Interview on 3AW Drive with Tom Elliott
Delivering more affordable, flexible and accessible child care for Australian families; delivering fairer paid parental leave

Tom Elliott: Our next guest is the Federal Minister for Education, Senator Simon Birmingham. Senator, good afternoon.

Simon Birmingham: G’day Tom. Great to speak with you again.

Tom Elliott: Good to talk with you too. Have you spoken with Cory Bernardi today?

Simon Birmingham: I haven’t today. I passed Cory in the corridor yesterday and we exchanged short greetings.

Tom Elliott: What, the normal high five, or …

Simon Birmingham: Not quite a high five, no, but we said hello to each other.

Tom Elliott: I only ask because I’ve heard all sorts of quite innovative insults are being hurled in his direction by former colleagues. Have you thought up a new name for Cory?

Simon Birmingham: Look, I haven’t thought up a new name for him. I said yesterday that I thought what he had done was a dog act, and I think that is the case, that he’s betrayed the trust of the 345,000-plus South Australians who voted for me, voted for Cory, voted for others on the Liberal Senate ticket and thought they were going to get people who would serve as Liberal senators. They weren’t people who voted for One Nation or for the anti-Muslim Liberty Alliance, or anybody else – they voted for the Liberal Party and wanted Liberal representatives in the parliament. I know they are very disappointed, but we move on. We get on with what’s at hand, and we of course will work with Cory like any other Senate crossbencher to get the job done.

Tom Elliott: All right, we do indeed. Now, could you explain for us succinctly what is the difference between Family Tax Benefit Part A and Family Tax Benefit Part B?

Simon Birmingham: Sure. So the simple answer there is that Family Tax Benefit Part A is essentially a universal entitlement that is means-tested to support lower income families and middle income families …

Tom Elliott: [Interrupts] Sorry, it’s not universal, it’s means-tested.

Simon Birmingham: It’s means-tested, but it applies to all families in that sense where the means test applies …

Tom Elliott: [Interrupts] And do you get it once you have a child?

Simon Birmingham: If you meet the criteria of the means testing and so forth, yes. 

Tom Elliott: And where does it cut out? Is it like $150,000?

Simon Birmingham: It’s a little bit lower than that, but it is in the six figures. I can’t tell you that off the top of my head. 

Tom Elliott: Okay, that’s all right. So if you earn an income in the six figures you probably don’t get it?

Simon Birmingham: Correct, roughly.

Tom Elliott: Okay, all right. So what’s Family Tax Benefit Part B?

Simon Birmingham: Family Tax Benefit Part B gives extra assistance to single parents, non-parent carers such as grandparents, or couples with one main income only.

Tom Elliott: Right, okay. So at the moment you’ve got Part A which is given to everybody. Does it vary with how many children you have?

Simon Birmingham: Yes, it can.

Tom Elliott: It can, all right. So you get a certain amount per child, but it cuts out at a level of income somewhere above $100,000. Part B is for single parents and carers and people who need extra assistance. Okay. So how much- I know that you propose to change them. Which of these two are you proposing to change?

Simon Birmingham: So they’re technical changes, and of course remember that these payments were introduced mostly in the Howard era when of course big surpluses were being run, and the budget was in pretty good shape at the time. The changes we’re proposing, though, are to increase the fortnightly rate, the standard fortnightly rate for Family Tax Benefit Part A by $20.02 for each child in the family aged up to 19.

Tom Elliott: How did you come up with $20.02?

Simon Birmingham: I think that’s just a factor of how different inflation factors roll out once you look to the date at which increases apply and so on.

Tom Elliott: Okay, so 20 bucks a fortnight, that’s basically 10 bucks a week, so that’s $520 extra a year.

Simon Birmingham: That’s right, and …

Tom Elliott: [Interrupts] Plus the 2 cents, which would add up to another dollar.

Simon Birmingham: [Laughs] Very good, Tom. Very quick on the mark there. Supplements, which are essentially lump sum end of year payments would be phased out for families. They’ve already been phased out for families earning more than $80,000 a year; they’d be phased out for those earning less than $80,000 a year over a period stretching through a couple of years, through to 2018. That of course would see, though, the additional fortnightly payment applied instead.

Tom Elliott: Wait a minute, when you talk about supplements is that Family Tax Benefit Part B?

Simon Birmingham: This is a Part A supplement that we’re talking about here, but yes, the Part B supplement will also be phased out over the same couple of year period. 

Tom Elliott: [Talks over] But sorry, you talk about a supplement and I’m told it’s $726 a year. So you can get a certain amount per fortnight, plus you get $726 a year, is that right?

