Bills Digest no. 84 2015–16
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WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.
Dale Daniels
Social Policy Section
24 February 2016
Contents
List
of abbreviations
Purpose of the Bill
Background
Committee consideration
Policy position of non-government parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions
Date introduced: 2
December 2015
House: House of
Representatives
Portfolio: Social
Services
Commencement: Sections
1 to 3 upon Royal Assent; Schedule 1 on 1 January 2016; and Schedule 2 on 1
July 2016.
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent, they
become Acts, which can be found at the ComLaw
website.
|
Abbreviation
|
Definition
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|
ATI
|
Adjusted taxable income
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|
ATO
|
Australian Taxation Office
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CPI
|
Consumer Price Index
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FA Act
|
A New Tax System (Family
Assistance) Act 1999
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FTB
|
Family Tax Benefit
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FTB-A
|
Family Tax Benefit Part A
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FTB-B
|
Family Tax Benefit Part B
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GDP
|
Gross Domestic Product
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|
No. 4 Bill
|
Social Services and Other
Legislation Amendment (2014 Budget
Measures No. 4) Bill 2014
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|
No. 6 Bill
|
Social Services and Other
Legislation Amendment (2014 Budget
Measures No. 6) Bill 2014
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|
SS Act
|
Social Security Act 1991
|
The Social Services Legislation Amendment (Family
Measures) Bill 2015 (the Bill) amends A New Tax System (Family
Assistance) Act 1999[1]
(FA Act) and A
New Tax System (Family Assistance) (Administration) Act 1999[2]
so:
- from
1 January 2016, the length of time for which Family Tax Benefit Part A (FTB-A) can
be paid to recipients who are outside Australia will be reduced to six weeks
and
- from
1 July 2016, the Large Family Supplement will be abolished.
FTB-A and Family
Tax Benefit Part B (FTB-B) are the two main forms of direct financial
assistance the Commonwealth provides to families with children. Both payments
are means tested to target assistance at lower-income families. FTB-A is
available to all families who meet the care, residence and income test
requirements.[3]
Different income test requirements for FTB-B restrict the payment to single
parent families and couple families where one parent has a low income or is not
in paid employment.[4]
2014–15 Budget measures
In its 2014–15 Budget, the Abbott Government proposed a
range of savings measures targeting family payments. These included:
- lowering the income cut-off
point for FTB-B for single parents and primary earners
in a couple from $150,000
per annum down to $100,000
per annum
- limiting
FTB-B to families with a child under six years
- introducing a new FTB allowance for single parents
on maximum rate of FTB-A
who have a child aged six to twelve
years, worth $750 per child,
to partially makeup
for the loss of access
to FTB-B
- limiting
the FTB-A Large Family Supplement to families with four or more children
- maintaining
FTB payments for two years, that is, they would not be indexed
- not
indexing some of the FTB-A and FTB-B income test thresholds for three years
- removing the FTB-A ‘per child add-on’, a component of the FTB income test which reduced
the payment withdrawal rate for those
with more than one child and
- reducing the FTB-A and FTB-B supplements to their 2004 values ($600 per FTB-A child and $300 per FTB-B family).[5]
The Government stated that the intent of the measures was
to ‘ensure the family payments system is sustainable in the long term’ and is
‘better targeted to support those who need it most’.[6] Expenditure
savings of $8.5 billion over five
years to 2017–18 were anticipated.[7]
The Government attempted
to legislate these measures, together with a range of other
social security measures, in two omnibus Bills:
the Social
Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014
(the No. 1 Bill) and the Social
Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014.[8] The Government was unable to secure their
passage in the Senate due to opposition to various measures from the Labor
Opposition, the Australian Greens, minor parties and independent senators. Both
Bills were discharged from the Notice Paper in the Senate on 28 October 2014.
On 2 October 2014, the Government reintroduced the
measures in four new Bills. The family payment measures were contained in the Social Services and Other
Legislation Amendment (2014 Budget Measures
No. 4) Bill 2014 (the
No. 4 Bill) and the Social Services and Other
Legislation Amendment (2014 Budget Measures
No. 6) Bill 2014 (the
No. 6 Bill).[9] The No. 6 Bill contained the measures that the Opposition had
offered to support.[10]
This Bill passed both Houses on 17 November 2014. The
family payment measures it included were:
- the
limit on the Large Family Supplement to families with four or more children
- removal
of the FTB-A per child add-on and
- lowering of the income cut-off point for FTB-B for
single parents and primary
earners in a couple from $150,000 per annum down to $100,000
per annum.
