House of Reps proceedings 16 February 1988 part 5

House of Reps proceedings 16 February 1988 part 5

Title: CHILD SUPPORT BILL 1987
Date: 16 February 1988
Speaker: Wilson The Hon I.B.C. (STURT, LP)
Interjector: Mr Howe; Mr DEPUTY
Source: House

Mr WILSON (Sturt)(6.03) --The Child Support Bill 1987 is an important piece of legislation. However, sadly, it is a bandaid. It does not address the major problem that confronts the future of this nation. Australia's wealth, as we celebrate the year of our Bicentenary, is its people. Currently, because of social attitudes and, more importantly, government institutional frameworks, our population is declining. Our birth rate is significantly below the replacement rate. We maintain our level of population through migration programs. Those who know me would be aware of my continuous support for a sensible migration policy. But I would not support a migration policy simply because we need to replace the population that we cannot give birth to ourselves in this country. Sadly, the Government has not asked why the birth rate continues to be so low. Nor has it asked whether anything can be done to give Australian families and potential families the opportunity to fulfil their dreams and have families of the size that they would choose.

We fall back onto the customary wisdom that Organisation for Economic Co-operation and Development countries have tried family allowance and special tax schemes and they have not worked. Australia is different from those countries. Even if we had the same result from our family allowance policies, developed on a more imaginative basis, at least we should ask ourselves whether or not our serious population drought is a consequence of government action or inaction through the tax and social security systems. It is my belief that there are hundreds of thousands of young Australians who would like to have larger families and to have their families earlier, but they cannot do so because they cannot afford to face the economic consequences of bringing children into the world. They would want to do the right thing by those children.

It is interesting that some notice is being taken of the work of the Australian Institute of Family Studies, which analysed the cost of maintaining a child. The study was important from a number of points of view. Firstly, it was important because it recognised that the cost of maintaining children varies according to the children's age. Secondly, it was important because it made it quite clear that the allowances made to families with the lowest incomes are totally inadequate to meet the assessed cost of maintaining children.

It is not only those families with low incomes which are poor that we should be concerned about; it is those families with medium-sized incomes to which we should give some attention in our policy making. We make totally inadequate allowance for them through the tax system and family allowance system. The Labor Government, since it came to office, has funded many of its grandiose schemes at the expenses of Australia's families. It has frozen the family allowance and the spouse rebate and it has means tested the family allowance for families which may be high income families today but, once they separate, the mothers of which very often become low income earners and go onto social security. True it is that the Child Support Bill will address that question.

In making these introductory remarks, I emphasise my real concern that the fundamental issue which we should be tackling is the way in which our tax and social security systems look after families with children. Do we believe in the capacity to pay principle? If so, is capacity to pay merely a function of income, or does it take into account the number of people who are dependent on the taxpayer? I believe that we should take that into account. Children and the supported dependants should not be treated as a consumption expenditure to be paid for out of after tax income, but should be recognised as providing, in the case of children, for the future of the nation. Alternatively, if the Government wanted to look at it realistically, in today's modern society where families break up and responsibilities for children are shifted from private individuals to government, the tax system should recognise that a taxpayer who supports a child should get in tax relief as much as it would cost the Government to support that child. Then there would be equity in the system and then we would fully recognise the cost of bringing up children.

What we have now is a system in which, when families separate, there are superficially substantial financial advantages. For example, a family with a single income of $25,000 and one child, with all the allowances-the dependant spouse rebate, the Medicare levy and the family allowance-taken into account, has a disposable income of just under $20,000. If that family separates and the mother looks after the child, gets no support from her husband but gains a supporting parent's benefit she receives an income of $8,100, whilst the father of the child, her former husband, has an after tax income of $18,686. The total income of that split family is $26,786 compared with $20,000 before it split. We say that two households cannot live as cheaply as one. That is true, but this family group that was living together has an after-tax income, when they split, $6,000 to $7,000 higher than when they were living together. That is causing a lot of social change. It is making people say, `Well, we have economic problems and we have emotional tensions; we will split and separate'.

Mr Howe --I cannot follow that.

Mr WILSON --Can you not follow that?

Mr Howe --Surely the woman would not be part of that decision. She is on $8,000. It is a disaster for her.

Mr WILSON --That is right; it is a disaster for her but in many instances women are part of that decision and arrangements between them do not come under the scrutiny of the Department of Social Security to assess the extent to which benefits are passing between the households and the father and the mother are optimising their situation and getting some $6,000 or $7,000 more than other families that are living together and struggling. I believe that is happening in a number of cases-a sufficient number for us to be concerned.

That moves away from the real point that I want to emphasise. We have to determine whether we say that in the case of an intact family the children are supported out of the after-tax income but if the parents separate we will provide them with taxpayers' resources to survive, albeit at that low, meagre, modest, and inadequate level. The whole system needs to be analysed and we need to change the total tax and social security system to recognise the family formation period.

For most taxpayers it will be a transfer of their taxes from when they were single or before they had families to the time when they had families and likewise when the families are grown up. It will be a transfer of income across the life cycle. Young families want a greater level of income while they are having their children and supporting them, and buying the home in which they want to bring them up. At present our tax and social security system does not give sufficient sensitivity to those needs. We need life cycle taxation so that people can be relieved of tax to meet the cost of maintaining their children and pay a higher level of tax while they are not supporting their children. That is my primary concern and why I say that this legislation is bandaid legislation.

