TAX LAWS AMENDMENT (EDUCATION REFUND) BILL 2008;Second Reading – 27 Nov 2008

The incorporated speech read as follows—

I am delighted to rise in support of the Tax Laws Amendment (Education Refund) Bill 2008.

This Bill will be of great benefit to parents across the nation—and it is a Bill that many people have been waiting for over a very considerable time , over 11 years, but of course it falls to us, a Rudd government to deliver it.

About the Bill

This Bill will deliver to parents a refund of 50 per cent of eligible expenses incurred in meeting the costs of their children’s primary or secondary education.

Parents will be entitled to a tax offset of up to $375 per child in primary school and $750 per child in secondary school.

Assuming these amounts aren’t increased this adds up to a saving of $7,125 per child over the course of their schooling.

Some of the equipment for which parents may incur expenses eligible for the Education Tax Refund ( or ETR as it is commonly known) include laptops, home computers, internet access, printers and paper, educational software, school textbooks and prescribed trade tools.

This Bill delivers on the Rudd government pre-election commitment to introduce the ETR and provide some welcome relief for families with schoolchildren.

And of course, every parent wants their child, or children, to have the best opportunities in life – and that means giving them the best education possible.

Providing even the basics for a child’s education involves some financial sacrifice and that can put some strain on the family budget.

This Bill will deliver realistically in the budgets of ordinary, everyday families. It will help to ease some of that burden.

The Rudd Government made this commitment before the last Federal Election because we recognise that you can’t have an Education Revolution without parents being able to meet the basic costs of putting their children through school.

The ETR will be provided to families on the basis of need.

This is why parents will be eligible the Education Tax Refund in respect of children for whom they are also eligible for Family Tax Benefit Part A.

However, there are concessions for certain families that fail to meet the full eligibility for the ETR.

The ETR has been expanded to include these concessions so that its administration is fair and it is applied where it is most needed.

For example, if a parent has a child who receives income support such as Youth Allowance, AUSTUDY or the Disability Support Pension—but would otherwise have been eligible for Family Tax Benefit Part A in respect of that child,

  • they will still be eligible for the ETR for that child.

Families who share receipt of Family Tax Benefit Part A or have shared care arrangements will share the ETR just as Family Tax Benefit Part A is shared.

If a child enters or leaves school in any year, their parents will be eligible for an amount of the ETR attributable to the half of the financial year that they attended school.

If a student transitions from primary to secondary school during a financial year their parent will be eligible for the ETR based on the secondary school rate.

Parents with home-schooled students will be eligible for the ETR if their child is registered with the relevant state or territory authority.

Students living independently will also be eligible for the ETR.

It is estimated that eligibility for the ETR will extend to 1.3 million families extending to 2.7 million students.

And may I say, one of the great things about this Bill is that it doesn’t matter which school you go to.

Promoting the ETR

I have written to a number of schools in Tasmania advising them of the Rudd Government’s commitment to legislating for the Education Tax Refund.

Some schools have communicated this information to parents through their school newsletters or other means.

I have done this because it is important for parents to be aware of the ETR even before it has been legislated.

I have been urging parents to make sure that they keep receipts for expenses incurred in respect of their children’s schooling in case they are eligible to claim the ETR in their 2008-09 income tax return.

Parents should keep receipts for any expenses incurred after 1 July 2008 for which they think they may be eligible for an Education Tax Refund.

Of course, parents should seek advice from the Tax Office or a registered tax agent if they’re not sure whether they are eligible for the ETR or don’t know what expenses they are entitled to a refund for.

Those eligible to claim the ETR will be able to claim it for the first time in their 2008-09 tax return.

There are some parents eligible for the ETR who will not otherwise be required to lodge a tax return.

For these parents, a simple form will be available from the Tax Office to allow them to claim the ETR without having to complete a tax return.

Importance of the ETR

It is estimated that the Education Tax Refund will cost $4.4 billion over the next four years.

It’s important to remember that when the Prime Minister—then Opposition Leader—announced Labor’s policy of delivering the ETR during the 2007 Federal Election, it was released at the same that we announced our income tax policy.

We were able to fund the ETR by holding off tax cuts that the Coalition had proposed for people earning a taxable income of over $180,000 per year.

