How much does it cost to raise a teenager? Family payments don’t add up

19 November 2009

Low-paid Australian families do not receive adequate financial support to meet the costs of their children, says a report released today by the Australian Council of Social Service.

Sole parents, families without paid work and raising teenagers struggle to budget for essential items for their children and face greater levels of poverty and disadvantage. Family payments cover less than half of the cost of raising teenagers aged 16 years and older.

While Australia’s family payments are mostly well targeted and are relatively effective in keeping families out of poverty by assisting with the costs of children, ACOSS has proposed key changes that would reduce disadvantage among families earning less than $40,000.

“Every parent who has raised a teenager knows that kids can be expensive. Families on low incomes rely heavily on family payments to pay for groceries, clothes, school books and housing expenses for growing children,” said Clare Martin, CEO, Australian Council of Social Service.

“While kids cost more as they get older, family payments decrease with age. Our research shows a 16-year-old costs $200-$290 a week. Yet when a child turns 16, payments drop by $14 to $102 per week, which is less than half of the costs of these children.

“Payments based on the amount children cost to raise at different ages would be a better solution. Until this can be put into place, an increase in the Youth Allowance rate for young people living in low income families would direct funding when the costs of children are highest.”

The downturn has seen increased numbers of Australian families without paid work, rising from 11.8% to 13.9% of all families with children from June 2008 – 2009.

“Families without paid work are six times more likely to be in poverty than employed families. Almost 10% of Australian working age households with children do not have an employed parent, double the OECD average.

“As more families come to rely on inadequate family payments, it is likely child poverty will rise. During the recessions of 1980 and 1990, family joblessness almost doubled.”

Sole parents face additional costs because they are raising children alone and experience high levels of poverty and deprivation. Over half of sole parents on income support payments could not pay a utility bill in the last 12 months, and a quarter could not afford up-to-date school books or clothes.

ACOSS proposals:

Increase support for older children

  • Develop an age-based family payment structure based on minimum costs of raising children in low income families as they grow older.
  • Increase dependent Youth Allowance payments.

Increase support for sole parent families

  • A supplement for sole parents to recognise the additional cost of raising children alone.

Ensure the long term sustainability of family payments

  • Restore the indexation of family payments to wages, which was removed in this year’s Budget. If payments continue to be indexed to the CPI only, they will fall behind community living standards and child poverty will rise.

The Henry Review is considering reforms to family payments along with other social security payments.

Read the full paper here

Media Contact: Clare Cameron, ACOSS – 0419 626 155