Budget Resources
Michael Klapdor and Dr Matthew Thomas
Budget 2022–23 contains two significant measures affecting
parents on income support: expanded eligibility for Parenting Payment Single
and the end to the ParentsNext employment program.
Parenting Payment changes
The Government will expand eligibility for Parenting Payment
Single by allowing single parents to remain eligible until their youngest child
turns 14; up from the current cut-off age of 8. The Government
estimates that the change will cost $1.9 billion over the 4 years to
2026–27 and will benefit at least 57,000 single principal carers. Principal
carers are those caring for a dependent child under the age of 16.
Mutual obligation requirements will continue to apply to Parenting
Payment Single recipients with a youngest child aged 6 or older.
The change will require legislation and is intended to
commence on 20 September 2023.
Parenting Payment Single and
JobSeeker Payment compared
Parenting Payment
is the main income support payment for the principal carer of young children. To
be eligible, a person must be the principal carer of a
qualifying child aged under 6 if partnered or under 8 if single. Single
parents may have to meet mutual obligation requirements such as job
search when their youngest child turns 6. Some parents of children under the
age of 6 were also required to participate in activities under the ParentsNext
program (see below). An income test and assets test applies.
Principal carers of children who have reached the Parenting
Payment cut-off ages may be eligible for other income support payments such as
JobSeeker Payment, which has a lower payment rate. Table 1 sets out key
differences between the two payments.
Table 1 Comparison of
Parenting Payment Single and JobSeeker Payment, May 2023
|
|
Parenting
Payment Single |
JobSeeker
Payment1 |
| Payment rate including any
automatic supplements |
$967.90
per fortnight |
$761.30
per fortnight |
| Income test |
Income
free area of $202.60 per fortnight plus $24.60 for each additional child.
Each dollar over the free area reduces payment rate by 40 cents. |
Income
free area of $150 per fortnight. Each dollar of income over the free area
reduces payment rate by 40 cents. |
| Income limit —where payment rate
reaches $0 under the income test |
For a
parent with one dependent child: $2,622.35 per fortnight. |
$2,053.25
per fortnight |
(1) For a single principal carer of a dependent child. Note
that single principal carers granted an exemption from mutual obligation
requirements for foster caring, being non-parent relatives under a court order,
home-schooling, providing distance education or having a large family are paid
the same rate as Parenting Payment Single.
Source: Services Australia (SA), A guide to Australian Government
payments: 20 March 2023–30 June 2023, (Canberra: SA, 2023).
As
at December 2022, there were 230,830 recipients of Parenting Payment Single
and 85,580 single principal carers receiving JobSeeker Payment or Youth
Allowance (Other). Around 95.5% of Parenting Payment Single recipients were
female or identified as non-binary.
2006 and 2013 eligibility changes
The budget measure partially reverses a change
made by the Howard Government in 2006 which reduced the cut-off age from 16
to 8. Those receiving Parenting Payment Single in July 2006 were protected from
the change through grandfather provisions. The Gillard
Government removed these grandfather provisions in January 2013.
The Howard Government changes were part of the 2005–06 Budget’s ‘Welfare
to Work’ package (p. 132). The changes to Parenting Payment saw the
introduction of mutual obligation requirements once a recipient’s youngest
child turned 6 as well as the reduction in the cut-off age (p. 137). In 2005,
then Minister
for Employment and Workplace Relations Kevin Andrews stated that the Howard
Government was concerned children were growing up in jobless households and, ‘Parents
out of the work force for long periods of time are in danger of losing the
skills and self-confidence necessary for them to return to work’.
Labor opposed the changes with then Deputy
Leader of the Opposition Jenny Macklin stating:
We support welfare reform that goes far beyond moving people
from one welfare queue to another—the dole.
…
Real welfare reform understands that being a parent is an
important job in itself and that work makes families more secure. Real welfare
reform helps parents find the balance between supporting their family and
raising their kids.
The government
evaluation of the 2006 changes found that single parents with children aged
8–15 who claimed Newstart Allowance (the previous name for JobSeeker Payment) following
the eligibility change were more likely to leave income support compared to
Parenting Payment Single recipients prior to the change. However, much of this
was due to Newstart Allowance’s tighter income test and the fact that some
single parents claimed other payments such as Disability Support Pension or Carer
Payment (pp. 21, 34–36).
In May
2012, there were 122,630 Parenting Payment Single recipients who had been
grandfathered from the 2006 changes (out of 320,828 Parenting Payment Single
recipients) (pp. 83–84). In the 2012–13
Budget, the Gillard Government announced an end to the grandfathering
arrangements from 1 January 2013 so that all Parenting Payment Single
recipients and new claimants would be subject to the age 8 cut-off (pp. 116–17).
Introducing the Bill to end the grandfathering arrangements, then
Minister for Employment and Workplace Relations Bill Shorten stated:
These important changes to income support payments for
parents continue this government’s focus on providing greater incentives and opportunities,
particularly for single parents, to re-engage in the workforce and share in the
benefits that work brings.
The removal of grandfathering arrangements will provide
greater equity and consistency in the Parenting Payment eligibility rules by ensuring
that all parents are assessed the same, regardless of when they first claimed
income support.
The changes to parenting payment will encourage parents with
school age children to re-enter the workforce sooner and to ensure a fair and consistent
set of parenting payment eligibility rules.
