EDITORIAL: by Peter WestmoreNews Weekly
Family policy is more than paid parental leave
, May 25, 2013
With the Labor government and opposition engaged in a bidding war over which party has the better paid parental leave scheme, there is a danger that this issue will obscure the wider need for a coherent and fair family policy.
Over the years, governments have established a number of programs to assist families at different stages, and the existing arrangements reflect this complexity.
For example, when a baby is born, parents are able to claim either the baby bonus, which is of particular benefit to parents caring for their children at home, or the government-funded paid parental leave scheme, but not both.
Both the baby bonus and paid parental leave are subject to an income test, but the criteria for payment are slightly different.
For growing children, the government provides support in the form of income-tested family tax benefits and, for low-income parents, the parenting payment, which is subject to both assets and income tests.
For families on income support, there are additional payments, including rent and telephone subsidies.
Because of the large number of mothers in the paid workforce, governments have created a number of schemes to assist them. The child-care benefit is income-tested, and is payable for children in approved child-care facilities. The maximum payment is about $10,000 per child per year for children who are in child-care for up to 50 hours a week.
On top of the child-care benefit, there is an additional child-care rebate which meets 50 per cent of out-of-pocket child-care expenses, up to a maximum amount per child per year.
There are additional payments to assist with education expenses for low-income families, and special payments to assist meeting health-care costs for children with disabilities.
The complexity of the system of family payments is such that every family is treated differently, depending on family income, whether one or both parents are in paid work, and the number of children in the family.
Additionally, the system currently actively discourages mothers with young children from staying at home to care for their children.
One of Australia’s leading social scientists, Dr Barry Maley, looked at the family payment system some years ago, and found that it had a number of unintended side effects.
He said, “There are many kinds of payments and benefits for parents, including child-care subsidies. They have developed in piecemeal fashion to constitute a mess which is anything but efficient or equitable. Targeted welfare has created poverty traps and work disincentives.” (Families, Fertility and Maternity Leave, CIS Issue Analysis, September 16, 2002).
Where paid maternity leave comes from employers, it adds to the cost structure of those businesses compared to those who do not. Where it is provided by governments, it effectively amounts to a subsidy from single-income families (which pay tax but are not eligible for paid maternity leave) towards families on two full-time incomes.
Similarly, the child-care benefit is an indirect subsidy from single-income families to families on two full-time incomes.
Additionally, the system of means-tested benefits encourages dependence on government payments and disincentives to self-reliance.
In light of this, the focus by both the government and opposition on paid parental leave has little to do with creating a coherent family policy, but is directed towards winning swinging voters in the run-up to the election.
Whatever happens before September’s election, there is a clear need to look again at the tangled, confusing programs which constitute family policy in Australia.
The principle which should underpin a coherent family policy was identified clearly by Barry Maley as treating all families equally, whether mothers are in the paid workforce or not.
He said, “If policy is to be fair to all children and families, without privilege or discrimination, and the same for families where mothers are employed as for families where mothers are not employed, the obvious way of achieving this is to establish a tax credit or cash allowance of equal value for all dependent children.”
He added, “A tax credit, rather than a welfare handout, is important in not discouraging work effort for higher incomes, and in allowing people to keep more of what they have earned, rather than see themselves as government supplicants.”
Additionally, there should be a uniform payment to reflect the range of out-of-pocket costs incurred in having a baby and bringing it into the family, like the Baby Bonus.
Where families suffer acute hardship or children have special needs — as for children with disabilities or families suffering the effects of unemployment — supplementary payments should be made through the welfare system.
There is no question that the opposition leader, Tony Abbott, is seriously interested in improving family policy in Australia, as he has said. He should take the opportunity to do it.
Peter Westmore is national president of the National Civic Council.