It was our view at the time—and it remains our view—that people earning that sort of money are probably doing okay at the moment.

We thought that parents struggling to meet their children’s school expenses are in a bit more need of help.

Of course, we could have just as easily offered a general tax cut to parents of schoolchildren so that they would have had a choice to spend it on whatever they liked.

But the ETR is about more than just assisting parents to meet the expenses of raising school age children.

It’s about providing incentives for parents to invest in their children’s education.

And what better incentive is there than reducing those costs each year by $375 or $750 per child?

A general tax cut could be spent indiscriminately, but some of the constituents who have contacted my office have commented to my office that they are considering purchasing computers for their children’s education if they are eligible for the ETR.

Given the prevalence of information and communications technology in schools nowadays, being able to study on a home computer puts students at a huge advantage.

Of course, there are many other basic expenses that parents could have subsidised by the ETR.

Many public and private schools prescribe specific textbooks for their subjects.

The way the Australian dollar has been performing recently as a result of the global financial crisis means that prescribed textbooks sourced from overseas will now be more expensive than before.

School textbooks will now be more affordable from year to year, as will the large quantities of stationery that parents often have to buy.

As has been the continuing case since the change of government last year the Coalition has yet again criticised a Rudd government initiative.

There have been comments made that the ETR is not broad reaching enough, but let’s consider what would have happened had they been elected.

Not only were they going to retain their tax cuts for people earning over $180,000 a year, … but that were going to add to that an Education Tax Refund that would have cost three times as much as ours.

Of course they only came up with their policy for a tax refund as a direct response to ours.

But faced with a proposal that was so well received by ordinary Australians—one that helped families with schoolchildren meet the costs of living but also gave them some incentive to invest in their children’s education—they reverted to their instinctive response -which is to try and spend their way out of trouble.

Rather than consider how best to target assistance they took a scattergun approach and decided to try and outbid us.

This was a pattern they began in 1998 and it saw them through several elections, so much so that their response to a political crisis became almost involuntary in their response:

Oh! We have a problem with this specific demographic—let’s throw some money to that area—and hopefully this will get us votes.

It was partly because voters were sick of this reckless spending and , of course, they knew they were being misled—that many people decided to vote the Coalition out

It has only been by putting the brakes on reckless spending that the Rudd Labor Government was able to build up a $22 billion surplus, a surplus that was continually attacked and eroded in this place by those opposite.

I would like to know how the Coalition would have responded to the global financial crisis without a decent surplus to use to stimulate economic activity.

They would have had two choices, revert to borrowing for their economic stimulus or ignore the crisis and let the economy suffer.

While Australia’s economy is in a better position than most to withstand the global financial crisis, our position could have been much improved had the previous Government not failed to invest in the drivers of productivity.

And one of the greatest drivers of productivity is education, training and skills development.

That’s why Australia needs an Education Revolution.

The Education Revolution

The Education Tax Refund is an important plank in the Rudd Government’s Education Revolution.

All up the 2008-09 Budget includes $19.3 billion to deliver the Government’s election commitments to education over the next four years.

The Rudd Government has established an Office of Early Childhood Education and Child Care in the Department of Education, Employment and Workplace Relations.

One of the Office’s major roles is to implement our commitment to deliver universal access to 15 hours a week of early childhood education for four-year-old children.

The early years of a child’s life are the most crucial in regard to brain development.

And scientific research points to the critical importance of an appropriate learning environment for very young children.

I cannot emphasize enough how important this fact is.

In fact—the foundation of neural structures in the frontal lobes of the human brain are not fully developed until approximately the age of twenty-four.

This means the brain continually develops, and we know that in order to achieve full potential a child needs interaction in all types of environments, and it is easier to learn new skills and take in knowledge when young as opposed to later in life.

An extra year of early learning could make a huge difference in the educational attainment of Australia’s children.

The Rudd government focus is revolutionary.

It starts with very young children and if we want to look for the areas of greatest disregard by those responsible for education during the Howard years, then this is where we begin —because there has been many OECD surveys pointing to the shameful underperformance of Australia when it comes to investing in the early years of education.

