Loopholes In The Family Tax Benefit Scheme, Pauline Hanson, Millionaires Getting Family Payments Wayne Swan - Shadow Minister for Family and Community Services,

TV Interview with Lauire Oakes

Transcript - Sunday, Channel Nine - 24 August 2003

LAURIE OAKES: Morning, Jana. Mr Swan, welcome to Sunday.

WAYNE SWAN: Good morning, Laurie.

LAURIE OAKES: Could I ask you – could I ask you first about Pauline Hanson. Do you agree with essentially the majority opinion, that she has been jailed for too long?

WAYNE SWAN: Well, Laurie, I don't intend to join the national hand wringing over this case. I wasn't in the court. I didn't hear the evidence. She was convicted by a jury of her peers. And the case is going to appeal. I think people should butt out and leave it alone, frankly.

LAURIE OAKES: Do you agree with Peter Beattie though, that it's hurting the Labor Party? The backlash is hurting Labor?

WAYNE SWAN: Well, it possibly might be hurting the Labor Party. I don't know. But I know one thing that will hurt our judicial system and the rule of law, and that is for this debate to continue as it has been going. We're better off to let the case go to appeal and leave it alone.

LAURIE OAKES: But do you think it has any national political implications, or just at the state level?

WAYNE SWAN: Well, I think it might have some national political implications. I mean, for example, John Howard won the last Federal election because he had Pauline Hanson's lipstick all over his collar. He basically took on board most of her policies to run that fear campaign to win the last election. It certainly would have some implications in terms of Tony Abbott's participation in the case.

LAURIE OAKES: Do you approve of what Tony Abbott did?

WAYNE SWAN: Look, I'm not aware of all of the facts. It's not for me to approve of it, or to disapprove of it. I can let the public make their judgement on that, Laurie.

LAURIE OAKES: Okay. Well, you seem to come up with a new one of these welfare exposes just about every week. How is that a system operated by the Government provides so much political ammunition for the Opposition?

WAYNE SWAN: Well, because the system is so unfair, there's a double standard. And Senator Vanstone and Mr Howard refuse to change it. I mean, what we showed in the Parliament last week is that they're making payments to millionaires and very wealthy individuals – something like 18,000 families receiving family payments earning over $100,000, and 15 millionaires receiving those payments.

And on the other hand, while Senator Vanstone is in the Parliament justifying this Toorak welfare, if you like, she has in her question time brief new figures that show in the second year of operation of the family payments system, 643,000 families – a third of all families – have incurred huge debts because she refuses to pay the system. She refuses to change it, and she just justifies it. Well, the double standard can't continue. The system needs to be reformed, and we need to provide some relief to those hard-working families that are getting slugged.

LAURIE OAKES: Well, Senator Vanstone promised last year that in the second year of this scheme you wouldn't see those crippling debts. Are you saying that the Government's failed?

WAYNE SWAN: Yes, well, Senator Vanstone said she would fix the system, but there are 643,000 families probably with an average debt of about $870, and on top of that there are 250,000 families who have debts from the first year of operation, and now they have debts from the second year of operation. She told us that this wouldn't happen, and that she would fix it.

She is clearly completely incompetent when it comes to the family payments system, because it is causing immense financial pressure for a lot of low and middle income earning Australian families.

LAURIE OAKES: Now, you're quoting these figures. You – you claim that Amanda Vanstone had these in her question time brief. How do you know that?

WAYNE SWAN: Well, I know she had them in her question time brief because I know someone who has seen her question time brief. But the hypocrisy of her to stand in the national Senate, justify the payments to millionaires, and very wealthy individuals, but continue to refuse to change the system to close those loopholes, and on the other hand simultaneously be out there stripping the tax returns of many families who are unaware they have a debt. Who have not even had the courtesy of receiving a phone call from Senator Vanstone. She just takes a sledgehammer to those families, and refuses to fix the system. That's why we're going to need to change the system, reshape the family payments system, and get rid of this debt trap.

LAURIE OAKES: Well, if you – if you know about those figures, did you know how big the – the accrued debt it, that these families are facing?

WAYNE SWAN: Well, we know in the first two years of operation, the accumulated debt that was to be repayed in one form or another by the families was about $1 billion. We've now just seen the third year of operation of the system. The debt could surge to $1.5 billion. Now, as you know, Laurie, in the first year they provided a waiver of $1000. No waivers were given last year, so families had their tax returns stripped, and they had these monies taken out of their future payments. She even advised families to pay off the debt on their credit card. I mean, all of this is just financially and socially irresponsible, and just shows how mean Senator Vanstone is.

LAURIE OAKES: Well, there's a recent newspaper headline: Amanda Vanstone, could she be the meanest person in Canberra. But is this really her fault? Can you personalise it to that extent?

WAYNE SWAN: Well, Senator Vanstone has vigorously defended this system. Mr Howard went into the Parliament last year and said he would change the system, he would fix the problem. Senator Vanstone said that she had substantially fixed the problem. Well, that hasn't occurred. Her only solution is to advise Australian families not to take their payments on a fortnightly basis, but to take them at the end of the year. But of course these payments are there to assist families to feed, educate, and clothe their kids. And their kids don't stop growing, they don't stop going to school, just because Senator Vanstone can't fix the system.

