Second Reading Speech
Senator REYNOLDS (Western Australia - Assistant Minister for Home Affairs)I move:
That this bill be now read a second time.
I seek leave to have the second reading speech incorporated in Hansard.
Leave granted.
The speech read as follows-
This Bill contains three measures that will improve the sustainability of the welfare payments system by encouraging greater self-reliance where it is fair and reasonable to do so and better targeting support to those who need it most.
These measures were previously introduced into the Parliament in:
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- the Social Services Legislation Amendment (Encouraging Self-sufficiency for Newly Arrived Migrants) Bill 2018
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- the Social Services Legislation Amendment (Maintaining Income Thresholds) Bill 2018, and
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- the Social Services Legislation Amendment (Payment Integrity) Bill 2017.
The Government has incorporated these measures into this single Bill.
The Government has also made a number of changes to these measures that are reflected in this Bill. These changes are made for a number of reasons including responding to the Senate Standing Committee on Community Affairs' recommendation that the Encouraging Self-sufficiency for Newly Arrived Migrants Bill and the Maintaining Income Thresholds Bill not be passed in their original form.
Together, the measures in this Bill deliver on the Government's ongoing commitment to a welfare payments system that is fair, targeted and sustainable both now and into the future.
Encouraging Self-Sufficiency for Newly Arrived Migrants
This Bill gives effect to changes to promote financial independence and self-sufficiency for newly arrived migrants.
Australia is a prosperous country with strong social and economic foundations. Migrants seeking to settle in Australia are attracted to our way of life, our successful multicultural society and the opportunities our economy offers.
To maintain this, we need to make fiscally responsible decisions to keep spending under control for the benefit of current and future generations.
A key part of this is ensuring that our welfare payments system provides the best possible encouragement for people to support themselves and contribute socially and economically to this nation, including new migrants.
Waiting periods for new migrants already exist for a number of welfare payments. Known as the Newly Arrived Resident's Waiting Period, these waiting periods are designed to encourage people who settle permanently in Australia to provide for their own support during their initial settlement period.
The changes in this Bill will extend these existing waiting periods and apply new waiting periods to a number of other payments.
These changes will apply only to skilled and family migrants - those who are well-placed to support themselves through their existing resources, through work or through support from family members already in Australia.
Changes to waiting periods for working age income support payments
Currently a two year Newly Arrived Resident's Waiting Period applies to working age income support payments, including Newstart Allowance, Youth Allowance, Special Benefit and the Farm Household Allowance, as well as concession cards such as the low-income Health Care Card.
A waiting period was first introduced in 1993 and extended to two years in 1997. It has not been changed since then even though welfare expenditure has grown, placing increasing pressure on the Budget and efforts to return to surplus.
This Bill will extend the length of the existing waiting period for these working age payments and concession cards to four years. This reflects that those who come to Australia to work or be with family should have the capacity to support themselves for longer and should not need to rely on working age payments.
This Bill will also introduce a four year waiting period for Parenting Payment and Bereavement Allowance which currently have a two year qualifying residence period. This will apply consistent rules across similar payments.
The extension of the existing waiting periods will not apply to Carer Payment. This payment will continue to have a two year waiting period in recognition that people with caring responsibilities for a person with disability may be less able to support themselves over a longer initial period. The existing exemptions for carer visa holders will be maintained under this measure.
The full range of existing exemptions will be maintained for all waiting periods, providing important protections for potentially vulnerable migrants.
Introduction of new waiting periods for Carer Allowance and family payments
Currently, no waiting period applies to Carer Allowance, Family Tax Benefit, Parental Leave Pay or Dad and Partner Pay. This means that these payments are available to new permanent residents immediately on arriving in Australia.
Under the changes in this Bill, a Newly Arrived Resident's Waiting Period will now be applied to these payments.
It is reasonable to expect that skilled and family migrants with caring responsibilities for a dependent child or person with disability should support the costs associated with those responsibilities for an initial period when they first settle in Australia.