The remaining measures were included in the No. 4 Bill
which has been before the Senate since 28 October 2014.
2015–16 Budget measures
In its 2015–16
Budget, the Abbott Government included its stalled
measures and announced that it would move to
abolish the Large Family Supplement altogether.[11] The Government also linked the savings from the 2014–15 family payment budget
measures with funding for its
families package—primarily
the $3.5 billion in additional funding allocated
to replace two existing child care fee assistance payments with
a single payment, the Child Care Subsidy, and to overhaul the funding programs for non-mainstream services.[12]
Stalled measures now dropped
In introducing the Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2015,
the Minister for Social Services Christian Porter stated that it would
‘supersede measures’ that had stalled in the Senate.[13] Treasurer Scott
Morrison stated that, as Minister for Social Services, he had worked with
‘crossbench senators over many, many months to reengineer the measures that
have been put forward in the 14–15 Budget.’[14]
The Social Services Legislation Amendment (Family Payments
Structural Reform and Participation Measures) Bill 2015 was the first
instalment of the 2015-16 Budget family assistance changes. It passed both
houses on 30 November 2015. However after amendment only one measure
remained. That measure was the removal of eligibility for FTB-B for couple
families with a youngest child aged 13 years or more. Grandparents and great‑grandparents
were exempt from this change.
Further measures concerning FTB-A and FTB-B are contained
in the Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) (No. 2) Bill 2015 introduced into Parliament at the
same time as this Bill on 2 December 2015.
Portability of Family Tax Benefit
Part A
Provision for families to receive family payments while temporarily
overseas dates back to the Chifley Government in 1947.[15]
At present FTB-A can be paid at the full rate for an absence of up to six weeks
and at the base rate for a further 50 weeks. The full rate is an age related
rate (currently $179.76 to $233.94 per fortnight) that is available to lower
and middle income families. The lower base rate (currently $57.68 per
fortnight) is a rate available to families with higher incomes. This period can
be extended in certain circumstances such as if hospitalisation prevents return
or if an individual is deployed overseas with the Australian Defence Force or
the Australian Federal Police. FTB-B can only be paid for six weeks to an
individual who is overseas.[16]
Large Family Supplement
Higher rates of family payments for large families have
existed in Australia since 1964 when the Menzies Government increased Child
Endowment for third and subsequent children to a higher rate than that for
first and second children. When Family Allowance was introduced by the Fraser Government
in 1976 a slightly different approach was taken. The rates of payment were
lowest for the first child and each subsequent child received a higher rate
than the one before (except for third and fourth children who received the same
rate and fifth and subsequent children who also received the same rate).[17]
In 1989 the Hawke Government simplified this arrangement
so that the same rate applied to the first three children in a family and a
higher rate applied to subsequent children. In January 1996 when the Keating Government
merged Basic Family Payment and Additional Family Payment to form Family
Payment, the Large Family Supplement was introduced. The rates of Family
Payment were age related and the principle of paying higher rates for larger
families was preserved through the Large Family Supplement which provided an
extra payment for each fourth or subsequent child in a family.[18]
The introduction of Family Tax Benefit in 2000 left the
Large Family Supplement essentially unchanged. However, in 2006 the Howard
Government extended eligibility to the third child in each family.[19]
The Abbott Government included a reversal of the 2006
change in its 2014 Budget. This measure was included in the Social Services and
Other Legislation Amendment (2014 Budget Measures No. 6) Act 2014[20]
which passed both houses on 17 November 2014. As a result, from July 2015 the
Large Family Supplement was paid for the fourth and subsequent child in a
family.
In June 2015 Large Family Supplement was paid for 121,000
children whose families received FTB-A fortnightly. Approximately six per cent of
people receiving FTB-A receive it as a lump sum after the end of the year and
cannot be included in the end of year statistics.[21]
Senate Community Affairs
Legislation Committee
The Bill has been referred to the Senate Community Affairs
Legislation Committee for inquiry and report. Details of the inquiry are available
on the Committee
website.[22]
The Committee’s report, released on 22 February 2016,
recommended that the Bill be passed.[23]
The Australian Greens issued a dissenting report, recommending that the Bill
not be passed, stating:
poorly targeted cuts to the FTB system in isolation, without
any broader strategy for the necessary reform to the revenue base, inevitably
hurt vulnerable people the most, without addressing underlying structural factors.[24]
The ALP has agreed to support the abolition of the Large
Family Supplement. Shadow Treasurer Bowen made this commitment in his 20 May
2015 Press Club Speech.[25]
When the Bill came up for debate in the House of Representatives on 8 February
2016, the Labor Opposition confirmed that it would not oppose the measures
contained in the Bill.[26]
As set out above, the Greens do not support the Bill. Adam
Bandt, of the Australian Greens and Independent MP Andrew Wilkie both voted
against the passage of the Bill in the House of Representatives.[27]
The Western Australian Commissioner for Children and Young
People has raised concerns about the impact of the removal of the Large Family
Supplement on low income large families and on large indigenous families in
particular.[28]
The Society of St Vincent De Paul also raised concerns
about the impact on low income families of the loss of the Large Family Supplement.
