Discrimination Against Single-Income Families
Babette Francis
Treasurer Joe Hockey has been warning the nation that the forthcoming federal budget is going to be tough, that Australia has been living beyond its means and that we all have to share the pain of belt tightening. Well it seems that some people are going to feel the pain more than others, particularly those living in single income families.
* Single income families get only one tax-free threshold
whereas dual income families get two tax-free earnings
of $18,000 for each partner.
* Another discriminatory policy is Prime Minister Tony Abbott's Paid Parent Leave which offers mothers in the paid workforce their full salary for six months of maternity leave up to a total of $75,000. The money is to be obtained by a l.5% levy on big companies. Single-income families are discriminated against not only because they do not get the maternity leave payments but also because the tax cuts to big companies to cover the cost of the PPL levy will come out of the pockets of taxpayers. It seems counter-productive to levy big companies to cover some of the costs of the PPL and then give them a 1.5% tax cut. This might be described as "churning", which costs money in itself as more bureaucrats will be required to administer it, not to mention additional staff at the Australian Tax Office. Furthermore, the 1.5% levy on big companies does not cover the full cost of Tony Abbott's PPL. The government, i.e.taxpayers, will have to cover the additional costs.We suggest a more equitable system would be to offer all mothers an increased baby bonus. The savings in additional staff required to administer the PPL would cover much of the cost of such a policy.
* The inherent discrimination in paying some mothers $75,000 in PPL and other mothers $40,000 or less does not seem to be adequately addressed. Economic pressures are cited but surely these are far more severe on those mothers who are on lower wages than on mothers who are on $150,000 per annum, and who therefore have far more opportunity to save for their time on maternity leave.
* The Prime Minister has argued that his Paid Parental Leave policy is a workplace entitlement similar to holiday pay or sick leave. This is not correct because holiday pay and sick leave are built into employers' costs of running their businesses, while PPL funds are obtained by a combination of a levy on big (but unrelated to the employers of the women) companies, and taxpayers' funds. In other words, it is A GREAT BIG NEW TAX ON BUSINESS. Tony Abbott sees this so clearly in relation to the carbon tax, it is a mystery he cannot see it in regard to his Paid Parental Leave.
* The fact that some single-income families may receive Family Tax Benefit Part B, even though their income is higher than dual-income families illustrates the anomalies in the system; it requires a wholesale revision and simplification, which would reduce the number of public servants required to administer such policies.
* The argument that taxation based on couples rather than individuals would benefit higher income couples more does not stand up to scrutiny as many dual income families, especially in the higher income brackets can split their incomes by appointing the wife (or husband) as a "Director", "Partner", "Receptionist" etc. in the business. These tax splitting possibilities are available to businesses, farmers, etc. but not to wage and salary earning workers. This is another anomaly that should be addressed. The very top earners already reduce their tax liabilities in every way legally possible by using tax consultants; income-splitting between husband and wife would not reduce their tax liability any more. It is the ordinary wage and salary earners who cannot split incomes with their spouses or appoint them as business partners or "directors" who suffer from the current tax system.
* A further discrimination is that the Child Care Benefit is means tested while the Child Care Rebate is not. Surely mothers not in the paid workforce because they have large families are more in need of help than those mothers who have paid workforce incomes. An equitable system would be to make Child Care Benefits available to all mothers on a non-means tested basis, while allowing mothers in the paid workforce tax deductions for additional child care costs. In some cases these mothers would find their child care costs were almost as much as their wages, which suggests anomalies in a system which pays child-care workers reasonable wages but pays mothers at home nothing for the same work plus love. Some Scandinavian countries have addressed this issue by paying mothers who stay at home to care for their children. This is particularly helpful to low-wage mothers.
At a Liberal Party meeting in the Malvern electorate I argued some of these points with Peta Credlin, the Prime Minister's Chief of Staff, but failed to sway her. She said "We will have to agree to disagree". The discriminations inherent in the Paid Parental Leave and Child Care funding will be felt most keenly by families with more than the average l.7 children. Our birth rate is below replacement level and it is a pity that our government, instead of deploring the additional health care and other costs associated with an ageing population, does not realise that parents who have large families are nurturing a valuable future resource.
Treasurer Hockey's objective of enticing more mothers into the paid workforce so as to increase tax revenue is a shortsighted policy. The real problem facing developed nations is the inverted demographic pyramid - a shrinking base of babies and young people, the future workers and taxpayers, who will have to support the increasing load of an ageing cohort. This will delay their plans for buying homes and having children, continuing a downward population spiral.