House of Representatives

Second Reading Speech

Ms Ley (Parliamentary Secretary (Children and Youth Affairs))

I move:

That this bill be now read a second time.

This bill will amend the social security law, the family assistance law and the Veterans' Entitlements Act 1986 to provide for two further commitments made by the government before the 2004 election. These commitments are aimed at families with children and older Australians.

The first of these commitments is to increase the rate of family tax benefit part B. The bill gives effect to this by introducing a new family tax benefit part B supplement. The new supplement will be added to an individual's standard rate of FTB part B and will be payable as a lump sum on income reconciliation after the end of the income year in the same way as the family tax benefit part A supplement introduced last year.

The annual amount of the new supplement will initially be set at $302.95 for the 2004-05 income year. This amount represents a daily amount of 83 cents. As the family tax benefit part B supplement commences from 1 January 2005 and there are 181 days in the period 1 January to 30 June 2005, the maximum FTB part B supplement for that period would be $150.23.

The family tax benefit part B supplement will be subject to a one-off six-month indexation arrangement on 1 July 2005, which reflects its 1 January 2005 commencement, and then will be indexed on 1 July 2006 and each following 1 July according to annual movements in the consumer price index.

The second 2004 election commitment given effect by this bill is to exempt aged care accommodation bonds from the social security and veterans' affairs means test. The government is delivering this commitment in an easily understood manner that will provide elderly Australians with peace of mind and will afford them the opportunity to manage their transition to aged care.

Currently, where a customer pays an accommodation bond to an aged care facility, the refundable balance of the bond is held as an asset of the customer for means testing purposes. This may result in a reduction in the pension the customer receives from the government and may, in some cases, mean that a pension is no longer payable. These amendments will mean that many older Australians will be able to receive a higher rate of payment, or obtain a payment from the government that they would not otherwise have had.

These amendments will also allow customers who pay their accommodation bonds by periodic payments to rent out their former home, without the rental payments affecting their rate of payment from the government. Customers in this situation will also be able to retain the asset test exemption for their former home during any period in which they rent it out. This change mirrors existing concessions available to residents in high-level aged care who pay accommodation charges.

There will also be provision for customers who will now be eligible for either a social security or veterans' affairs payment because of these changes to have their payment backdated to 1 July 2005. The backdating will be available where customers apply to Centrelink or the Department of Veterans' Affairs for a payment prior to 30 September 2005 or, if they have special circumstances, to 30 June 2006.

In a separate measure, this bill repeals the existing formula for the family tax benefit child income cut-out amount for FTB. A child whose income equals or exceeds the cut-out amount cannot attract payment of family tax benefit.

The formula is being replaced with a specified amount of $11,233. This figure represents annual indexation of the existing amount for 2004-05 of $10,948. The new cut-out amount will apply from 1 July 2005 and will be indexed on 1 July 2006 and each following 1 July according to movements in the consumer price index.

The new amount is higher than the amount of $11,218 that would have been applicable from 1 July 2005 under the existing formula. I commend the bill to the House and I present the explanatory memorandum.

Debate (on motion by Mr Ripoll) adjourned.