Who fathered the Family Tax Benefit?

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Daughter and mother look sadIn commenting on the proposal in the 2014 Budget to remove Family Tax Benefit, Part B (FTB B) from single breadwinner families, former prime minister John Howard described himself as the 'father' of the FTB scheme.

Perceptions about the paternity of the FTB B family payment could impact on post-Budget strategies and positions in the Senate. The Government might be happy to see Howard claiming paternity in the hope that it will reinforce a view that the FTB B was the product of his 'white picket fence' view of family life, and/or an unsustainable distribution of the benefits of the mining boom. The Government might hope that the other parties will not want to preserve Howard's claimed legacy.

In a sense Howard is right because the current system of family payments was introduced by his government as part of a package of compensatory messages to accompany the introduction of the GST in 2000.

FTB B is paid to single breadwinner couples and sole parents with children. The maximum FTB B weekly payment of $51.50 per week is a very significant part of the budgets of low-income single-breadwinner families. In families where the youngest child is under five, the maximum weekly payment is about 43 per cent higher. Since 2004, families have received an annual supplement currently at $354.05 and equal to $6.79 per week.

The most significant change in the Family Tax Benefits system since 2000 has been to the per child Part A payments. These payments have been extended into middle Australia: a family with two children and an income moving with Average Weekly Ordinary Time Earnings (now over $1440 per week) has had increases of over 210 per cent. This was Howard's major contribution to the family payments system.

The Budget seeks to withdraw the FTB B weekly payments from families who do not have a child under six years of age and to convert the annual supplement into a Single Income Family Supplement of $300 per year, or $5.75 per week. On current figures, this would mean losses of $52.14 per week for couple parent families. The position of sole parent families is slightly different because they would pick up a payment of $750 per year for each child between the ages of six and 12.

If paternity matters in this debate, it is Paul Keating who can claim the credit for the family payments that are now under attack.

For decades taxation law provided a rebate for taxpayers supporting a dependent spouse and children. By 1993 the rebate was worth up to $27.40 per week for the mostly male breadwinners.

In his Policy Speech on 24 February 1993 Prime Minister Keating said: 'We propose to introduce a new cash payment of $60 each fortnight to be called the Home Child Care Allowance ... This allowance is more generous than the Dependent Spouse Rebate it will replace, and has the added advantage of being paid directly to the mother at home. This will provide a source of independent income for women while they are out of the paid workforce caring for children.'

In referring to the amending legislation during a speech to launch the International Year of the Family on 6 December 1993, Keating said: 'We recognise that women, throughout their lives, have a range of equally legitimate choices about being in the workforce or being at home. We appreciate the value of caring and nurturing provided by women who do choose to stay at home while their children are growing up, and the value of the unpaid work they carry out both in the household and in the community.'

Keating's allowance was introduced and, after some name changes in the late 1990s, it emerged as FTB B in 2000, having grown from $30.00 to $34.79 per week.

The changes championed by Keating recognised that the work of women in raising children should not be treated as tax concessions for their spouses and that the care of children has economic and social value.

There may be debate about whether the current FTB B payment is adequate recognition of the economic and social value of domestic child care. But no one can seriously argue that it should be $5.75 per week, as proposed in the Budget. It is a pittance which will drive low paid families deeper into poverty.

Anything less than the current rate is an affront to those who perform the work, and those who have fought for so long to have proper recognition of the economic and social value of child care, whether by mothers or fathers, within the home or outside it.

The question of whether John Howard or Paul Keating was the father of the threatened family payments is, in truth, a side issue. The Keating amendments, and, therefore, the current FTB B, came about as a result of social change pressed by women across the political spectrum. It was, and remains, an important issue for women.

When the Senate debates these family payments it will not be about Howard's or Keating's legacy, but something much more fundamental: the value that is put on child care, whether in the home or child care centres, and the recognition that we give to the people who provide it.

 


 

Brian LawrenceBrian Lawrence is Chairman and Australian Catholic Council for Employment Relations and the editor of the ebook Working Australia, 2014: Wages, Families and Poverty.

Topic tags: Brian Lawrence, family tax benefit, Budget, John Howard, Tony Abbott

 

 

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Existing comments

The FTB A and B 'supplements' as the end of year payment is being referred to is actually not a supplement at all. That payment is actually money that is WITHHELD from the fortnightly FTB payments as a measure to stop people from getting into debt with Centrelink from having under estimated their income. The 'supplement' only becomes available after you have lodged your tax return (if you have employment income) and then your annual income is reconciled against what you have received in FTB payments and the BALANCE is paid. It is NOT A SUPPLEMENT. The sudden change in using the word 'supplement' instead of 'reconciled payment' is an important lesson in semantics because now the general public is seeing that this payment is an 'extra' instead of what it actually is - a reconciled payment made up of money that has been withheld throughout the year. Language is a very powerful tool and the government must not be allowed to get away with this twisting of words which is in fact causing even more angst between the 'haves' and the 'have nots'.
vanessa J | 02 June 2014


This paragraph: "The Budget seeks to withdraw the FTB B weekly payments.... On current figures, this would mean losses of $52.14 per week for couple parent families. The position of sole parent families is slightly different because they would pick up a payment of $750 per year for each child between the ages of six and 12." is missing something - the figures on how much the single parent family would lose each year. I'm fairly certain losing $51/week and then getting a bonus at the end of the year still means you're losing $51/week. Having to hold out waiting until the end of the financial year for payment. Even so, single parent families getting a $750 bonus means they still lose - $1900/year per child. Or $37/week.
AJT | 04 June 2014


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