They also raised concerns about the changes to portability of FTB-A where low
income parents needed to travel overseas to care for close relatives such as
aged parents.[29]
According to the Explanatory Memorandum, the Bill will provide
net savings of around $219.4 million over the
forward estimates.[30]
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the
Bill’s compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[31]
The Parliamentary Joint Committee on Human Rights has
examined the Bill and has concluded that it does not raise human rights
concerns.[32]
Schedule 1—Portability of Family Tax
Benefit
The Minister for Social Services Christian Porter has
stated that the change to the portability period for FTB-A will align it with
that for FTB-B and most other income support payments.[33]
The changes made by Schedule 1 commence from 1 January
2016.[34]
A New Tax System (Family
Assistance) Act 1999
Items 3, 4 and 6 amend subsections 24(1) and (4) of
the FA Act to replace the 56 week maximum portability period with a six
week maximum portability period.
Items 1, 5, 7, and 25 repeal redundant provisions.
Item 23 inserts new subsections 57G(4) and (5) of
the FA Act to reflect the way eligibility for Single Income Family
Supplement is affected by the change in portability period.
A New Tax System (Family
Assistance) (Administration) Act 1999
Items 27 and 28 make consequential amendments to
reduce the maximum portability period.
Items 29 and 30 insert new provisions concerning
variations to entitlements for FTB and child care benefit to reflect the
reduced portability period. The Explanatory Memorandum explains these
amendments in greater detail.[35]
Schedule 2—Large Family Supplement
The Minister stated that the abolition of the large family
supplement was in line with recommendations of the Henry Tax Review 2010, the
National Commission of Audit and the McClure Review. He also stated that recent
research into the costs of children found that each additional child in a
family costs less than a first child.[36]
This undermines the long standing approach of giving more per child to bigger
families.
The changes made by Schedule 2 commence from 1 July 2016.
A New Tax System (Family Assistance)
Act 1999
Items 1 to 7 repeal all provisions for Large Family
Supplement.
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277 2500.
[1]. A New Tax System (Family
Assistance) Act 1999, accessed 8 February 2016.
[2]. A New Tax System (Family
Assistance) (Administration) Act 1999, accessed 8 February 2016.
[3]. Department of Human Services (DHS), ‘Family Tax
Benefit’, DHS website, last updated 14 October
2015, accessed 10 November 2015.
[4]. Ibid.
[5]. P
Yeend and M Klapdor, ‘Family payments’, Budget review 2014–15,
Research paper series, 2013–14, Parliamentary Library, Canberra, 2015, accessed 22 October 2015.
[6]. K
Andrews (Minister for Social Services), Supporting parents through a sustainable, better targeted
family payments system, media release,
13 May 2014, accessed 22 October 2015.
[7]. Australian
Government, Budget measures: budget paper no. 2: 2014–15,
pp. 197–200, accessed 22 October 2015; Parliamentary Budget Office (PBO), 2014–15 Budget and forward estimates— charts, PBO website, 10 June 2014, p. 10, accessed 18 November 2015.
[8]. Parliament
of Australia, ‘Social
Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014
homepage’, Australian Parliament
website; Parliament of Australia, ‘Social
Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014 homepage’, Australian Parliament website,
both accessed 6 November 2015.
[9]. Parliament
of Australia, ‘Social Services and Other
Legislation Amendment (2014 Budget Measures No. 4) Bill 2014 homepage’, Australian Parliament
website; Parliament of Australia, ‘Social Services and Other
Legislation Amendment (2014 Budget Measures No. 6) Bill 2014 homepage’,
Australian Parliament website, both accessed 6 November 2015.
[10]. J
Macklin (Shadow Minister for Families and Payments), ‘Second
reading speech: Social Services and Other Legislation Amendment (2014 Budget
Measures No. 6) Bill 2014’, House of Representatives, Debates, 2 October
2014, p. 9, accessed 24 February 2016.
