Budget surplus and Australia’s poorest families

Media speculation is that the Federal Government in next week’s Budget will further hit single parents trying to raise their children in tough circumstances.

That would be unfair and worsen poverty in Australia, according to the nation’s leading welfare bodies.

In response to media reports today, the Australian Council of Social Service, National Welfare Rights Network, and National Council for Single Mothers and their Children, said that a Budget surplus should not come at the expense of the most needy. They are urging the Commonwealth to instead focus on tackling poorly targeted subsidies and tax concessions and tax loopholes such as ‘golden handshakes and other shelters which would save billions of dollars to the Budget bottom line.

“Sole parents are already required to seek paid work once their youngest child turns eight, this won’t make any difference to their job prospects whatsoever, and in fact will make them worse,” said ACOSS CEO Dr Cassandra Goldie.

“One third of single parents on parenting payment already work, mostly part-time. This would effectively mean a cut in income of $59 a week for those on the maximum rate who are already struggling to raise their children on low payments.”

“The surplus should not be built on the backs of Australia’s poorest families and their children. Keeping a roof over their heads, paying utility bills and paying for school expenses is going to be that much harder under if these cuts proceed,” said Maree O’Halloran, President, National Welfare Rights Network.

“The current rate of social security payment for a person in receipt of Parenting Payment Single is $324 a week. However, the rate of payments for a principal carer on Newstart is just $265 per week – a payment reduction of $59 a week or $3,086 a year.

“We estimate such a move would force a further 100,000 single parents of children from disadvantaged and low income families onto the lower paying Newstart Allowance, which pays just $35 a day ($37 for sole parents) and hasn’t been increased since 1994,” Ms O’Halloran said.

“Financial Hardship makes finding a job so much harder. No one wins when some children just get are left behind – a family breaks down when struggling with financial stress on a daily basis,” said Terese Edwards, CEO,  National Council of  Single Mothers and their Children.

“We can do so much more than to make it harder for families that are already doing it tough. A job in itself does not guarantee a way out – causal, temporary, seasonable and low paid employment doesn’t work for single mums.”

“Business leaders, the ACTU, the 2009 Henry Review and even the OECD have all recently highlighted the need for the Newstart Allowance to be increased. Coupled with the recent changes to the eligibility criteria of the Disability Support Pension, the change would push hundreds and thousands more people onto the paltry Newstart payment,” said Dr Goldie.

“We maintain that these changes simply cannot be justified unless the Newstart Allowance payment is increased by $50 a week at the very least.”

ACOSS, Welfare Rights, and NCSMC have long argued that Newstart Allowance is not a suitable payment for parents with young dependent children. Under Newstart Allowance, the financial returns from employment are less than those available under Parenting Payment. These reforms will actually reduce work incentives, rather than increase them.

“The Government would do better to look for savings at the top end where billions are wasted every year on poorly targeted subsidies and tax concessions and tax loopholes such as ‘golden handshakes and other tax shelters.

“Our report ‘Waste not, want not: Making room in the Budget for essential services’ released last week identifies around $8 billion that could be saved by targeting the new layer of rebates which have grown unsustainably in the past decade as well as  other tax breaks and loopholes, which overwhelming benefit those on high incomes,” Dr Goldie said.