How both sides of politics have failed families Editorial
For the past 15 years, both Labor and Coalition governments have slashed tax relief and benefits to single-income two-parent households with dependent children, but have increased childcare funding for wealthier couples enjoying two full-time incomes.
Households in which one of the spouses leaves paid work in order to raise children suffer two penalties. First, the couple sacrifice a second income at the very time they have an extra mouth (or mouths) to feed. Secondly, they find themselves in an inferior tax position. A couple on two full-time incomes don't pay tax until their combined pay exceeds $36,400, whereas a couple relying on a single income start paying tax once that income exceeds $18,200.
The Howard Coalition government sought to compensate single-income, two-parent households by providing them with family tax benefits and the baby bonus. The then Treasurer Peter Costello introduced the baby bonus a year after Australia's birthrate hit the lowest level ever recorded (1.7 per couple) in 2001, and it was deliberately aimed at encouraging more births.
The subsequent Rudd and Gillard Labor governments reduced the Howard/Costello family tax benefits.
In 2014, The Abbott Coalition government, a year after it came to power, axed Mr Costello's popular baby bonus.
The Coalition government's then Treasurer Joe Hockey, in his 2015 Budget, greatly reduced the Family Tax Benefit Part B, not in order to help cut government outlays and reduce taxes overall, but solely in order to finance increased government funding for institutionalised childcare (David Crowe, "Families lost $9.4bn in benefit cuts to pay for childcare changes", The Australian, May 9, 2015).
The following year, under Mr Abbott's successor Malcolm Turnbull, the new Treasurer Scott Morrison, in his 2016 Budget, pledged to perpetuate this inequitable arrangement and committed the Coalition to increasing childcare subsidies the following year.
He proposed to finance this largesse with the money saved from the Coalition government's cuts to parenting payments and family tax benefits (Natasha Bita, "Budget 2016: Promise childcare subsidy stays on ice until next year", The Australian, May 4, 2016).
Endeavour Forum, Inc., urges both the current Albanese Labor government and the opposition Coalition parties to end their bipartisan support for financially subsidising couples enjoying two full-time incomes, and to restore to parents genuine freedom of choice as to how they wish to raise their children.
It is parents — not politicians, public servants or the Productivity Commission — who should decide how they wish to raise their children.
To give families genuine choice regarding child-rearing, the Australian government needs to adopt the following four simple rules and strictly adhere to them:
1) Personal taxation should be redesigned to ensure that a couple struggling to raise a family on a single income is not in an inferior tax position to a couple enjoying two full-time incomes The special tax privileges enjoyed by dual-income families should be extended to single-income two-parent families. Alternatively, if the government feels it cannot afford this level of largesse, then it should in fairness scale back the tax privileges currently enjoyed by dual-income families in order to give greater tax relief to needier couples trying to raise a family on one income.
2) A family's level of tax-free threshold and tax relief should always reflect the number of dependants (such as an unwaged at-home spouse and children) being supported on a given income.
3) Government assistance for institutionalised child-care — whether by tax rebates or direct subsidy — should be matched dollar for dollar by identical financial assistance for parents who choose to raise their children at home.
4) Government should adopt a more transparent means of
delivering assistance to families. Instead of two types of
payments for two types of child-care being administered
by two different government departments, there should be
only one type of payment (or tax rebate) given directly to
families. This payment should reflect the number and ages
of the dependent children and should not favour children
enrolled in day-care centres over children raised at home.
