Back to the drawing board on family payments: new bill still hits poorest families

Responding today to the introduction of a new family payments bill into the Parliament, ACOSS has urged against looking for budget savings in family payments for single parents and low income couple households, and advanced an alternative reform proposal.

“On our numbers a low income single parent family with 2 children will take a hit of more than $60 per week or $3000 per year over time once their youngest child turns 13, due to the reduction in Part B and the withdrawal of end of year supplements. We cannot support this,” said Dr Cassandra Goldie, ACOSS CEO.

“Single parents and their children have already been hit hard with cuts over the last few years which have reduced their safety net significantly.

“On the latest analysis, there are over 600 000 children living below the poverty line and children in single parent households are in poverty at over twice the rate of children living with two parents.

“The proposed changes will also hurt low income couple households, including those without paid work. The $5 per week increase to Part A will not offset the losses for these families.

“We are also disappointed that the proposed package does nothing to address the gradual erosion of family payments as a result of indexation to prices.

“The lack of indexation to wages since 2009 has already resulted in a cut of approximately $20 per week per child in family payments for families on the lowest incomes.

“The restoration of indexation to wages would ensure they keep pace with rises in community living standards and partly compensate couples with older children for any losses due to changes to Part B.”

ACOSS is advocating an alternative package of reform which would ensure that family payments are fit for purpose, well-targeted and simplified. The ACOSS package is designed to reduce child poverty, target payments more appropriately and reduce workforce disincentives.

“ACOSS supports reform to Part B to address work disincentives for couple households with older children, but we will only support a reform package that gets the balance right. Our proposal would target Part B to couple households with children under 13 while substantially offsetting losses for low income couple families through increases to Part A. It would also boost the incomes of single parent families by $23 per week and secure the adequacy of payments into the future for all eligible families through indexation to wages.

“We are keen to see modelling of our proposal, and all reform proposals currently on the table, to ensure that the impacts of each option on different families are well understood.

“We look forward to continuing a dialogue with the Government, the major parties and the cross-bench to secure a fair and sustainable family payments system for the future.

ACOSS’ proposed reforms:

  1. Index family payments to wage movements as well as the CPI, by restoring previous benchmarking of maximum rates of family payments to pension rates, which were based on the age of each child.
  2. For Part A, consider introducing a ‘middle benchmark’ for children of primary school age (in addition to one for preschoolers and another for those of high school age).
  3. Replace Family Tax Benefit Part B for single parent families with a Sole Parent Supplement to provide adequate supplementation for the extra costs of raising a child alone regardless of paid workforce status. This should be set at the level of the current Part B payment for younger child, so that payments to single parent families no longer fall when the youngest child reaches 6 years. This would provide an increase to affected single parent families (many of whom recently experienced payment cuts) of $23 per week and clearly separate this function from that of supporting the main carer of a child to ‘stay at home’.
  4. Progressively replace the ‘remaining’ FTB Part B payments in respect of couples with school-age children with higher Family Tax Benefit Part A payments, in a way that minimizes any income losses for families on low incomes. For example, the Part B payment for couples could initially be restricted to those whose youngest child is 12 years or less, and low income families with older children. Any income losses for those affected should be substantially offset by proposed increases in the FTB Part A payment for school age children, and proper indexation for those payments.
  5. Retain FTB Part B for couples where one parent cares for a young child ‘at home’.
  6. Establish an independent review of the adequacy and indexation of social security payments: The Government should establish an independent payments review commission to review the adequacy of all payments (including pensions, allowances, family payments and supplements) and indexation arrangements on a regular basis (say every 3 to 4 years) with a view to ensuring all households are able to achieve an acceptable standard of living. This body should recommend benchmarks for income required to achieve an adequate standard of living, including for children, based on the best available research.

 

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