Satchelnomics: The economics of politics and family

The government has delivered a budget with a few fiscal sweeteners, as would be expected in the lead up to an election. These include the SchoolKids bonus payment, and up to $600 extra for some families, which may still be of little comfort to those whose single parenting payments will disappear. 

Does it add up?

Under the new SchoolKids scheme, about a million low to middle income families will be eligible for a cash bonus of $820 for every high school child and $410 for primary school aged children, which will go straight into bank accounts from next month. Families earning up to $123,000 with two teenagers who claim Tax Benefit A will qualify.

This scheme replaces the Education Tax Refund, which required parents to keep receipts to prove they had spent their dollars and cents on computers and text books and uniforms and things before getting a rebate. Parents of school-ages kids will now get two payments each year (one in Term One and one in Term Three), but a bonus will kick-start the new scheme.

"In just a few weeks, a million families with kids at school will get extra money in their bank accounts to help with school costs," said PM Julia Gillard told The Sunday Mail. "In this Budget, we will deliver a surplus, but today's announcement is about helping families out as well where we can. We want to make sure families get the help they need to make ends meet."

Essentially, much of the money put aside for families was not being claimed, because they did not file their receipts, so what the Government is doing is making the access to the funds simpler (a relief for parents who have enough trouble getting around to reading the school newsletter and packing lunches before they trot off to work). 

Sweet! Right?

The legislation is also expected to help weary retailers by unleashing funds into the consumer world ASAP, just like the post-GFC $900 bonus Kevin Rudd gave us to spend on plasma TVs, books and music back in 2009, and the $950 Back to School Bonus of the same time. The SchoolKids Bonus can help to pay for school uniforms and books and tuition and such.

But governments can't control how families spend money.

In a recent story titled 'Lifestyle puts pressure on basics' for The Gold Coast Bulletin, Stephanie Bedo and Milena Stojceska write: "Gold Coast families are spending up to $20,000 year bankrolling their kids' hobbies and funding luxury gym memberships and overseas travel to meet 'social expectations'... Some families are forking out an overage of $500 a week to fund their lifestyles and pay for childcare, cleaning and basic beauty services."

Meanwhile, single, unemployed parents whose children are aged over eight are being encouraged to re-enter the workforce, or turn to charities or the dole, by having their specific financial support taken away and replaced with the Newstart allowance (the Parenting Payment Single is $324 per week; Newstart is $265 per week), thereby saving the government $686 million.

For single parents, this raises issues around childcare and job availability and affordability, as well as other workforce barriers, such as education and transportation, particularly given industries such as retail are performing badly in the current climate and cost-of-living pressures tighten.

A few other pieces of policy are relevant here. One is childcare support. In an effort to have more people in the workforce and off welfare, the Government has committed $225 million to pay childcare fees for parents on income support who are studying or trying to find work. It's expected 130,000 Aussies, most single parents, will benefit from the 'Employment Pathway Plan', which will be paid fortnightly.

The Plan disqualifies parents studying for their Masters or Doctorates or a repeat qualification, but will allow for parents undertaking a Certificate II or higher. It allows for up to 50 hours of childcare per week when a parent undertakes 15 hours of work, study or training; a maximum of 24 hours of childcare support for parents undertaking less than 15 hours each week.

The Budget also makes provisions for individuals earning less than $80,000 a year to experience a tax break, and also for families receiving Tax Benefit A to get a boost of up to $600 from July next year, spread out over fortnightly payments. There is also a Supplementary Allowance of $350 for couples and $210 for singles on low incomes. In all, the cash injection for struggling families adds up to $5 billion.

How this adds up financially for single parents is to be weighed up perhaps on a case-by-case basis.

It is estimated by the National Welfare Rights Network that moving people off the Single Parenting Payment and onto Newstart will force a further 100,000 single parents of children from disadvantaged and low-income families onto Newstart when their children turn eight. People who might not have the privilege of education, the confidence for gainful employment, let alone while juggling parenting responsibilities.

The oft-debilitating outcome of divorce or separation, the stigma around single-parenthood, the unfair disadvantage of finance and emotional support, may already be too much to bear for some who go it alone while raising kids in the home, let alone with $59 less in the bank each week to make ends meet.

And all the while couples with kids who may be doing AOK get a cash bonus in the bank? That is a kick in the shins.

"Anything that you do to cut payments to single parents, who are some of our most vulnerable members of the community, anything that cuts support to them also damages their children and makes it harder for them to bring up their children," said Greens Senator Rachel Siewert in response.

Family spokesmen Kevin Andrews, a former Howard government minister, tells the ABC that two months ago Labor proposed to reduce the child's cut-off age to parents already on the payment from 16 to 12, and now it wants to cut that to 8.

"That strikes me as being more concerned about actually saving money in order to deliver the surplus rather than a proper, thought-out approach to welfare," he said. "At a time when jobs are being lost and unemployment is a concern to many Australians, just to push people from the parenting payment onto Newstart, if there's no other assistance to this people, would be somewhat cruel."

With a 2013 election looming over the Gillard Government, whose carbon tax has not won favour among many in middle-Australia and battlers in the country, a few economic sweeteners are par for the course... but we are more likely to remember a negative (the knifing of Kevin Rudd; the carbon tax) than a positive (cash bonus in the bank!).

In light of the single parenting cuts, SchoolKids could be a case of another happy-fix booster policy biting the government in the back.

Updated: 7am, Wednesday May 9

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