Sunday, October 30, 2016

Myth busted: parents don't get more on benefits than working

Welfare experts have ridiculed a government claim that thousands of parents on government benefits earn more than if they had a job, saying it is built around a mathematical mistake.

The claim, published in The Australian on Friday and backed up by Social Services Minister Christian Porter, is that single parents with four children can get payments totalling $52,523 per year if they don't work but only $49,831 after tax if they work and receive the median full-time wage.

Mr Porter said the data showed taxpayer-funded benefits could be providing a ­disincentive to work, a systemic flaw that required government ­attention. "What is not in any recipients' best interest is to be deprived of the incentives to reduce income from welfare with income from work," he said.

Treasurer Scott Morrison backed him saying it was "a crying shame that some Australians would have to take a pay cut to get a job in this country because of the way our welfare system works".

Former Department of Social Security analyst David Plunkett said the calculation excluded $30,916 in family tax benefits that the parent working full-time would also receive, meaning that when "apples are compared with apples", the parent would receive $80,747 if working and $52,523 per year if not working.

The parent would be almost $30,000 per year better off working than not working, rather than than $2692 worse off as claimed.

Australian Council of Social Service CEO Cassandra Goldie said the claims were part of a disturbing pattern.

"It appears to be a deliberate strategy to generate a story which creates this impression that we've got a social security system which is 'bloated and too generous' when the facts will show it's completely to the contrary," she said.

"It creates an incorrect and misleading impression that single parents are doing well on welfare. This is absolutely wrong."

She believes the claims are aimed to convince the Senate crossbenchers to support government cuts to family payments.

Peter Davidson, research director at ACOSS, said the "glaring omission" was remarkable because family tax benefits were the biggest source of income for the non-working parent. To have cited them as income while not working, but not while working biased the calculation by $30,000.

It also failed to build the case for government plans to scale back family tax benefits, because if those plans were approved by the Senate and legislated the differential would be unchanged.

"This single parent family with four children stands to lose about $4000 a year [$80 a week] in Family Tax Benefit payments if legislation is passed," Mr Davidson said. "That family would lose the same amount whether the parent is out of paid work or employed full-time."

A total government payment of $52,523 was not a lot for a family of five.

"There is a reason a large family receives much more money than 93 per cent of others receiving Family Tax Benefit: children are expensive," he said.

"Excluding rent assistance, those family tax benefit payments average around $7000 per child which has to cover all child-related costs including food, clothing, and school costs."

The $87 per week received in rent assistance would cover only a fraction of a Sydney or Melbourne rent.

A spokeswoman for Mr Porter defended the original figures.

"The point being made is simply that a person receiving the single parenting welfare payment, plus family tax benefits and other welfare payments, gets an amount equivalent to what another person might earn working full-time."

The amount of welfare being received in the example is equivalent to a full-time median wage, she said.

In The Age and Sydney Morning Herald