Simon Birmingham: That’s right. So this is a lump sum payment that was again introduced a number of years ago, back in a period of time when the way income was estimated frequently was wrong and families were near the end of year bills.

Tom Elliott: [Talks over] Okay. So you’re going to take away $726 a year, and replace it with $20.02 a fortnight, which is $521 a year. So on that basis, a family who is getting the supplement will now be $205 worse off?

Simon Birmingham: Broadly speaking, that’s right. But…

Tom Elliott: [Interrupts] Well why is it so complicated, by the way? I mean, you could not- this is the sort of gobbledygook that some bureaucrat has dreamt up back in the Howard years, as you say. But why a) have such weird numbers, and b) have an amount per fortnight and an annual amount and we’ll have a separate amount if you’re a single carer and all that sort of thing?

Simon Birmingham: Well that’s why we want to get rid of the end of year payment. To actually get rid of that, phase that out so they do simply then a fortnightly payment that helps families who are lower income families with young children with their living costs. So it’s a more efficient system, we think a fairer system, and we’re reinvesting some of those savings that will be generated into providing again a simpler, fairer system for child care payments that would be much better targeted in the future.

Tom Elliott: [Talks over] And just so we’re absolutely clear, Family Tax Benefit Part B – which is provided for single parents and other people in a similar situation – that’s not being touched. The Family Tax Benefit Part A, an annual payment of $726 is being eliminated and replaced with $20 a fortnight.

Simon Birmingham: The end of year supplement in both cases would be phased out…

Tom Elliott: [Talks over] Right.

Simon Birmingham: …so that all payments would simply become regular routine fortnightly payments.

Tom Elliott: [Talks over] So how much is the end of year supplement in Part B?

Simon Birmingham: That end of year supplement as it remains is – I’m just trying to see that on my notes here – it reduces to $153 a year from 1 July 2017, but I’m trying to see what it is before that.

Tom Elliott: So you’re not going to make up that supplement being taken away?

Simon Birmingham: No.

Tom Elliott: Alright. So people lose a $726 supplement plus another couple of hundred dollars from Part B, let’s call it a thousand bucks a year in annual payments. And they get extra fortnightly payments worth $521 a year. 

Simon Birmingham: If they are receiving all of those supplements…

Tom Elliott: [Talks over] Right. Could you…

Simon Birmingham:  …noting that there are different criteria for different families to get Family Tax Benefit Part A versus Family Tax Benefit Part B.

Tom Elliott: Do you think it is time that you just got rid of the whole thing and just replaced it with a  much simpler single fortnightly payment? I mean, rather than have A and B and this and that. Because this is mind-bogglingly complicated.

Simon Birmingham: It is complicated. As I said, we are trying to simplify a complicated system. It will still be a challenging system perhaps for people particularly who don’t access it to understand. But in the end it’s a relatively- will be a relatively straight forward, fortnightly payment to parents under certain circumstances.

Tom Elliott: [Talks over] Right.

Simon Birmingham: And it’s- as I say, coupled with a raft of other reforms, all of which are really earmarked to try and to make the system partly simpler but also a lot fairer in better targeting of taxpayers’ welfare dollars in the system.

Tom Elliott: Just a question without notice. We had a caller Sam from Lakes Entrance here in Victoria who’s pretty upset that his local kindergarten – there’s only one of them there apparently – has gone from being free to charging $125 a week per child. Do you know why that might be?

Simon Birmingham: That would have to be something probably that the Andrews government would need to answer there. I’m assuming in saying a local kindergarten that we’re talking about a state government-run pre-school service or kindergarten service so no, I can’t see why that would be the case. Our support for pre-school continues right through this year with millions of dollars provided by the Turnbull Government to the states to deliver pre-school services. And importantly what we’re proposing in the child care space is a significant re-write of child care subsidies that goes from having a Child Care Benefit and a separate Child Care Rebate that are assessed on different terms, to replacing that with a single child care subsidy payment that is means tested, ensures more support for people who meet an activity test, need to go to work or are studying, and therefore need to meet the bills of their child care while they’re doing so. More support for those low and middle income families in those circumstances. Eliminates an arbitrary $7500 cap for low and middle income families on the amount of child care support they can get, and so that those families who find that they run out in February or March each year of their child care support actually get more assistance right through the whole year to be able to stay at work or choose their hours of work.

Tom Elliott: [Interrupts] Alright, thank you Senator. Senator Simon Birmingham there. Look- with due respect to the senator, it is a dog’s breakfast. There’s still so many different ways of entitlements. There’s Part A, Part B, there used to be annual payments. Overall people will get less, the Government wants to save money. I think it will be about a thousand bucks less per annum. So let’s not try and whitewash that, but why is the system so complicated? Only in Canberra would they think up such a thing.