Opinion & Commentary
Welfare for parents increases risk of poverty
It's time to eliminate the welfare incentives that keep single parents out of the workforce, a strategy most Australians agree with, argues Peter Saunders.
The single biggest cause of poverty in Australia is joblessness. It follows from this that the most effective thing we could do to reduce poverty would be to move as many people as possible from welfare into work.
For the past 40 years, however, we have been doing the exact opposite. In the mid-1960s, just 3 per cent of working-age adults relied on welfare payments as their sole or main sources of income. Today it is 14 per cent.
One of the factors contributing to this huge increase in welfare-dependency has been the rise in the proportion of adults (mostly, but not entirely, women) that depends on the single-parent benefit.
Six per cent of women of working age receive this payment and most of them have little or no independent income.
Australia is one of a very few Western countries that accepts that single parents may remain on welfare for as long as they have a child under school-leaving age. Most European countries expect parents to work once their children start school and some such as France and Sweden assume parents will get back to work when their children turn three.
Some American states expect single mothers to work within months of giving birth.
Nobody is suggesting we go that far. Developmental psychologists tell us the first three years of a child's life are crucial for both emotional and intellectual development and that it is important we enable parents to develop a close bond with their children during this formative period.
There is, therefore, a strong case for providing welfare support for single parents while they are raising infants and toddlers.
Once the youngest child starts school, however, there is no obvious reason why we should continue to pay a single parent to remain at home all day. Indeed, the longer parents remain on welfare, the worse the outcomes are likely to be for them and for their children.
Recent research by Bob Gregory at the Australian National University has found that people claiming the parenting payment (single) are spending an average of 12 years on welfare.
This does nobody any good. Long periods on welfare not only increase the risk of long-term poverty, but they erode parents' skills and self-confidence, making it increasingly hard for them to get back into work when their children eventually leave school.
American research has also shown that, while younger children benefit from having a parent at home, adolescents who have grown up in households where no adult is employed tend to underperform at school and are more likely themselves to end up on welfare.
Recognising the importance of helping single parents move into employment rather than festering on welfare, the government recently announced that claimants with children at primary school would now attend an annual Centrelink interview, while those with older children would be expected to do training or voluntary work for up to six hours a week.
This is a move in the right direction as it signals to claimants that they need to be thinking about returning to work.
But if we really want to improve matters, we need these parents to get into employment, rather than simply anticipating it.
The current system of parenting payments reflects a time when most Australians disapproved of women working. Back in the 1950s, if a mother was widowed or abandoned, it seemed only natural to give her welfare support as mature-age women were not expected to work.
But times have changed. Two in three working-age women today have jobs, yet we still have a welfare system that pays single mothers to stay at home right up to the point where their youngest child leaves school.
The Centre for Independent Studies proposes that single parents should be expected to look for part-time work once their children start school. This means the parenting payment would be paid in full while their children were small, but when the youngest started school, the payment would be halved.
This proposal strikes most Australians as eminently sensible. In a survey carried out for CIS by ACNielsen, more than four in every five Australians said single parents with school-age children should work part-time.
Seven out of 10 also said single parents should be expected to work full-time when their children get to high school.
If these changes were introduced, we estimate that it could save at least $1 billion a year.
This money might be used to reduce taxes on lower-income earners, or it might fund improved training or intensive assistance to help people find jobs.
Either way, it would be a better use of the money than simply paying people to stay at home for 12 long years while their skills erode, their self-confidence ebbs away, and their children grow up never having experienced a parent go out to work.
Peter Saunders is director of social policy research at the Centre for Independent Studies.
