Yesterday marked the 10-year anniversary of Julia Gillard’s misogyny speech. Yet on the very same day in 2012, her government cut welfare payments for single-parent families — predominantly single mothers — leaving them $60-$100 a week worse off.
Other commentators have reflected on Gillard’s complicated legacy as an at-times disappointing feminist leader. I’m more concerned about the policy failure this moment exemplified, which started long before Gillard and continues today — a shameful neglect of family welfare.
More than one in six Australian children live in poverty. That’s over 774,000 kids with half-empty lunchboxes. Who have crooked teeth because their parents can’t afford braces. Who wave goodbye to their classmates aboard the school excursion bus, unable to join them because mum and dad couldn’t pay the extra fee.
Around 17% of the homeless population are children under 14, most of whom lack housing because their parents do too. This rate has remained stagnant since at least 2006. And children who are persistently poor are almost five times more likely to be persistently poor as adults.
Poverty is a deceptively simple problem
The media often depict child poverty as “a complex and multi-faceted issue”. But this overcomplicates matters. Poverty means a lack of money. Give families more money and the problem goes away. They may still face other issues like domestic violence or mental health, but these problems are also usually helped by extra income.
How to allocate that extra income? Wages growth would help families with at least one employed parent, but lower-income and single-parent families inevitably rely on welfare payments too.
Yet as Sean Kelly recently wrote, “many of these kids [in poverty] are already receiving the maximum amount of support. Our government knows about them, helps their parents a bit, but has decided not to help them enough to keep them out of poverty.”
Our child benefits are pretty stingy
Australia’s family benefits are globally mediocre. They’re technically right on the OECD average, but it’s dragged down by countries like Turkey and the US who provide next to nothing.
Part A of our Family Tax Benefit (for low-income earners only) provides $63-$257 per child per fortnight, while Part B (for middle-income earners too) provides up to $168 per child per fortnight.
You’ve also got to jump through multiple hoops to qualify. For instance, you must care for your child “at least 35% of the time”. And there are complex income tests and rate adjustments based on both partners’ incomes, as well as interactions with your tax returns.
The low rates and joint means tests leave stay-home parents financially dependent on their spouses, which makes it harder for domestic violence victims to leave abusive partners.
And as our chief mechanism for fighting child poverty, our family benefits are failing. Child poverty has climbed over 2.5% since 2003.
Hawke, the child’s champion
Bob Hawke might have slightly overpromised in 1987 when he vowed to end child poverty by 1990, but his government was undoubtedly more committed to fighting it than any government since. Due to his ambitious suite of welfare policies, child poverty fell by 50% among kids with non-working single parents and 80% for those with two non-working parents.
But subsequent governments eroded Hawke’s legacy. Howard moved single parents onto Newstart (now JobSeeker), Rudd clipped rates by indexing them to prices rather than wages, Gillard backdated Howard’s move, and Abbott and Turnbull froze rates altogether.
The Albanese government, many of whose ministers idolise Hawke, should follow his example and restore his poverty-crushing policies. Particularly, rates must be raised to make up for years of backsliding.
A handy helper in taxing times
There are good reasons for Albanese to go further, towards the European model of universal child benefits — basically a universal basic income for children. The World Economic Forum — hardly a collective of socialist firebrands — argues it’s a “fiscally responsible welfare policy” because abolishing means tests “avoids arbitrary benefit cut-offs for working families with children who may see their incomes fluctuate”.
It would also help the government if it were to scrap or modify the stage three tax cuts. A common argument in favour of cutting upper tax brackets is that many individuals on otherwise high incomes might not be “rich” if they’re supporting multiple dependents. As The Australian Financial Review‘s John Kehoe wrote last week: “Where mortgage repayments and rents are expensive, a family raising children with one parent on [$200,000] is not wealthy.”
This hypothetical person earns more than 98% of us, so their family is probably doing fine. But Kehoe raises a valid issue — household composition is one of the biggest determinants of economic wellbeing. As economist David Sligar has noted: “A worker who lives alone may earn the same wage as another worker who supports four children and a disabled spouse, but the former household is far better off than the latter in per capita living standards.”
Child payments are the best way to deal with this “big family bias” because they’re paid per child. Conversely, tax cuts give single rich people just as large a benefit to spend on fine wines, while single-earner families still stretch the earner’s pay to afford formula and nappies.
Taking the saved cash from halting stage three and funding generous, universal family benefits would ensure single-income households aren’t left behind, and provide Albanese and Chalmers a defensive line against AFR-style backlash.
Politicians love invoking children when moralising about the deficit or the latest moral panic, but they haven’t been serious about ensuring their wellbeing. It’s time they put their money where their mouths are.
How expensive is raising children in 2022? Let us know your experiences by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
