Leyonhjelm to govt: Cut middle-class welfare or lose my support

A potential deal on the Coalition’s $1.6 billion childcare reforms that would leave welfare payments ­intact could be derailed by a push from two crossbench senators for the package to be watered down by axing subsidies for families earning more than $200,000 a year.

by Simon Benson and Sarah Martin, The Australian

As the government tries to win over the Nick Xenophon Team’s bloc of three senators to clinch a deal on the childcare reforms this week, independent senators David Leyonhjelm and Derryn Hinch are warning they will not support the bill without further amendment.

The government needs the support of nine of the 11 crossbench senators to pass its omnibus savings bill, meaning it must secure the votes of NXT, Pauline Hanson’s One Nation, former Liberal Cory Bernardi and at least one of either senators Leyonhjelm, Hinch or Tasmanian Jacqui Lambie.

Senator Lambie has indicated she will side with Labor and the Greens in opposing the bill.

The bill includes $8bn in saving measures, including $5.1bn in cuts to Family Tax Benefits, $933m from ending energy supplements to new welfare recipients and $491m from a tightening of maternity leave provisions. The government is proposing to offset the FTB cuts by boosting FTB A payments by $20 a fortnight at a cost of $2.4bn. Once the childcare measures are funded, the bill ­provides net savings of $4.3bn. The Australian understands the government is hopeful of doing a deal with NXT by maintaining the popular FTB payments and keeping the energy supplement payments to win over his support. This would leave $1.8bn in savings that could cover the $1.6bn cost of the childcare reforms.

However, a key stumbling block to being able to fund the entire package from other measures in the bill is Senator Xenophon’s opposition to maternity leave changes that would end so-called “double dipping” of employer and government schemes while extending leave for all new parents to 20 weeks saving $491m.

Senator Leyonhjelm has warned the government he would vote against the $1.6bn childcare package if Scott Morrison could not secure the bulk of the original $5.7 billion in savings measures that have been bundled into an omnibus bill. He will also seek amendments to the childcare package to lower the $340,000 means test threshold for a tapered 20 per cent subsidy to $200,000.

“I have been on about middle-class welfare for ages … this is just one of many areas where welfare is going to people who don’t need it,” Senator Leyonhjelm said.

Senator Hinch said he had told the government he would not support the childcare package without lowering thresholds for subsidies. He said he was in broad agreement with Senator Leyonhjelm’s proposal.

Senator Leyonhjelm has said he is opposed in principle to putting extra money into childcare but could live with supporting it if the government could demonstrate significant savings that would not only offset the $1.3bn cost, but add further savings toward addressing debt and the budget deficit.

“I don’t believe that people who don’t have children should pay for people who do have children,” he said. “But I can live with it if it is part of substantial savings.”

The senator’s threat puts the government in a difficult position while trying to deal with other crossbenchers supportive of the childcare package but opposed to the savings measures linked to it.

Social Services Minister Christian Porter said negotiations with the crossbench were ongoing and he would not canvass publicly the progress of the talks.

Senator Xenophon said yesterday he would not support the “deep cuts” to family tax benefits to pay for the childcare reforms.

Originally published at The Australian on March 21, 2017.