ACOSS plan for Family Benefits

The Australian Council of Social Service has unveiled a new modelling detailing a path for making Australia's Family Tax Benefit system fairer - by better targeting payments to families that need support the most and simultaneously reducing poverty.

"We know there are nearly 600,000 children currently living in poverty in Australia and the recent annual report of the longitudinal study of households (HILDA) showed that it increased by 15% since 2001. This is simply unacceptable in one of the wealthiest countries in the world.

"Our family payment system performs the vital dual roles of helping prevent child poverty and treating low and middle income families with children fairly by taking account of the costs of raising children in the tax-transfer system. We do not consider assisting low and middle income families with children as ‘middle class welfare'. However, it urgently has to be reformed if it's to prevent even greater levels of poverty.

"The family payment system is in urgent need of repair, having strayed from its primary goals over the past decade and increasingly been used for purposes that are not well targeted, such as the Baby Bonus, the Schoolkids Bonus, and the ‘Part B' payment for single-income couples.

"These two bonuses should be replaced with the savings not to be used to restore the budget bottom line, but instead used to restore the budget bottom line of low and middle income families.

"We want to see the savings from the Baby Bonus rolled into increased Family Tax Benefit A payments for preschool children aged 0 - 4, and the savings from the Schoolkids Bonus put into higher Family Tax Benefit A payments for school age children aged 5-18.

"Under our proposals, modelled by the National Centre for Social and Economic Modelling (NATSEM), around 50% of low income families (about 600,000 thousand families) in the bottom two quintiles would be on average around $1300 a year ( $25 a week) better off.

"Among the bottom 40% of families, three out of four families would receive higher payments. Sole parents, most of whom have low incomes, would particularly benefit with 71% better off.
"This reform, together with our proposed $50 a week increase in Newstart Allowance for single people, would help to offset recent payment cuts for sole parents fully reliant on income support.

"Our modelling using ‘cameos' of low income families with children of different ages shows that half currently fall below the poverty line. We found that three of these families currently below the poverty line (2 sole parent cameos and 1 couple families) would be lifted above the poverty line by the proposed changes.

"We call on the major parties to take the issue of poverty seriously and commit to restructuring the confusing Family Tax Benefits system as part of an anti-poverty plan for our nation.

"In these times of significant economic challenges, and falling revenues, we need to go ‘Back to Basics', with government assistance targeted to those who need it. Our proposals do not complete reform, but they take us in the right direction.

"ACOSS and our members across Australia's community welfare sector look forward to working with all parties and the next government in advancing such reforms," Dr Goldie said.