cannot
argue that their 2008 changes are completely separate from the Coalition’s
changes in 2006.
In particular, any charity worker who salary sacrifices into
superannuation or has losses on investments will be affected by Labor’s changes
in the 2008 Budget. Labor’s measures will result in a much larger reduction in
family payments than the Coalition’s changes from 2006.
Opposition Senators are concerned that Labor is reducing
support for families in the 2008 Budget, in contrast with the dramatically
increased support for families during the period of the previous government.
Opposition Senators note that the Minister for Families,
Housing, Community Services and Indigenous Affairs (the minister) cleared the
Explanatory Memorandum for this Bill prior to its presentation to the House on 29 May 2008.[6]
The Opposition notes that the Minister’s awareness of the impact of the 2006
legislation was not aroused by her clearance of the Memorandum prior to 29 May 2008 which mentions that notification letters to recipients of Family Tax Benefit
and Child Care Benefit were being issued from April 2008.[7]
Evidence presented to the Committee clearly established that
no officers of the Department of Families, Housing, Community Services and
Indigenous Affairs (FHCSIA) were aware prior to May 2008 of the extent of the
impact of the legislated but not yet operative provisions relating to the
treatment of fringe benefits for the purpose of calculating family assistance
payments.
It was acknowledged by FHCSIA that when the changes were
proposed in the 2006–07 Budget, the Department was only aware of the
general impact of changes, rather than the impact on specific groups of
individuals with particular circumstances. Mr Hazlehurst of FHCSIA acknowledged
that:
...we did not at that time [2006] do an analysis sector by sector
of how many people would be affected.[8]
And later that:
...we did not do any sector-specific analysis. So, we did not look
at how employees in different sectors would be affected.[9]
The Opposition notes the evidence provided to the Committee
that the Minister's office was provided an oral briefing on the impacts on
employees in charitable organisations on 29 May 2008.[10]
Yet neither the Minister nor the Treasurer made any attempts to raise the
matter publicly until the publication of an article in The Australian
newspaper on 18 June 2008, [11]
prompting a joint press conference that day and an announcement on 19 June 2008.[12]
It remains unclear whether the Minister or the Treasurer
intended to act on this issue before 1 July, or at all, if the issue had not
received considerable public interest following the media coverage from 18 June 2008.
The Minister through her attempts to deny having supported
these changes, indicated that she does not understand her own legislation.
In principle, Opposition Senators support the Government’s
intention as announced to introduce relevant amendments to ensure that employees
in charitable organisations are not adversely affected by changes to the
treatment of fringe benefits for the purpose of calculating family assistance
payments.[13]
Opposition Senators will closely examine the detail of the Government's
amendments with a view to supporting change that corrects the anomaly with
respect to employees in charitable organisations but does not reinstate
previously closed loopholes.
Commonwealth Seniors Health Card (Schedule 3)
Opposition Senators are concerned at the impact on older
Australians of the Government’s introduction of a new compliance regime for the
Commonwealth Seniors Health Card (CSHC).
The CSHC establishes the eligibility of older Australians
for a range of benefits to assist them with the cost of living, including
discounted pharmaceuticals through the PBS, the Seniors Concession Allowance
and the Telephone Allowance.
Opposition Senators acknowledge that rising cost of living
pressures place proportionately higher burdens on those with low incomes.
Opposition Senators are particularly mindful of the impact of these pressures
on pensioners.
Evidence provided to the Committee during this inquiry
indicated that, as a result of the Government’s changes in this Bill to require
the provision of a Tax File Number (TFN), 27 000 people will lose their CSHC
between 1 July 2008 and 30 June 2010. FHCSIA further acknowledged that this
number will increase.[14]
Opposition Senators consider that the TFN requirements in
Schedule 3 could be seen as a de facto means test. Such a measure is a sneaky
and underhanded way of stripping older Australians of the CSHC. This is against
the backdrop of the neglect of pensioners in the Budget.
Whilst it is acknowledged that changes to the adjusted
taxable income test are not specifically dealt with in the Bill before the
Committee, Opposition Senators nonetheless express grave concern at the
evidence presented to the Committee that a further 22 000 people will lose
eligibility for the CSHC as a result of this change.[15]
Opposition Senators note that FHCSIA has not modelled how
many people will no longer be eligible for the CSHC in future years beyond the
forward estimates, meaning that the true number of people adversely affected is
likely to end up much higher.[16]
Opposition Senators further note that the proposed
eligibility changes to the CSHC were not flagged by the then Opposition prior
to the election.