[11]. Australian
Government, Budget measures: budget paper no. 2: 2015–16,
p. 151, accessed 22 October 2015.
[12]. T
Abbott (Prime Minister) and S Morrison (Minister for Social Services), Jobs
for Families child care package delivers choice for families, media
release, 10 May 2015; M Sheppard, ‘Early childhood education and care’, Budget review 2015–16, Research paper
series, 2014–15, Parliamentary Library, Canberra, 2015, both accessed 18
February 2015.
[13]. C
Porter (Minister for Social Services), ‘Second
reading speech: Social Services Legislation Amendment (Family Payments
Structural Reform and Participation Measures) Bill 2015’, House of
Representatives, Debates, 21 October 2015, p. 11919, accessed 22 October
2015.
[14]. S
Morrison (Treasurer), C Porter (Minister for Social Services), S Birmingham
(Minister for Education and Training), Revised
Family Tax Benefit measures to fund $3.5 billion child care investment,
media release, 21 October 2015, accessed 22 October
2015.
[15]. D
Daniels, Social
security payments for people caring for children, Background note,
Parliamentary Library, Canberra, 29 January 2009, accessed 18 February 2016.
[16]. Department
of Social Services (DSS), ‘3.1.1.50 FTB
payments during absence from Australia’, Family assistance guide,
version 1.184, released 8 February 2016, DSS website, last updated 11 May 2015,
accessed 9 February 2016.
[17]. D
Daniels, Social
security payments for people caring for children, op. cit.
[18]. Ibid.
[19]. Ibid.
[20]. Social Services and
Other Legislation Amendment (2014 Budget Measures No. 6) Act 2014,
accessed 10 February 2016.
[21]. DSS,
‘Answers
to Questions on Notice’, [Questioner: C Moore], Question 6(b), Senate
Community Affairs Legislation Committee, Inquiry
into the Social Services Legislation Amendment (Family Payments Structural
Reform and Participation Measures) Bill 2015, 19 November 2015.
[22]. Senate
Community Affairs Legislation Committee, Inquiry
into the Provisions of the Social Services Legislation Amendment (Family
Measures) Bill 2015, The Senate, Canberra, accessed 13 January 2016.
[23]. Senate
Community Affairs Legislation Committee, Inquiry into the Provisions of the
Social Services Legislation Amendment (Family Measures) Bill 2015, Report,
The Senate, Canberra, 22 February 2016, accessed 24 February 2016.
[24]. Ibid.,
p. 15.
[25]. C
Bowen, ‘Labor
and the Economy: Owning the Future’ National Press Club Speech, 20 May
2016.
[26]. J
Macklin, ‘Second
reading speech: Social Services Legislation Amendment (Family Measures) Bill
2015’, House of Representatives, Debates, (proof), 8 February 2016, p. 91, accessed 10
February 2016.
[27]. Australia,
House of Representatives, ‘Social
Services Legislation Amendment (Family Measures) Bill 2015’, Votes and
Proceedings, 8 February 2016, p. 107, accessed 10 February 2016.
[28]. Commissioner
for Children and Young People(Western Australia), Submission
to Senate Community Affairs Legislation Committee, Inquiry into Social
Services Legislation Amendment (Family Measures) Bill 2015, 4 January 2016,
accessed 8 February 2016.
[29]. St.
Vincent De Paul Society, Submission
to Senate Community Affairs Legislation Committee, Inquiry into Social
Services Legislation Amendment (Family Measures) Bill 2015, 29 February
2016, accessed 8 February 2016.
[30]. Explanatory
Memorandum, Social Services Legislation Amendment (Family Measures) Bill
2015, accessed 10 February 2016.
[31]. The
Statement of Compatibility with Human Rights can be found at page 8 of the Explanatory
Memorandum to the Bill.
[32]. Parliamentary
Joint Committee on Human Rights, Thirty-third
report of the 44th Parliament, 2 February 2016, p. 2, accessed 8
February 2016.
[33]. C
Porter (Minister for Social Services), ‘Second
reading speech: Social Services Legislation Amendment (Family Measures) Bill
2015’, House of Representatives, Debates, 2 December 2015, p. 14422, accessed 13 January 2016.
[34]. See
subitems 31(2) and (3) which provide exceptions to the general rule.
[35]. Explanatory
Memorandum, op. cit., pp. 4–5.
[36]. C
Porter (Minister for Social Services), ‘Second
reading speech: Social Services Legislation Amendment (Family Measures) Bill
2015’, op. cit.
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