Treasury boss Ken Henry has proposed a complete reworking of family payments, boosting support for parents of young children and phasing it out when children reach school age.
At present Family Tax Benefit B is available to parents of children aged up to 16 and Family Tax Benefit A to parents of children aged up to 24.
Dr Henry, who is heading the Henry Review of the tax and welfare systems told a children and youth conference in Melbourne that the present system encouraged parents to stay at home long after their presence was needed.
"Such an outcome may have positive consequences for children when they are infants, but disincentives for workforce participation are problematic for parents with older school aged children," he said...
"Decisions around participation in the workforce can have longer-term capability costs for both parents and their children."
In 2005 the Howard Government abolished single parents benefits for new parents whose children had turned 6 on the ground that those children would be better off if their parents were in work.
Dr Henry proposed treating Family Benefit recipients the same way, suggesting "a higher level of support for parents with very young children when their caring and nurturing role is the greatest, and supporting higher levels of workforce participation for parents and carers as children move into their school years".
"There would, of course, continue to be a need for assistance to low-income families with older children," he added. "But it is not only parents whose incentives matter. It is also important that the system sends the right signals to teenagers choosing among study, work or dropping out of school."
In a signal that incentives to work will be an important part of his report to be released in December he said it was clear that the interaction of the family benefits income test with the income tax system discouraged many members of families from working.
He told the Australian Research Alliance for Children and Youth that money wasn't enough to support parents of disadvantaged children, and often wasn't the best way to do it.
"Government assistance is likely to be more effective if it is provided in the form of significant assistance with services such as maternal and child health, affordable and quality child care, parenting programs and quality schooling," he said.
Targeted financial payments ran the risk of exacerbating the disadvantage they were designed to redress.
"We cannot add further multiple layers of means-tested payments and services on the same groups without, at some point, creating insurmountable barriers to workforce participation," he warned.
Dr Henry said parents of disadvantaged children tended to under-use the services that could be of most help to them and suggested case-management of the kind being trialled in Indigenous communities as a way of guiding individual parents through the system.
"I don't pretend that this sort of approach would be easy or cheap. But it is nevertheless worth exploring," he told the conference.
Published in today's Age
Graphic: UC San Diego Counselling Service
Henry on Children