Partner Service Pension (Schedule 5)
Opposition Senators acknowledge the contribution made to Australia
by veterans and their partners, particularly recognising that often the roles
of the partners of veterans are as carers.
It is in view of this that Opposition Senators are concerned
at the evidence provided to the Committee that approximately 930 partners of
veterans would be affected by the changes in this Bill.[17]
It is considered that the savings generated from this measure are insignificant
and that the measure is mean-spirited.
Opposition Senators were disappointed at the Prime
Minister's lack of awareness of this issue, confirmed in the House of
Representatives on 19 June 2008.[18]
Opposition Senators were surprised that the Minister for Veterans’ Affairs, the
Hon Alan Griffin MP characterised the impact of this change on affected
veterans as 'minor'.[19]
It is noted that the proposed changes are justified by the
Government as necessary to align the partner service pension with arrangements
in place for social security benefits. The Opposition considers this to be an
inappropriate rationale and are conscious of the concern in the veteran
community that they be treated separately from welfare or social security
recipients. The Opposition supports the wishes of veterans in that regard.
Opposition Senators note the evidence to the Committee that
no consultation was conducted with ex-service organisations over these changes.[20]
It is further noted that the proposed changes to the partner
service pension were not flagged by the then Opposition prior to the election.
The Baby Bonus (Schedule 2)
Opposition Senators express their concern at the blunt means
test proposed by the Government for the Baby Bonus. The means test lacks a
taper, meaning that an extra dollar of income can make the difference between
receiving the full Baby Bonus and receiving nothing. Evidence to the Committee
indicates that the Government failed to commission any modelling on tapering
the Baby Bonus means test.[21]
Opposition Senators also note the Government’s decision to
strip $80 million over four years from Baby Bonus recipients by proposing to
index the bonus once yearly rather than the status quo of twice yearly.[22]
Opposition Senators note the time limit extension in
claiming can allow for people who thought they would exceed the $75 000
threshold to backdate and claim. It may allow for people to get around the
threshold by organising for salary/benefits etc to be paid after the six month
deadline to receive the benefit of the Baby Bonus.
In her second reading speech Minister Macklin clearly states
that if the income estimate is incorrect and the household goes over the $75 000,
families do not have to worry that a debt will be raised against them because
their income changes, however should false or misleading information be
provided then the usual welfare sanctions will apply.[23]
This demonstrates that the new Baby Bonus scheme will be almost
impossible to administer and police, making the new criteria almost pointless,
but will cost $22.6 million to administer.[24]
It is further noted that the proposed changes to the baby
bonus were not flagged prior to the election. Just two days before the 2007
election a constituent contacted the Labor Party via their website asking
whether Labor was considering any changes to the Baby Bonus. The response was:
We have no plans to make any other changes to the way the Baby
Bonus is structured, either in terms of eligibility or payment methods.[25]
An article in The Australian further reported that:
Wayne Swan this week ruled out any change to the baby bonus and
said Australia’s middle class did not receive too much welfare.[26]
Family Tax Benefit – Part B (Schedule 1)
The Government flagged a means test to Family Tax Benefit
Part B in January of this year as part of their 'razor gang' process. The
Finance Minister, the Hon Lindsay Tanner MP, was reported by ABC Online on 25 January 2008 as saying:
We have undertaken to put a means test at a very generous level
for Tax Benefit B.[27]
Additionally, it was reported in the Herald Sun that
the limit would be $250 000.[28]
There was no mention during the election campaign by Labor
that there would be a means test. However during the passage of the Family
Assistance, Social Security and Veterans’ Affairs Legislation Amendment (2005
Budget and Other Measures) Bill 2006 the ALP proposed an amendment that Family
Tax Benefit Part B be subjected to a modified income test where a couple’s
combined income exceeded $250 000.[29]
Opposition Senators condemn the Government’s broken promise
on the Family Tax Benefit Part B means test. The means test is set at $150 000,
when the Government’s pre-election commitment was to means test this payment at
$250 000.[30]
The $150 000 income test the bill proposes will not just
apply to partnered couples with the primary earner, it will now include sole
parents as well. Previously sole parents were exempt from any income testing.
