The Turnbull government’s revamped cuts to family payments have been rejected by the peak social service lobby group, which says they would cost some sole-parent families $1,750 a year and impose unfair cuts on the lowest paid families.
“On our numbers, single-parent households will take a hit of $1,750 per year once their youngest child turns 13 and much more over time,” said the chief executive of the Australian Council of Social Service, Cassandra Goldie.
“We cannot support this. Single parents and their children have already been hit hard with cuts over the last few years which have reduced their safety net significantly.
“On the latest analysis, we have over 600,000 children living below the poverty line and children in single-parent households are in poverty at over twice the rate of children living with two parents.
“The proposed changes will also hurt low-income couple households, including those without paid work.”
But the government is appealing to Labor, the Greens and the Senate crossbench to take into account extra childcare assistance offered in the 2015 budget as they decide the Senate fate of the proposed new cuts to government benefits.
Treasurer Scott Morrison insisted the cuts to family benefits achieved the same overall budget savings as those proposed in the Abbott government’s disastrous 2014 budget that were blocked by the Senate, but in a better and “more targeted” way. Initial figures provided by the government suggest reduced budget savings.
He said when the two packages were considered as a whole, no family would be worse off if they were working.
Education minister Simon Birmingham, who is also responsible for childcare, said the benefit cuts “must be looked at in the context of the childcare changes the government is proposing as well”.
Labor appeared sceptical about the new package but did not dismiss it.
Labor leader Bill Shorten said the government had “only backed off” on its initial cuts to family payments because of the strength of the Labor party’s opposition.
“We acknowledge the need for savings generally but I have never believed that the way you get the budget into surplus is by stinging the vulnerable,” he said. “For the life of me I don’t understand why the Liberal party of Australia has to be dragged kicking and streaming into going after the ridiculously generous superannuation tax concessions of a very few wealthy people.
“What is the case for people who already have millions of dollars in savings to get a tax concession on the income they earn from millions of dollars? Yet at the same time, the government wants to take thousands of dollars off families.”
Greens spokeswoman Rachel Siewert said the new plan was “another example of the government pursuing watered-down measures that still disproportionately target our most vulnerable”.
Crucial crossbench senators, who have been in negotiation with Morrison since May when he was still Tony Abbott’s social services minister, were also uncertain about the revamped cuts.
The government has the support of senators Bob Day and David Leyonhjelm, but if the package is opposed by Labor and the Greens it will need four more crossbench votes.
South Australian senator Nick Xenophon said the government had “made some effort to improve things, but there’s a lot of consultation and negotiation to be done”.
Queensland senator Glenn Lazarus said he was still considering the changes and was concerned that children didn’t get cheaper as they grew older.
Victorian senator Ricky Muir said he was undecided. Tasmanian senator Jacqui Lambie has compiled a wish list from which she wants concessions in return for her Senate vote, including the federal government waiving Tasmania’s public housing debt.
Softening the original 2014 budget plan, the new package:
- ends family tax benefit B for single-income two-parent families when the youngest child turns 13. It now stops at 18, but the 2014 budget proposed that it end at six.
- reduces family tax benefit B for single parents and eligible grandparents with children between 13 and 16 to $1,000, from $2,737 a year.
- abandons the proposed two-year freeze on all family tax benefit payments.
But the package claws back some of the forgone savings by phasing out twice yearly supplements to families, providing instead a $10 increase in fortnightly payments.
The government argues the supplements – designed to help families cope with the end of year adjustments if they underestimated their income and turned out to have been overpaid by the government – are no longer needed because technological advances make it easier to avoid such over-payments.
“Australians don’t expect us to put cash splashes out there at the end of each year,” Morrison said.
According to the explanatory memorandum to the legislation introducing the changes to the House of Representatives, it appears to save $4.8bn over the next four years. According to Morrison, however, it saves $2.4bn. The government needs at least $3.5bn in savings because it has hypothecated this amount as a way to pay for a $3.5bn childcare shake-up that was the centrepiece of this year’s budget.
While the childcare changes were not scheduled to start until 2017, they would be harder to spruik in the 2016 election year if the government had failed to secure its self-identified funding stream.
Family tax benefit B is available to families earning up to around $100,000 a year.
Acoss has backed the idea of removing family tax benefit B for single-income couple families when their youngest turns 12, but has been strongly opposed to any cuts to payments to sole-parent families. It has proposed the government restore more generous indexation to family payments, saying lower indexation rates and freezes imposed by successive governments have significantly eroded the real value of the payments.
“Family payments were intended to ensure that households with children had an adequate income,” Goldie has argued. “The minimum wage is set at a level adequate for a single person. The family payments system was supposed to make it adequate for a family.”