Let’s remember that in 2006 Australia was ranked 25th out of 26 countries on the OECD indicator looking at the proportion of students enrolled in pre -primary education—hardly a ranking to be proud of, in fact members of the Howard Government should hang their heads in shame.

Let’s also remember, there was a comprehensive failure by the Howard government to invest in the professional training of those who care for very young children.

That is an area where the education revolution is being focused: on investing in the qualifications of those who care for our very important young people.

The Rudd Government believes it important for students to develop the basics in education and we want a focus on skills in literacy and numeracy.

The Government’s National Action Plan on Literacy and Numeracy targets the students who need it most and includes funding specifically targeted at Indigenous students.

Another important initiative is the development of a National Curriculum, which will ensure that there is consistency across states and territories in what students learn.

One of the advantages of the National Curriculum will be that students can move across state borders and continue their education where they left off with minimal disruption.

It will also help to develop more comparable university entrance criteria.

We also need to make sure that students of the twenty- first century are equipped with the tools of the twenty- first century.

The Rudd government is working hard to develop a highly skilled workforce, including funding for trades training centres in secondary schools which will encourage more secondary students to learn a trade.

Our pre-election commitment to provide 450,000 new training places over four years was extended by the 2008-09 Budget.

We will now provide 630,000 new training places over five years including 85,000 apprenticeships.

We have established Skills Australia to advise on current and emerging skills needs.

The Howard Government in its 11 years failed to undertake a serious assessment of Australia’s skills needs and it was this failure that led to the skills crisis that we faced when we took Government in 2007.

The Rudd Government will also be undertaking a major reform of employment services, which will provides incentives to Job Network members to support the most disadvantaged job seekers.

Finally, we have created an $11 billion Education Investment Fund, which includes the $6 billion from the existing Higher Education Endowment Fund.

This fund will support capital works at educational institutions throughout Australia including universities, research facilities and vocational institutions.

The Education Revolution may be a series of programs, but it is a comprehensive series that addresses the various aspects of education that need addressing.

We have provided funding that supports the built infrastructure in our educational institutions.

We have invested in early childhood education and are undertaking reforms to ensure that schools provide quality education right through primary and secondary school through our initiatives on school accountability, the National Curriculum and literacy and numeracy.

We are investing in skills through new training places and trades training centres.

And finally, we are undertaking major reforms of employment services to make sure that all Australians regardless of their educational attainment are able to find work, especially the most disadvantaged jobseekers.

All these policy proposals do not stand alone but fit together like a jigsaw puzzle to create a comprehensive, quality education system from early childhood right through to vocational education and training and university.

Throughout the development of the Education Revolution, we are implementing our policies through a process of negotiation through COAG.

This is a recognition of the role of the states and territories in education as well as the need for a national education agenda.

This is why a spirit of co-operation with the states and territories is vital to the Education Revolution.

It is a stark contrast with the big stick approach to dealing with the states taken by the previous Government.

Instead of negotiating with the states they threatened to withhold new funding unless the states did things their way.

You would think that they would have used this power for a serious undertaking like comprehensive reform in education or helping lift the performance of underperforming schools.

But instead, they used it to make sure that schools installed flagpoles.

I don’t recall flagpoles ever being particularly high on the COAG education agenda.

So where does the Education Tax Refund fit in to the Education Revolution?

  • It recognises the important role of families in supporting students through school.
  • It provides an incentive for parents to invest in the education of their children and to take an interest in their children’s material educational needs.

The ETR is of particular importance to my home state of Tasmania.

According to ABS statistics, Tasmanians earn less income on average than any other Australian state.

One of the really unfortunate impacts of socioeconomic disadvantage is that some parents, while able to get a quality education for their children through the public school system, cannot always afford to support them with the basic expenses that inevitably arise.

Ironically, education is most reliable way of getting out of a cycle of poverty.

The ETR will go some way towards helping families meet those expenses.

The fact that it is a fully refundable tax offset rather than a deduction, means that although it supports families of various means it still provides relief to those most in need.

It is with great pleasure I stand here to talk about this very important bill which delivers on the promises that Labor made during the campaign and continue to fund and maintain while in office.

I commend the Bill to the Senate.