May 2005

The Nation Reviewed

Money

By Brian Toohey

Illustration by Jeff Fisher.

John Howard, a prime minister who supposedly yearns for the days when fathers went to work, mothers stayed home and families lived behind white picket fences, might seem an unlikely hero for single mums. But he can fairly claim to have done much more to alleviate poverty among single parents than the Labor governments led by Bob Hawke and Paul Keating ever did. It is true that Howard’s more explicit plan has been to look after stay-at-home mums with high-income husbands, including 31 on million-dollar salaries at the last count. But it is single mums who have emerged from this same system as the unexpected – and largely unintended – winners.

A single-income Australian household with two children can now receive $13,264 a year in family payments. When added to the basic pension for jobless single parents of around $12,500, this makes for a total income of more than $25,000 – not a king’s ransom but not bad either, once you include pharmaceutical, childcare and other benefits on top of that. Single parents who do have a job can earn up to $32,485, meaning an overall income of more than $45,000, before their family payments start to phase out. Meanwhile couples with two children under 13 and a pay packet of less than $32,485 get an extra $8,190 a year.

If most voters haven’t heard Howard bragging about such unprecedented generosity, the reason is simple: he doesn’t like talking about it for fear of enraging his own party. Many Liberals still hate the idea of welfare payments; they barely understand, let alone admire, exactly what Howard has done. Most particularly, he has upset a so-called “ginger group” of about 20 Liberal back-benchers, which was established after last October’s federal election and who meet regularly during parliamentary sittings in Canberra. The ginger group was started by two Victorian MPs, Sophie Panopoulos and Mitch Fifield. Before entering parliament in 2001, Panopoulos won Howard’s esteem as an articulate monarchist. Fifield worked as a senior political adviser to Treasurer Peter Costello. Steven Ciobo, a fervent free-marketeer from the Gold Coast, is another prominent ginger member, and Malcolm Turnbull, the aspiring Liberal leader and probably the richest person in parliament, sits in on some meetings too.

The ginger group’s premise is that tax cuts are good, welfare spending bad. Their main goal is to reduce the top tax rate from 47% to 30%, apparently undaunted by the $15 billion cost of achieving this and unperturbed by the $7,000-a-week tax cut this would offer the average executive dullard on $2 million a year. Instead of family payments they want a rise in the tax-free threshold for all, from $6,000 to $12,500, even though the existing system effectively gives eligible families a tax-free threshold of more than $42,000 a year.

Turnbull has been more cautious, stressing the budgetary cost of big tax cuts and proposing only a modest shaving off the top rate. But if Panopoulos, Fifield and others have their way, hard-working single-income households that currently receive family payments of more than $250 a week would instead get tax cuts of a little over $20 a week. As Peter Costello, Fifield’s old boss, has been known to complain of the ginger group’s masterplan: “You can’t give a tax cut to people who don’t pay tax.” The ginger group’s method for getting a single mum “off welfare” and into a job which, chances are, she already has, could perversely make her much worse off.

Howard tried to pre-empt ginger concerns by christening his family payments Family Tax Benefit A and Family Tax Benefit B – an unsubtle attempt to portray them as tax cuts, not welfare benefits. What it means is that families can choose between receiving their benefit in the form of an increased tax-free threshold or as a regular payment. Much to Howard’s disappointment, 90% have gone for the regular payment option, leaving him trickily placed to fend off claims that a growing number of Australians are “on welfare”. Not that too many of them seem to mind. One obvious drawback of the Howard–Costello formula is that people with no children who earn less than $52,000 a year miss out. At the last election Labor offered these same voters an average tax cut of $6 a week – and went on to record its lowest primary vote since 1934.

Lately, Costello has been dropping hints about the importance of single mothers seeking jobs once their children start school, saying anything else would be over-generous and inappropriate in a country bothered by labour shortages. But from Howard’s perspective, his family payments are a political masterstroke. They have won him the votes, at a relatively low cost to the federal budget, of the battlers who usually back Labor. They have made him the hero of single mums everywhere. And all because of his old-fashioned wish to do something for mums who stay at home to look after the kids. Accidental hero is more like it.

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