When John Howard criticised the proposed Georgiou private member’s bills in the party room he is reported to have asked “Don’t you know how we won the last election.” This isn’t just a reference to so-called “dog whistling” but a tacit recognition that a key demographic – the “Howard Battlers” – keeps the government in power, and nothing should be done to upset it.
While the Howard Government might have its eye on the electoral ball when it comes to refugees, it has taken it off with respect to tax rates. From the point of view of winning elections Howard should be reprimanding Treasurer Peter Costello equally with Georgiou, because, as The Australian demonstrates this morning, his failure to increase the lowest tax thresholds in this year’s budget has led to the ridiculous result where a $17 dollar a week wage rise will actually cost some of Howard’s battlers 68 cents!
On another front reform of the child support system is set to result in non-custodial parents (the Australian calls them “dads” in this article on the issue, demonstrating the unconscious bias inherent in the child support system) paying 50% more in support for teenage children. This is based on the supposed cost of raising children as calculated by Professor Parkinson of Sydney Uni in an ACOSS study which doesn’t appear to be available on their site.
However, it sounds similar to two studies (both discontinued) – the Lovering Study and the Lee Study, which are used in Family Court calculations – so I’ll look at them instead. The Court prefers the Lee study, and explains the system on its website here.
Bottom line is that the Lee study reckons that a single income family on $47,127.60 p.a. spends $16,673.27 of it on a single teenage child. After tax the family only earns $36,817.50, so this would mean that they spend more on the child than they spend on each other. More to the point it begs the question – If these calculations are correct, how is it that there are so many families on average incomes with more than one child? Are the parents knocking off banks on the weekend to supplement their income, or just extraordinarily fortunate on the pokies?
That Senator Kay Patterson, the minister responsible, is taking a submission to cabinet to increase child support from non-custodial parents for teenage children when many of those non-custodial parents would already be struggling to support themselves is an indication that in another area, Howard government ministers don’t understand how they won the last election.
It is also an example of how strongly bureaucratic capture of the child support system is entrenched that her department would provide her with such a submission based on economic studies that anyone who’s ever prepared a family budget should know couldn’t possibly be correct. (I know I’m prejudging the Parkinson one, and will be happy to retract if it’s not similar to the ones I have cited).
Meanwhile, in Queensland, where Premier Beattie reigns on the basis of the support of the same battlers who elect Howard, he has his headline priorities right. Large dollops of money to the public hospital system, and an increase in the land-tax threshold. Land-tax is not obviously a battler issue, but given that it currently kicks in at $200,000 and that a second residential property is the favourite investment of low and high income Australians it will have an impact.
He’s also making provision for some of the mess that Senator Patterson might be about to create by spending more money on hostels and boarding houses. They may be needed by some of the non-custodial parents who will be unable to afford to put a conventional roof over their heads and who have less money in their pockets, even though they just received a pay rise.
June 08, 2005 | Graham
Child support and taxes – Howard’s battlers are battling
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A little care is needed when interpreting the cost of children research. Some of the cost is in income forgone by a parent who is staying at home to look after children. This does not represent cash that has to be expended, so the analysis that says that the family is spending more on their children than they spend on themselves does not stand up.
The cost of income forgone is also an element the rationale behind the child support formula. What it appears to ignore is that fact that the custodial parent is often in that position out of choice – both parents want custody, but only one gets it. The implication is that there is some perceived benefit to having custody of the children. This benefit does not appear to have been taken into account when the formula was devised, and arguably results in the child support amounts being too high.
Certainly, when various welfare payments are taken into account, the non-working custodial parent can be in a position to obtain a higher standard for themselves and the children than than the working non-custodial parent.
Where the income of the non-custodial parent is much higher than that of the custodial parent, the result can be that the custodial parent is providing significantly more than half of the custodial parent’s total net income. It is difficult to avoid the conclusion that the liable parent is subsidising the standard of living of their ex partner.
Comment by Sylvia Else — June 8, 2005 @ 11:22 am
The bigger question is why the media are so beligerent and biased when discussing these issues?
And why couldn’t labor get any traction on these types of issues in the last election?
Comment by alphacoward — June 8, 2005 @ 6:25 pm
Sylvia, I’ve rechecked the tables that I reference in the post and I can’t see any allowance for foregone income. Am I missing something?
Comment by Graham Young — June 8, 2005 @ 11:17 pm
Graham, I was basing my comments on my memory of looking at this some years ago. I can’t see anything in the referenced document that expressly identifies income forgone as a factor, other than a vague comment about the costs of children being a function of the parents’ incomes, and whether one or both are working.
My conjecture is that the tables have become garbled over the years. The figure for transport costs per week seems scarcely credible. Where are these children travelling to? I thought they had to go to school.
Sylvia.
Comment by Sylvia Else — June 9, 2005 @ 11:44 am
I think the transport cost issue arises because they impute some part of the family car to the child. Same applies to housing costs. Of course this is dubious because it assumes that people would live in smaller houses if they didn’t have children, or drive two-thirds (in the one child case) of a car.
The income foregone issue sounds to me like one that was taken into account when calculating the statutory formula rather than calculating the cost of raising children.
I see from today’s paper that non-residential parents (they persist in calling them fathers) will be able to quarantine income from a second job for the first 5 years of separation. Sounds like another unnecessary and unfair complication. What about those of us who couldn’t possibly take on a second job because the first job is all consuming? Don’t we also have problems re-establishing? And why exactly should the residential parent do without? If reestablishment is an issue, surely the property settlement ought to take account of that.
Time for a blank sheet approach to the whole issue I think.
Comment by Graham Young — June 9, 2005 @ 12:24 pm
well at last an article written by someone with common sense,what a pity you are not in a position to enforce some changes with child support, or should I say x partner income suppliment payments as it it obvious to everyone but an intellectually slow person the system is not far to non custodial parents.But no one wants to listen.An intellectual idiot comes up with a formula that makes no sense at all and the government uses it.How dumb can you be….
Comment by k.kennett — January 6, 2006 @ 8:32 pm