The Government has responded to concerns raised during the Senate Committee inquiry process into the original Encouraging Self-sufficiency for Newly Arrived Migrants Bill and has adjusted the length of the new waiting period for these payments.
The new waiting period will be two years for Parental Leave Pay and Dad and Partner Pay and one year for Carer Allowance and Family Tax Benefit Part A.
These arrangements reflect that these payments support particular needs and costs for eligible individuals and families and provide a proportionate increase for payments which are having a waiting period introduced for the first time.
There will be no waiting period for Family Tax Benefit Part B. This recognises the role that this payment plays in supporting single parent families or those who have one main income earner to balance work and caring responsibilities, particularly when their children are younger.
Families serving a waiting period for Family Tax Benefit Part A will still be able to claim a low-income Health Care Card, provided they meet the income test. This will provide low-income families with access to concessional benefits under Medicare and the Pharmaceutical Benefits Scheme.
Transitional arrangements will also be put in place so that people who may already be pregnant and have planned their leave arrangements are not disadvantaged. New migrants who have a baby born or adopted in the first six months after commencement, and are otherwise eligible for Parental Leave Pay or Dad and Partner Pay, will still be able to access these payments for that birth.
In addition, families subject to a waiting period for Family Tax Benefit Part A or paid parental leave will continue to have access to broader Government-funded services to support their children's integration and wellbeing, including health care services, education and schools and child care subsidies where eligible.
Who will be impacted
The changes in this Bill will only apply to people granted a permanent skilled or family visa on or after commencement of the Bill (1 January 2019).
Information on the changes is already available through department websites and this will be supplemented by broader materials, once the Bill is passed. This will enable prospective migrants to make informed decisions and plans for supporting themselves during the waiting period.
Migrants granted permanent residency before the commencement date will not be affected. They will continue to have a two year waiting period for working age payments and no waiting period for family payments or Carer Allowance.
Exemptions and safeguards
There are a number of exemptions from the existing and new waiting periods which will provide a safety net, including for potentially vulnerable individuals and families, and people who have had a change of circumstances.
Humanitarian entrants and their families will continue to be exempt from all waiting periods. This exemption acknowledges that refugees settling here under the Humanitarian Program are particularly vulnerable. These migrants generally have no other means of support and are not usually in a position to make plans to support themselves before applying for a humanitarian visa. Maintaining immediate access to welfare payments will support the successful long-term settlement of these humanitarian entrants and their families.
While most temporary visa holders do not have access to welfare payments, holders of certain temporary visas, including Temporary Protection Visas and Safe Haven Enterprise Visas, currently have immediate access to Family Tax Benefit, Parental Leave Pay and Dad and Partner Pay as well as Special Benefit.
These temporary visa holders will be exempt from the new waiting periods for Family Tax Benefit, Parental Leave Pay and Dad and Partner Pay and will also continue to be exempt from the existing waiting period for Special Benefit. This exemption is consistent with the exemption for humanitarian entrants.
If these temporary visa holders are later granted a permanent visa, they will continue to be exempt from the waiting period. This means that they will not lose access to these benefits if they decide to settle in Australia permanently.
Most permanent migrants will be able to be self-reliant during their initial settlement period. The Government understands that some migrants will experience a change of circumstances that means they may no longer be able to support themselves as they had originally planned. For this reason, there are some key exemptions for migrants in this situation.
Migrants who become a lone parent after becoming an Australian resident will continue to be exempt from the waiting period for Parenting Payment, Newstart Allowance, Youth Allowance and Farm Household Allowance.
Migrants who experience a substantial change of circumstances will continue to be exempt from the waiting period for Special Benefit. This payment provides a safety net for people in hardship who are not eligible for other payments.
The Bill as originally introduced contained amendments that would have clarified and refined when a substantial change of circumstances could count for the exemption. To address concerns raised through the Senate Committee inquiry process, the Government has not proceeded with these amendments.
