The inquiry into the Family Payments Structural Reform and Participation Measures Bill 2015
On 3 December 2015, the Senate referred the Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill (No. 2) 2015 to the Senate Community Affairs Legislation Committee for inquiry and report.
The Committee reported on 1 March 2016. The Bill passed the House of Representatives but lapsed due to the 2016 election.
Our key concerns
Schedule 2: Family tax benefit Part B rate
Schedule 2 of the Bill introduces a new rate structure for Family Tax Benefit Part B, which assists single parents and families with one main income. The standard rate for families with a youngest child aged under one will increase by $1,000.10 per year. The standard rate for families with a youngest child aged 13 to 16 (with some exceptions) will decrease from $2,737.50 to $1,000.10.
RCOA believes this new rate structure unfairly impacts families from refugee backgrounds. The significant rate decrease for families with a youngest child aged 13 to 16 is intended to be offset in part by the brief rate increase when the child is first born. However, many refugee families in Australia are raising children who were born overseas. These families would bear the burden of the rate decrease without ever having received the intended complementary rate increase.
Refugee and humanitarian entrants are often highly motivated to work and many have ample capacity to participate in the Australian workforce. However, they frequently face significant difficulties in securing employment in Australia, particularly during the early years of settlement.
In light of these barriers, RCOA believes that measures aimed at creating incentives for participation in paid work (such as reducing income support for families outlined in this Bill) are unlikely to encourage refugee and humanitarian entrants to secure employment. In RCOA’s experience, refugee and humanitarian entrants need little encouragement and few incentives to work. Many are, in fact, desperate to find stable employment but find that their efforts to find work are stymied.
Participants in RCOA’s consultations with refugee communities regularly speak of their frustration and disappointment at not being able to gain access to the Australian labour market or fully apply their skills, experience and determination in the workplace. In RCOA’s view, coercing parents into the workforce by reducing their benefits seriously misunderstands the barriers people face in gaining employment.
Additionally, this Schedule seeks to reduce the point at which is a senior secondary school student ceases to be considered for the purposes of FTB Part B, from the end of the year in they turn 18 to the year in which they turn 16.
RCOA believes that this compounds the financial hardship created by the rest of this Schedule, as families with a youngest child aged 13 to 16 would receive the FTB Part B for approximately two years less than they currently do. As described above, this would create another burden on families from refugee backgrounds, especially those who are new to Australia.
Schedule 3: Family tax benefit supplements
Schedule 3 of the Bill rapidly phases out Family Tax Benefit Part A and B supplements. Part A supplements will be reduced to $602.25 a year from 1 July 2016, to $302.95 a year from 1 July 2017, and withdrawn from 1 July 2018. Part B supplements will be reduced to $302.95 a year from 1 July 2016, to $153.30 a year from 1 July 2017, and withdrawn from 1 July 2018.
RCOA believes the rapid reduction and withdrawal of the FTB supplements will adversely impact families from refugee backgrounds. As described above, many of these families are engaged in an ongoing process of settlement that places unique demands upon them. The FTB supplements are integral to providing the financial security necessary for this important process to succeed.
Schedule 1: Payment rates
Schedule 1 of the Bill increases family tax benefit (FTB) Part A fortnightly rates by $262.80 a year ($10.08 a fortnight) for each FTB child aged up to 19. It also links maximum basic rates for particular youth allowance and disability support pension recipients aged under 18 to the FTB Part A rate for families with children aged 13 and above. As a result, these rates will increase by $10.44 a fortnight.
RCOA expresses concern that the minor rate increase introduced by this Schedule is severely compromised by the major rate reductions and withdrawals introduced by Schedules 2 and 3.
RCOA recommends that the Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill (No. 2) 2015 not be passed.