Another aspect of concern to me is that although I recognise that the radical tax and social security changes that I am advocating are not likely to be brought in very quickly-although I believe in the ultimate that Australian people will recognise that the sorts of changes that I am promoting must be examined-Australian people will ultimately support them and require of their governments that they make the tax and social security system more sensitive to the support of dependent children and, thereby, have some influence on family size and the rate of our population decline or growth.

Another area about which I am concerned needs some preliminary introduction. This Bill is to set up an agency to collect maintenance from non-custodial parents. I strongly support the idea that non-custodial parents should be required to provide as much support for the children who are not in their care as they would be expected to provide had those children continued to be in their custody and care. The legislation that was passed late last year to set the priorities was a correct approach to this.

I also support the idea that the maintenance should be collected through the taxation system. However, I am concerned about the proposals for the means test arrangements and the extent to which the Government thinks it will save money. We should be aiming to do two things: we should be aiming to save money, on the one hand, but, on the other hand and perhaps more importantly, we should be aiming to ensure that the children in the care of sole parents have a better standard of living than they now have. There should be benefits both to the general body of taxpayers and to children who are placed in these circumstances.

The collection agency will be in the Australian Taxation Office. That is a sensible place in which to locate it. However, I have one area of concern and that is the suggestion that these collection arrangements are to apply only to families that separate after the legislation comes into force or, in the case of ex-nuptial children, where the parents are not living together-however, that is to be defined-to children born after the legislation comes into force.

I hold the view that this legislation and any formula for the collection of maintenance should apply to everyone who is subject to a maintenance order and particularly those who are on the social security system. When the formula is ultimately introduced, it should be introduced on the basis that it is deemed to be an amendment of every maintenance order. Maintenance orders are orders made subject to further order and when they are made subject to further order surely Parliament is in a position to legislate that the further order is that the maintenance to be provided is now the amount calculated in accordance with the formula. However, I recognise that some maintenance arrangements that have been entered into in the past involved capital transactions and other arrangements which may impose a hardship on some non-custodial parents. In those circumstances the rider that should be put on legislation such as that which I am now advocating is that the formula should apply subject to the court varying it downwards and taking into account the earlier circumstances in which maintenance arrangements were entered into. The children of non-custodial parents who are now separated from those parents should not be abandoned by the Government, by pretending that those children are to be helped by the legislation. When one reads the explanatory memorandum, one finds that although the legislation is to give the Government power to expand it to the children of all supporting parents, it says that it is designed to cover only those of families who separate after the legislation comes into force, or, in the case of ex-nuptial children, children born after it comes into force.

I cannot understand how the Government then expects to gather in the first full year of the operation of this legislation $190m saved from the revenue. On my quick calculations, what the Government might save, if non-custodial parents pay a very high rate of maintenance, is the extra supplement that is paid for children and the mother's allowance. The Government will not save what is the unemployment benefit called the supporting parent's benefit, being another name for a carer's allowance, because the maintenance orders are applicable mainly to children. On my quick calculations, the Government will have to have 35,000 marriage breakdowns in the first year of the operation of this legislation where the non-custodial parent pays the full rate of maintenance so that there is no child allowance or guardian's allowance payable to the supporting parent in order to gather in $190m.

If that is the case, I do not believe family breakdowns are at that rate. The Government needs to come clean. I hope that in coming clean the Minister for Social Security (Mr Howe) will say that this legislation will apply to all children who are living in sole parent circumstances and that the fathers of those children will be required under the formula to shoulder their responsibilities for those children. If that is the case, tell them, so that those children are not abandoned by this legislation, so that those children do not continue to live in poverty.

Talking of poverty, the Government keeps saying that its aim is that by 1990 there will be no children living in poverty. We will have to redefine the Henderson poverty line, because 10 per cent of the population are always below that line. Unless we can move all children out of the bottom 10 per cent of the community, we will fail. The poverty definitions that we are using are totally inadequate for making determinations as to whether or not we can move children out of poverty, because there will always be 10 per cent of the population, or some percentage, that are in poverty, in accordance with the Henderson poverty line.

I would like us to look not just at these families where there has been family breakdown but, in a more realistic fashion, at all families. The Government has taken up the Fraser Government's family income support scheme and has sensibly expanded it to a family allowance scheme. The Minister today at Question Time bragged that the take-up rate has been $100,000, but any social security program that is income tested has a relatively low take-up rate. The most efficient, effective and fair social security system is one that is universal. It is my view that the only way that this nation will continue to have a population that is increasing in size and not declining is if we have universal family allowances substantially increased for all families to the level equal to that which we are providing now to the poorest families. Yes, it may cost money or reduce tax collection--

Mr Howe --It is a bit hard to reconcile with the $11 billion saving.

Mr WILSON --My social conscience would have me prefer to impose increased taxation to achieve equity for Australian's children, and all of them.

Mr DEPUTY SPEAKER(Mr Millar) --Order! The honourable member's time has expired. Debate (on motion by

Mr DEPUTY SPEAKER --Before vacating the chair, I remind honourable members that the bells will ring at 7.55 p.m. and honourable members should proceed to the Senate chamber for a Joint Sitting. The bells for the resumption of this House will ring for five minutes, probably at 8.25 p.m.

Sitting suspended at 6.24 p.m.

Debate continues.....part 6