Under this government there have been better participation
outcomes for individuals who have not been grandfathered under the Howard
government’s Parenting Payment Single policy of 2006.
In practical terms the evidence shows us that while
grandfathered Parenting Payment recipients do better than most job seekers,
principal carer parents on Newstart do even better.
Campaign to reverse the age cut-off
changes
There has been a long-standing campaign from community
groups such as Single
Mother Families Australia (previously the National Council for Single
Mothers and their Children) and the Australian
Council of Social Service (ACOSS) to reverse the 2006 and 2013 changes to
Parenting Payment. This campaign has been backed by the Australian
Greens and, more recently, by independent MPs including Zoe
Daniel and Monique
Ryan. In March 2023, the Albanese Government’s Women’s
Economic Equality Taskforce wrote to the Minister for Women, Katy Gallagher,
listing the reinstatement of the Parenting Payment Single for women with
children over 8 as a priority for urgent action.
Why is the cut-off at age 14 and
not 16?
The 2023–24 budget measure will not fully reverse the 2006
changes as it will lift the youngest child cut-off age to 14 rather than 16.
According to the joint
media release announcing the measure, ‘By 14, children have typically
settled into high school and need less parental supervision, and single parents
are in a much stronger position to take on paid work’. When asked about the age
14 cut-off in an interview, Minister
for Social Services Amanda Rishworth stated:
Obviously 14 year
olds are settled into high school, they're becoming more independent, which
does allow a parent to do more work. I would note that as part of the broader
social security system, there is still a higher rate of payment that sole
parents will get when their children, their youngest child is between 14 and
16. There is a higher rate that you get with dependent children. But this is
about recognising that the role of parenting does evolve and that there is more
opportunity to take on more hours and more work.
No research evidence has been offered to demonstrate why age
14 is significant in terms of allowing parents to undertake more work, or how
it differs from earlier ages in terms of the level of parental supervision
required or the level of income support needed by single parents. Other
payments for those caring for children do not stop at age 14 or even 16—Family
Tax Benefit can continue to be paid until a child is aged 19 (if they are
finishing secondary school). According to a Parliamentary
Budget Office costing for MP Zoe Daniel, increasing the cut-off age to 16
would cost $1.2 billion over 3 years to 2025–26 compared to $916.6 million for
the age 14 cut-off.
Under the changes, there will still be a higher rate of
JobSeeker Payment for single principal carers but only for those with a
youngest child aged 14 or 15.
Single Mother Families Australia CEO Terese
Edwards stated that while ‘ecstatic’ about the budget measure, her
organisation would continue to push for the cut-off age to be raised to 16.
Parenting Payment Single recipients
will not receive a rate increase
A separate 2023–24 budget measure will see most non-pension
income support payment rates increased by $40 per fortnight (see the separate Budget
Review article, ‘Social security cost of living measures’) but Parenting
Payment Single rates will not be increased. When the Coalition provided a $50
per fortnight increase to non-pension payments in April 2021, Parenting
Payment Single was included.
ParentsNext abolition
The Government has
also announced that it intends to abolish the ParentsNext employment
program from 1 July 2024, and develop a replacement voluntary program (p. 106).
Compulsory participation requirements for current participants have
been paused from 5 May, but eligible parents may still volunteer to
participate.
Background
ParentsNext
is one of the main Australian Government initiatives designed to assist parents
to commence or return to work. The program is targeted at disadvantaged young
parents who are at risk of long-term income support recipience. It is intended
to assist parents with young children in planning for future employment by
arranging activities and connecting them to local services to prepare them for
work by the time their children are at school.
Parents with a youngest child aged under 6 who are in
receipt of Parenting Payment and who have not been employed for the past 6
months are eligible to participate, with participation compulsory for parents
who meet certain high-risk criteria.
When the program was first introduced as part of the 2015–16
Budget it was confined to 10 disadvantaged local government areas (p. 159).
The 2017–18
Budget provided funding to expand the program nationally from 1 July 2018
(p. 93).
Under the expanded ParentsNext program, participants became
subject to Targeted
Compliance Framework. This resulted in them being subject to sanction,
rather than simply payment suspension, when they failed to meet a participation
requirement without reasonable excuse. Participants could also have their
payment suspended automatically when their attendance at an appointment or
activity had not been reported or recorded. Previously, this was subject to the
discretion of employment service providers.
Criticism of the program
The program has been the subject of a great deal of
criticism.
The report
of a Community Affairs References Committee inquiry into ParentsNext in
2019 stated that, while the program is billed as being supportive, the
Committee had received extensive evidence that it was ‘causing anxiety,
distress and harm for many of its participants. In fact, many have argued that
ParentsNext is causing more harm than good’ (p. 71).
In February 2023, the Select
Committee on Workforce Australia Employment Services similarly found that
the program is doing ‘too much harm for the good it does’ and recommended that
it should be abolished at the end of its current contract (in June 2024) and
replaced with a new pre-vocational service, co-designed with parents, carers
and their advocates, ‘which focuses on building participants’ capacity and
which values raising children’ (pp. vii, 1, 12).
In its Budget response, ACOSS
has stated that it welcomes the abolition of ‘the punitive ParentsNext
program and immediate cessation of mutual obligations of parents subjected to
ParentsNext’.
All online articles accessed May 2023
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