There will be no change to the substantial change in circumstances exemption. The existing exemption will remain in place and will continue to provide protections for those in Australia - including, for example, where a person has applied for a temporary partner visa - who experience a substantial change in circumstances through access to special benefit payments. This provides certainty that there are no detrimental changes included in the legislation to the substantial change in circumstances exemption for special benefit.
People who are receiving an income support payment, for example, because they have been granted one of the previously outlined exemptions will also be exempt from the waiting period for Family Tax Benefit, Parental Leave Pay, Dad and Partner Pay and Carer Allowance if they have not already completed it. This will apply a consistent exemption across payments.
In addition, New Zealand citizens on Special Category Visas will be exempt from the waiting periods for Family Tax Benefit, Parental Leave Pay and Dad and Partner Pay. These visa holders will also be excluded from the extension of the waiting period for the low-income Health Care Card. This means that New Zealanders will retain the same access and entitlements they currently have in recognition of the unique arrangements between Australia and New Zealand under our Trans-Tasman Travel Arrangement.
Orphan Relative and Remaining Relative visa holders will be excluded from all changes in the Bill. This responds to concerns raised during the Senate Committee inquiry that these visa holders are often vulnerable young people who may be disproportionately disadvantaged by an increased waiting period.
The waiting period arrangements provided for in this Bill, including the comprehensive range of exemptions, strike the right balance between promoting self-reliance for newly arrived migrants and providing appropriate safeguards for those that may need them.
Consistent Income Taper Rates for Higher Income Families
This Bill introduces a consistent income test taper rate for Family Tax Benefit Part A for families with income above the higher income free area.
Presently, there are two different approaches to income testing for higher income families receiving Family Tax Benefit Part A. When working out a family's entitlement, the test that results in the higher rate paid is applied. This means that families with the same income can be treated differently.
The first test, known as the maximum rate income test, reduces the maximum rate of Family Tax Benefit Part A by 20 cents for each dollar over both the lower income free area (currently $53,728) and the higher income free area (currently $94,316).
The second test, known as the basic rate income test, reduces the basic rate of Family Tax Benefit Part A by 30 cents for each dollar over the higher income free area.
This means that families with the same income can have different amounts of their payment reduced due to income testing. This adds to both complexity and confusion for families.
From 1 July 2019, a consistent 30 cents in the dollar taper will apply to income above the higher income free area. This change means that all families will be treated equally once their income exceeds the higher income free area.
The maximum rate income test taper will remain at 20 cents in the dollar for income between the lower income free area and the higher income free area.
In response to concerns about the impact of this change raised during the Senate Committee inquiry process, this amended Bill also includes a one-off increase to the Family Tax Benefit Part A higher income free area, bringing this amount from the current $94,316 to $98,988 from 1 July 2019.
This will balance the importance of applying a consistent approach to income testing arrangements while making sure only families with sufficient income experience the higher taper rate.
Together, these two measures will create a simpler and fairer system. The changes balance the objectives of providing support for families while making sure that this support is well-targeted and sustainable in the long-term.
Maintaining Income Thresholds
Finally, the Bill will extend the existing indexation pauses on higher income limits for Family Tax Benefit and Paid Parental Leave for one further year. Under these changes, from 1 July 2020:
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- the Family Tax Benefit Part A higher income free area will remain at the increased level of $98,988
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- the Family Tax Benefit Part B primary earner income limit will remain at $100,000, and
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- the Parental Leave Pay and Dad and Partner Pay income limits will remain at $150,000.
Annual indexation of these thresholds will recommence on 1 July 2021.
Maintaining these thresholds at their current levels will target Government assistance to families that need it most.
Families with lower incomes will not be affected by these indexation pauses to these thresholds.
The indexation pauses that are included in this Bill will contribute to the sustainability of the family and paid parental leave payments without impacting lower income families, meaning we can continue to help those that need it most both now and into the future.
Conclusion
This Government is committed to creating a welfare payments system that is fair, well-targeted and encourages self-reliance for those who are able.
In line with the Government's broader fiscal strategy, this Bill will contribute to a sustainable welfare payments system and an economically strong future for Australia.
Debate adjourned.