The Turnbull government will freeze the rate of family tax benefit for two years as part of a recut package of welfare savings to help pay for its $1.6bn childcare package.
The government on Wednesday moved to extend the Senate sitting hours in an effort to push the childcare package and the recast savings bill through the parliament by week’s end.
The government has taken the decision to ground its $4bn “omnibus” savings bill, and replace it with a new $2.4bn savings bill.
The new legislation imposes an indexation freeze in the base rate and maximum payment rates for family payments, saving the budget $2bn between now and 2020-21.
The “omnibus” proposal contained cuts to family tax benefits and the paid parental leave scheme, scrapped the energy supplement for new recipients, required jobseekers under 25 to wait four weeks before accessing income support and cut the pension to migrant pensioners who spend more than six weeks overseas.
To try and push the package through, the government has, for now, shelved proposed changes to paid parental leave, the energy supplement abolition, the migrant pensioner cut, and the proposed four-week wait for unemployment benefits.
A decision will be taken at the looming budget about whether these measures will be carried forward, or ditched.
The government has also ditched a $20 per fortnight increase in FTB benefits it proposed earlier in the year in an effort to court Senate support.
Speaking in the Senate, Nick Xenophon signalled his NXT bloc would support the revised package to end the “stalemate” over the government’s childcare reforms.
Xenophon argued the indexation freeze would not leave families worse off in a “low-inflation environment.”
“In my view, this was the least worst option,” Xenophon told the Senate on Wednesday morning.
Labor objected to the government reordering the Senate business to expedite the two packages. Labor’s Senate leader, Penny Wong, fired off a broadside at the government, declaring the chamber was being asked to pass legislation it had not yet seen.
“This is a secret deal to take money off Australian families and that they’re not even prepared to demonstrate it to the Senate,” Wong told the chamber.
“The bill that the crossbenchers have agreed to bring on for debate we haven’t even seen. That’s no way to run the Senate.”
The shadow minister for social services, Jenny Macklin, later accused the government of reviving an Abbott-era budget cut with the indexation freeze.
Macklin said freezing the indexation of family tax benefit rates would mean that 1.5 million Australian families would be be worse off.
It’s not yet clear whether the One Nation Senate bloc is on board with the welfare changes.
The redux comes after the NXT dug in its heels earlier this year, refusing to support the so-called “omnibus” bill on the basis the proposed cuts, combined with the childcare cuts, were “robbing Peter to pay Paul.”
On Monday Pauline Hanson also warned that One Nation would block the proposed omnibus bill because it cut “too deeply and too broadly.” Hanson gave the government 24 hours to improve its current offer.
She linked the government’s proposed welfare cuts in the omnibus bill to the issue of multinational tax avoidance, saying the government needed to realise that companies must “pay their way … before those with the least are asked to tighten their belts.”
On Wednesday, before the new bill was tabled, Pauline Hanson’s chief of staff, James Ashby, told Guardian Australia negotiations were continuing.
The education minister, Simon Birmingham, said on Wednesday morning that the government was determined to get its childcare changes through parliament.
Birmingham said the government had “an outstanding track record of actually getting things done with the Senate.”
“That comes by being pragmatic, it comes by actually working cooperatively with the different parties elected to the Senate.”
He said the government was still talking to the Senate crossbenchers about which welfare savings measures they would support to pay for the $1.6bn childcare changes.
Malcolm Turnbull said on Tuesday, while visiting a childcare centre, that parliament needed to pass the childcare package.
“The important thing is, for the sake of these little kids and their parents and many others like them, that these reforms are passed,” Turnbull said.
“As Senator Birmingham said, they have been widely applauded through the sector, through the community, they’ve come through the Productivity Commission’s work.
“This has been a very well-designed reform of childcare and it deserves the support of the parliament, and in particular the Senate,” he said.
