Opinion & Commentary
Leave off, tax breaks can redress child costs
Three fundamental issues underlie the maternity leave debate. First is the form and level of assistance governments should provide to help meet the costs of having children.
Second is the method of ensuring equal treatment for all families and all mothers, whether or not the mothers are in the workforce. Third is the unacceptability of forcing employers to bear the costs of maternity leave, with the inevitable discrimination and reduced employment that would follow.
Of course, governments in Australia have always made concessions to families for the costs of children, by way of tax measures or endowments or cash allowances. Forty-odd years ago, those concessions were of equal value for all parents, irrespective of family income.
Since then, not only has their relative value declined greatly but equal treatment also has been steadily abandoned in favour of targeted welfare and means testing.
There is a dog's breakfast of conditional tax-rebate baby bonuses and child allowances of varying value, with low-income families treated relatively generously while middle and upper-income families have lost ground.
Some high earning, double-income families get liberal childcare subsidies, while single-income families with mothers at home get almost nothing.
It's a mix of administrative nightmare, unprincipled and confused policy, and glaring inequity. The proposals we've heard so far would only make things worse by more discrimination between working and non-working mothers, and stronger incentives for separating mothers from babies.
Some people argue against the whole principle of government child-rearing concessions. They claim that children are voluntary choices and "consumer goods" of parents, and it is unfair to require the childless and singles to help support them.
There are arguments against such a view. A child is not its parents' commodity. From the moment of birth, every child has an independent claim to personhood and (nascent) citizenship of no lesser value and status than that of any adult. Every adult, even the richest, is entitled to a threshold-income free of tax.
The implicit principle here is that no citizen should be so taxed as to deprive them of the bare necessities of life.
For children, it is their parents who are required by law to provide the necessities of life. They should therefore be entitled to a tax concession or its value equivalent on behalf of the child they must support and care for.
As for the supposed inequity involved in using part of the taxes of the childless to subsidise the parents of children, we are all children at one stage and therefore enjoy the benefits deriving from the tax concessions to our parents during our childhood. From a lifecycle perspective, then, there is no inequity.
There is one clear way to value all children equally and to treat all families fairly. This is by the administratively simple method of providing one uniform annual taxation concession or cash allowance for the parents of every dependent child. Low-income families also would continue to receive whatever other concessions or assistance are due to them.
The value of the child concession should be not less than $3000 per annum per child. The total cost of doing this would be roughly equivalent to what we already spend on child assistance (other than for education) in a highly complex, administratively expensive and unfair way. Raising the amount per child to $4000 per annum would match the sum already paid, in round terms, for the children of low-income families.
Yet even this would not return us to the relatively generous treatment of child costs, in relation to middle-level incomes, of the 1960s. And it is much less than the actual costs of rearing a child.
This single measure could replace all existing family allowances, childcare subsidies, maternity allowances and other concessions for children, and be payable in a fashion to ensure that every family gets the same monetary value per child. For handicapped children or for multiple births, special additional concessions need not be ruled out.
The standard concession would be available for use in any way that suited the particular family – whether to help with natal and post-natal costs, or absence from work, or child care.
It would thus be fair while allowing maximum flexibility to meet the differing circumstances of individual families. It would resolve the endless and invidious claims against each other by working and non-working mothers.
It would make a contribution to reducing the costs of children and therefore to arresting our declining fertility.
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About the Author:
Barry Maley is Senior Fellow at the Centre for Independent Studies and author of Family and Marriage in Australia, published by CIS.