Treasurer Wayne Swan’s Media Release on 18 May 2008 reported that a total of 40 000 families would lose eligibility for Family Tax
Benefit Part B.[31]
Other Issues
Opposition Senators also express their regret at Treasury’s
last minute decision to cancel their appearance before the Committee.
Opposition Senators believe that scrutiny of this legislation was diminished
when the witnesses before it were unable to answer particular questions citing
that they were issues for Treasury.
It is disappointing that Treasury declined to appear to give
evidence to this inquiry. On multiple occasions throughout the public hearing
at which Treasury was originally scheduled to give evidence, FHCSIA could not
answer questions directed to it citing that they were questions that would need
to be directed to Treasury.[32]
Given that many issues before the Committee were jointly
handled by the Treasurer and the Family Services Minister, the Treasury should
have made itself available to answer questions on this Bill.
Senator Mitch Fifield –
Deputy Chair
Senator John Watson
Senator Concetta Fierravanti-Wells
Constituent correspondence with the Australian Labor Party regarding the
Baby Bonus
----Original Message-----
From: ALP Campaign Information
[mailto:Info@syd.alp.org.au]
Sent: Thursday, 22 November 2007 4:00 PM
To: *******@optusnet.com.au
Subject: RE: Comments from KEVIN07
Dear *******
Thank you for your email.
Federal Labor supports the maternity payment. We understand
that many parents need support when their baby is born, and that's why we
believe that the maternity payment makes life a little easier for new parents.
The maternity payment is due to increase to $5000 from 1 July 2008, and if elected Labor will ensure this increase is passed on to parents.
Recently the Federal Parliament considered legislation that
made some minor changes to the maternity payment. One of these was to change
the name of the payment so that it officially is known as the Baby Bonus.
Everyone calls it that anyway, so it makes sense to have that as the official
name. The other change was to pay the Bonus in instalments for mothers under
the age of 18. Federal Labor called for this change last year, as we heard some
worrying cases of vulnerable younger mothers being exploited. Government has a
responsibility to make sure that efforts to help families at a critical time
are directed for the benefit of children.
We have no plans to make any other changes to the way the
Baby Bonus is structured, either in terms of eligibility or payment methods.
In addition, Labor has released a range of initiatives to
help new parents.
Labor knows that child care has become an integral part of
modern Australian family life.
Under a Rudd Labor Government, our children's early years
will be a national priority.
If elected, a Rudd Labor Government will:
- Increase the Child Care Tax Rebate to 50 per cent - covering up to
$7,500 a year of out-of-pocket costs for each child in child care;
- Pay the 50% Child Care Tax Rebate quarterly - so parents no longer
have to wait one or two years to receive their money;
-
Build 260 new child care centers in areas of need to help improve
access to child care;
- Invest $450 million in preschool for our four-year olds, with 15 hours
a week for forty weeks a year of fun, play-based learning delivered by a
qualified teacher;
- Implement tough national child care quality standards including a
quality improvement system that assesses child care services from A to E and
regular unannounced spot checks;
- Invest $73.5 million in incentives and opportunities to improve the
qualifications of child care workers to ensure our children receive expert
early learning and care.
Labor knows that parents can't work - no matter how much
they want to - if there is not enough high quality, affordable childcare to go
around.
If you would like more information about Labor's policies
for parents please visit the ALP website: www.alp.org.au
ALP Campaign Information Services
Disclaimer
This information is intended for the recipient only.
Every effort has been made to respond to your query in full.
Please monitor the Australian Labor Party website (www.alp.org.au) for further
information
----- Forwarded Message -----
From: KEVIN07 <admin@kevin07.com.au>
To: info@kevin07.com.au
Subject: New form submission has arrived from KEVIN07!
(Contact Us)
Date: Thu, 22 Nov 2007 11:12:55 +1100
New form submission has arrived from KEVIN07!
Form: Contact Us
First Name: *******
Last Name: ******
Street Address: ******
Suburb: ******
State: QLD
Postcode: ****
Email Address: *******@optusnet.com.au
Telephone Number: *
Mobile Number:
Opt In Email: No
Opt In SMS: No
Your Comments Or Enquiry: If Labour is elected, will the
'baby bonus' still be available at the current rate? Please email a response.
Thank you
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