In light of the government’s announcement to extend the single parenting payment to parents until their youngest child turns 14, new information has come to light about what happened when the rules were tightened in 2013, which restricted the cut-off age to 8.
When then-Treasurer Peter Costello reduced the cutoff age from 16 in 2006, forcing single parents who hadn’t found work onto (much lower) unemployment benefits, he said it would “help them with higher incomes and better participation in mainstream economic life”.
A few years later when then-Prime Minister Julia Gillard announced plans to remove a loophole that had allowed some parents with children over eight to continue receiving the payments, her treasurer Wayne Swan said it would “encourage re-entry into the workforce”.
Did the cutoff improve or harm lives?
Only now does recently available administrative data allow us to evaluate how single mothers fared after losing the payment when their children turned eight. Did they secure employment? Did they get higher incomes as a result of being pushed into work, or did their incomes sink?
Research Bob Breunig and I conducted on the changes enacted in 2013 finds that when taken together, the single mothers (they were overwhelmingly mothers) lost income.
On one hand, the change shifted a sizeable minority (about one-third) of single mothers off income support and into employment, boosting their incomes.
On the other hand, it left the majority on income support and on lower incomes – an effect that overwhelmed the increased incomes for those who left the payment and found jobs.
Multiple barriers to returning to work
What differentiates the (reduced income) majority from the (increased income) minority? While our particular dataset cannot identify characteristics that distinguish them from each other, there are two likely explanations.
First, individuals who have been on income support for long times tend to face multiple barriers to getting back to work, including illness and/or disability. In the case of single mothers, that illness or disability can also apply to their children.
Second is something more pernicious: domestic violence.
A personal safety survey conducted shortly after the Gillard changes found 60% of single mothers who had ever had a partner had experienced partner violence in their lifetimes – an astonishingly high figure.
If domestic violence underlies welfare dependence among single mothers (and it likely does), it doesn’t take rocket science to appreciate the difficulty of getting those mothers into work.
Single parents face greater financial constraints relative to dual-income households and greater constraints on their time, in terms of school pick-ups, drop-offs, sick days and things such as help with homework.
Domestic violence tightens these constraints, adding to demands on time and resources the need to find safe lodging, attend court hearings, and especially, as victims of trauma, care for their own (as well as their children’s) mental and physical health.
The trauma engendered by domestic violence can also be very difficult to escape when it is triggered at every custodial hearing, divorce proceeding, non-custodial parental visitation or on the days child support payments are due.
So what are the policy solutions?
First, increases in employment, unaccompanied by increases in income, appear to have deleterious impacts on children. Insofar as mutual obligations lead to unstable and poorly remunerated employment, they are counterproductive and detrimental.
Our research shows that additional mutual obligations did little to improve the employment outcomes of single mothers.
Second, individuals facing multiple barriers need tailored support that identifies and helps address multidimensional challenges.
The effect of domestic violence is hard to pin down
Scaling up individualised support can prove challenging, which is where case management experiments at the local level can help. The new treasury evaluation unit will be in a good position to ensure these policies are designed to be evaluated and assess their results.
As importantly, we need to be able to measure the impact of domestic violence on the economic security, employment and health outcomes of survivors and their children over time, as is done in countries like Finland.
The datasets needed to do this in Australia already exist, but so far the government has not allowed the linkage of longitudinal data on domestic violence and labour market outcomes.
Without the information that would come from putting these datasets together, Australia risks introducing policies, including those designed to assist single mothers who are victims of domestic violence, without a means of evaluating their effectiveness.
Single mothers – whether in paid employment or not – are among the hardest-working members of our society. They deserve better.
This article is republished from The Conversation under a Creative Commons license, with changes made by the author to reflect policy changes announced by the Government on Monday 8 May 2023. Read the original article.
Other Budget Forum 2023 articles
The Costly and Unfair Stage 3 Tax Cuts Will Undermine the Progressive Income Tax and Worsen Inequality, by Kathryn James, Guyonne Kalb, Peter Mares, Miranda Stewart and Roger Wilkins.
Inflation Forecast, Fiscal Policy and Personal Income Tax Rates, by Chris Murphy.
Financial Support for Those on Low Incomes, by John Freebairn.
Will the Budget Reduce Inflation? By Michael Coelli.
Stage 3 Tax Cuts and JobSeeker – A Slightly Different View, by Andrew Podger.
Equity Is Hard to Achieve When Unfairness Is Baked into the System, by Robert Breunig.
A Small Investment in the Budget With a Big Policy Return? By Nicholas Biddle.
Labor Could and Should Have Gone Stronger on the Petroleum Resource Rent Tax, by Rod Sims.
Straightening Out the Super Tax Breaks Debate, by Brendan Coates and Joey Moloney.
The Priorities of Australians Ahead of Budget 2023-24, by Nicholas Biddle.
Well, most mothers do like to be at home with their children. So do more than a few men. Years ago I shocked Bettina Cass when she was reviewing Social Security and said if my wife died I would be better off quitting my job as Senior Adviser on tax and income security and going on the sole parent pension. I showed her the figures for the after tax income of a single income family with 4 children compared to being a sole parent family after paying off the mortgage and having a bit over from life insurance, preserving my super to age 55 and combining modest investment and super incomes all the way past 65. Work is greatly over-rated compared to children. It is amusing to think I have been a working from home pioneer pretty much since 1989 when I left the CPS!
As for domestic violence and marital arguments, one does wonder how much is triggered by arguments over money. Given the relative rise in tax burdens of taxpayers with dependants since the 1950s, load shedding of dependants on the State is not surprising. People do crack under sustained money pressures.