Australian Council of Social Service
Reforming family payments to improve
adequacy, equity and sustainability
Briefing to cross-bench Senators
10 November2015
Jacqueline Phillips
Director of Policy
ACOSS policy objectives
1. To reduce child poverty
2. To ensure that support for the direct costs of children reflect
the different costs of children at different ages
3. To ensure that assistance to families keeps pace with
community living standards, which rise with wages
4. To provide adequate support for single parent families who
are at high risk poverty
5. To improve incentives to work for second earners once
children are at school
What’s wrong with the current system?
1. Payment rates are too low for single parent families.
2. Payment rates do not reflect the actual costs of raising
children at different ages.
3. Payment rates are falling behind community living standards
due to indexation changes.
4. The payment structure discourages workforce participation for
some, particularly second earners in two income families.
Proposed reforms
1. To improve the adequacy of payments for single parents
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.
The Supplement should be set at least at the level of Part B for
under 5’s – a $23 per week increase for those with older
children.
Proposed reforms
2. To ensure the payment structure reflects the different costs
of children at different ages
Part A: introduce a ‘middle benchmark’ for children of primary
school age (in addition to one for preschoolers and another for
those of high school age):
0-5 years: $104 per week
5-12 years: $119 per week
12-17 years: $145 per week
Proposed reforms
3. To ensure assistance to families keeps pace with community
living standards while simplifying the system
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.
Proposed reforms
4. To improve workforce incentives
a) Target Part B to couple households with younger children
(e.g. under 12 years, instead of 18 years) to encourage
second earners to return to workforce when children are
school age
b) Ensure low income couple families are compensated for any
losses through increases to maximum rate of Part A (through
a higher rate for older children and indexation)
c) Retain FTB Part B for couples where one parent cares for a
younger child ‘at home’.
Proposed reforms
5. To better target payments and simplify the system
a) Convert the current end of year supplements into weekly
equivalent increases to the maximum rate of the Part A and
B payments + new Sole Parent Supplement, then phase out
very slowly
b) Ensure low income couple families are compensated for any
losses from phase out of supplements and Part B age cut off
through increases to maximum rate of Part A (through new
rate for older children and indexation)
c) Retain FTB Part B for couples where one parent cares for a
young child ‘at home’.
Proposed reforms
5. To ensure payments are benchmarked to adequacy
Establish an independent review of the adequacy and indexation
of social security payments.
Packaging reforms
• The proposed package is one option for reform which could
achieve the intended objectives
• We would consider other options that delivered similar outcomes:
a better targeted, more adequate, equitable and sustainable
family payments system
• We have strongly argued that the linking of family payment cuts to
fund increased child care is problematic but have some major
concerns about the child care changes
• We advocate a reduction in the child care subsidy for higher
income households to 30% and the removal of activity
requirements for those accessing 24 hours or less care a week
The child care package: unfair and
unsustainable
• The proposed package is too generous at the top end and too
harsh at the bottom end.
• The Government proposes to subsidise 50% of the child care
costs of higher income households (>$170k), well above the
PC’s recommended 20% of cost (or 30% in draft report)
• At the same time, stricter activity test will mean some families
not in paid work will see access to ECEC half – from 24 to 12
hours per week
Contact us
Thank you
Contact
• Jacqueline Phillips, Director of Policy, ACOSS
• Phone: (02) 9310 6213
• Email: jacqui@acoss.org.au
• Postal: PO Box 4777 Strawberry Hills NSW 2012