Subject:
Federal Budget
E&OE...
BYNER:
Mr Howard, thanks for joining us.
PRIME MINISTER:
Good morning Leon.
BYNER:
First of all, Peter Saunders has probably made a better point than Wayne Swan and Wayne is there to try and point out the deficiencies of the Government. What do you say to the point where people on relatively good money are still on welfare?
PRIME MINISTER:
Well they're not on welfare, it's just that their Family Tax Benefits are paid through the spending side of the Budget rather than in tax deductions and the reason why it's not in tax deductions is you couldn't get the right mix between men and women. What Peter Saunders ignores completely in this analysis and I'm aware of it and I understand the argument he's putting is that the, in most families the principle carer is the mother and the mother is the person who gets the Family Tax Benefit, although it is obviously applied by both parents to the welfare of the children. If you adopted literally the Saunders approach it would mean that there would be larger tax cuts for the higher income earner in the couple and that's usually the husband and fewer direct payments to the mother and I don't think Australian women would think that was a good idea.
BYNER:
So you would reject then Mr Howard that you've got people on middle and higher incomes virtually cross subsidising each other with these sorts of benefits?
PRIME MINISTER:
What I would reject is that paying Family Tax Benefits entirely through changes to the tax scales because you would not be able to provide the level of benefits in the way you want them to go because the tax system is not as flexible as that. I think Peter and I have got a lot of respect for him, I don't think he quite understands how inflexible the tax system can be. The great advantage of the Family Tax Benefit system is that you can take it as a tax break if you like and if people at a certain level of income want to take it as a tax break and not as a benefit payment they can, but the fact that most people choose to take it as a benefit payment means that they think it better suits their circumstances and what the Peter Saunders approach would do would be deny families the choice of taking it fortnightly as a direct payment and take it either fortnightly through the inevitably the higher income earner's salary or at the end of the year by way of a tax refund. But people should understand that under the present system, you can elect to take the Family Tax Benefits as a tax break and not as a direct payment. You can do that and a few people do but the fact is most people don't and the reason why they don't is that it's more beneficial to their family circumstances to have it as a fortnightly payment, principally made, not always, but principally made to the mother. I mean, that's the reason. So the present system is more flexible and provides parents with much greater choice. I understand what Peter's getting at and in an overall macro economic sense I see his point but what matters to me is what best suits the individual circumstances of Australian families and the fact that they themselves have elected to take them as direct payments rather than as tax deductions means that that's what they want and shouldn't we give them what they want?
BYNER:
Now, on that point. There is going to be some changes because they were already announced or leaked before the Budget was given last night by the Treasurer, but under this family payment scheme there have been some people have got themselves into trouble because if you're somebody that has to estimate what you're going to earn, that is very difficult sometimes given that people...
PRIME MINISTER:
We're not altering the Family Tax Benefit system in relation to that, the changes are in relation to child care payments. They're a separate category and what we're doing is we're increasing the child care rebate which is paid direct to the child care centre and thus reduces or in some cases, well it reduces, it doesn't totally eliminate the child care expenses, but it's the other part of child care help that we're changing and that is that your out-of-pocket expenses, what you had to pay the centre after the benefit subsidy had been received by the centre, under the current system you have to claim that at the end of the year following in which you incur the expenses and that led to people saying