LAURIE OAKES: But hasn't she got that reputation for meanness precisely because she's doing her job, trying to stamp out welfare fraud and overpayment?

WAYNE SWAN: But these families are not frauding the system. These are families who are receiving the payments through no fault of their own. These are families, many of whom have no knowledge that they've accumulated a debt. It is the system that she has put in place which forces families to estimate their income one year in advance, that causes the debt. That was the conclusion that the ombudsman came to. The ombudsman said these debts, for most families, are unavoidable, and therefore the Howard Government should change the system, something it refuses to do, because it is simply trying to save money in the family payments system. These are payments which were meant partly to compensate families for the impact of the GST. She is simply out there saving money. She's not stamping out rorting in the system.

LAURIE OAKES: Well, it's not just families, of course, that have accumulated debt. Senator Vanstone's in your sights now because of aged pensioners being hit with bills for thousands of dollars from Centrelink. What's that all about?

WAYNE SWAN: Well, first of all, she's continuing to make those payments to millionaires, and at the same time now she's extended the sledge hammer to aged pensioners. Through her incompetence she has been failing to check the accuracy of payments to pensioners, and only in the last year or so has the Department started to check the accuracy of those payments. And suddenly they have discovered there are many thousands of pensioners who have been overpaid. Many of them innocently.

I can cite the case of Clive and Joan Franks, from my electorate. They suddenly received a letter in the mail from Senator Vanstone, saying they'd been overpaid by $20,000, and demanding immediate repayment. The problem was no one ever told them they had been overpaid. They had been submitting the correct information to Centrelink for the whole of the period. So this debt was through no fault of their own. Now Senator Vanstone says that if they don't repay the money immediately, what she is going to do is to sell their house. Now, this is happening to pensioners right across Australia at the same time that she's content to allow loopholes to exist in the family payments system so that millionaires and wealthy individuals receive family payments. Once again, an incredible …

LAURIE OAKES: Are you – are you saying …

WAYNE SWAN: … an incredible double standard.

WAYNE SWAN: … she – she's told – are you saying she's told those people specifically that she will sell their house if they don't pay the money?

WAYNE SWAN: No. But she said on national television on Friday night that people in similar situations to the Franks may well have to sell their assets, including their home. That just shows how unfeeling this Minister is. She treats these people like they're some entry in an accounting system, not as if they're people, or people who've worked hard all of their life to make the country strong, and to do the right thing.

LAURIE OAKES: But doesn't this money have to be collected? If you became minister …

WAYNE SWAN: It certainly does, Laurie.

LAURIE OAKES: … if Labor won an election, would you not collect such debts?

WAYNE SWAN: All debts that are correctly owed must be repaid. No doubt about that. But where repayments – or where debts have been accumulated through the … a fault of the Department, and not through the fault of the individual – the Social Security Act says that they may not have to be repaid. But even if they have to be repaid, Laurie, we could approach the repayment in a much more humane way. Not by suddenly sending these people a letter saying you owe us $20,000, pay up straight away or go to Hell in a hand-basket.

LAURIE OAKES: Now you – you've raised the issue of wealthy families accessing family tax benefits. Amanda Vanstone has promised an investigation into the loopholes that allow that to happen. But what's the basis of your – your latest claim that they – they're able to access maternity allowances as well?

WAYNE SWAN: Well, we have discovered a third loophole. The first two loopholes relate to the negative gearing of shares, allowing families to artificially reduce their income. The failure of the Department to check foreign income, and now, it appears, that those who apply for maternity allowance, when they apply for family tax benefit, and receive that allowance, don't have a debt raised against them from the Department when their incomes are discovered to be too high.

So that's the third big loophole in the system. One she didn't admit to last week when we were debating the fact that there are 18,000 people on incomes over $100,000 receiving family allowances. She simply will defend this system to the hilt. She'll defend the loopholes, because she knows that the Government needs to claw back, if you like, from low and middle-income earners, all of that money that they are clawing back through the debt – that $1.5 billion. This is nothing more than a saving mechanism. Nothing to do with stamping out fraud, or rorting in the system.

LAURIE OAKES: Just to clarify what you've said, you're saying that when wealthy families overstate their income, they – they'll be picked up on the extra family tax allowance that they've got, but they're not picked up on the maternity allowance?

WAYNE SWAN: Well, when they underestimate their income for whatever reason, when they apply for family tax benefit, they then become eligible for maternity allowances of around $1,000. There is currently no mechanism, Laurie, in the legislation, that enables the Department to ask for that money back when their higher income is subsequently assessed, and the monies are repaid.

So that's a third loophole in the same vein as the negative gearing of shares to artificially reduce income, and the failure of the Government to check on foreign income.

LAURIE OAKES: Mr Swan, we're out of time. But we thank you.

WAYNE SWAN: Good to talk to you, Laurie.

LAURIE OAKES: Back to you, Jana.

End. E&OE - PROOF ONLY