Family assistance payments in Australia

How well are Australia’s current family assistance payments supporting low-income parents to meet the needs of their children and achieve economic security?

Family Tax Benefits A and B make an important contribution to the costs of raising and caring for children in low-income families. However, existing BSL research  and policy work has highlighted a range of issues with these payments. These include payment adequacy, the high marginal tax rates impacting women’s decisions about work, administrative complexity, and interactions with other systems such as child support and Parenting Payments, which can have unintended financial effects.

Working with Prof. Miranda Stewart and Dr Emily Millane (University of Melbourne, Melbourne Law School), we are exploring Australia’s family payments system – whether it is fit for purpose in contemporary family, social and economic conditions – and pointing to potential directions for reform. This work is being conducted as part of The SEED Project to advance women’s economic security.

Background

For nearly a century, Australia has provided assistance to families raising children. The current Family Tax Benefit A and Family Tax Benefit B payments were introduced in 2000 by the Howard government. They are intended to contribute to the cost of raising a child (in particular, FTB A) and to support the care of children (in particular, FTB B). Despite their names, both are paid as cash transfers to the carer of eligible children, and depend on the child’s age, the work and residence status of parents or carers, and the family income.

The adequacy of FTB A and FTB B has declined over time: payments have not kept pace with the cost of living and fewer than half of Australian families receive FTB A or FTB B today. However, they remain an important component of household income for low-income sole parent and couple families.

Unfortunately, FTB A and B interact in complex ways with other benefits including Parental Leave Pay, the Child Care Subsidy, Parenting Payment and JobSeeker Payment, as well as with the child support regime and income tax rates. Eligibility rules are complex and administration is often difficult to navigate, so some families miss out and others end up with overpayment debts. The means testing of the payments contributes to work disincentives, especially for women, and to poverty traps.

Establishing a direction for reform requires reconciling diverse, sometimes competing policy goals.

This research is being led by Dr Dina Bowman and Dr Emily Porter .

It is part of the Understanding financial stress project and also of wider research and policy work within The SEED Project .

Contact: Dina Bowman or  Emily Porter