Why it’s going to happen.

By Gary Scarrabelotti

The Budget has been delivered and the federal government hopes that the voters will forgive and forget the 2014 fiasco. 

Some might; perhaps many might.  But others won’t. 

I am thinking especially of conservative (typically Christian) voters with intact families who embrace precisely being a family as the point around which daily life revolves. 

These people are not defined primarily by income or by the number of children they have.  They might have more than one income and they could have few or many children. They may, or may not, receive Family Tax Benefits. They don’t define themselves, fundamentally, by whether they have a trade, a profession, a career or by whether they’re successful in it. What specifies who they are is a principle: that work exists for the family, not the family for work.  This might not be a front-of-mind formula, but it underpins how they live.  They understand the principle instinctively; and they grasp its implications for other families as much as for themselves. 

You might say that this segment of the population is “simply Family”. 

To be sure, this group of voters is a shrinking element in Australian society.  In a tight election, however — which the next one will be — political strategists just can’t ignore, maybe, two to five percent of the electorate. This is so, especially in marginal seats, and above all because the group in question voted strongly for the Coalition at the 2013 federal election. Now they feel like jilted lovers and, for such, forgiveness is hard. 

Paid Parental Leave — first announced in March 2010 and, finally, dropped in February 2015 — is the thing that poisoned the wells. But it did its work slowly. Reservations in this segment of Coalition voters about Opposition Leader, Tony Abbott, who conceived the policy and ran hard on it, had set in long before the 2013 election. But hostility toward the Rudd-Gillard-Rudd governments was more intense.

In grievance deep 

What critically damaged Abbott’s “cred” with conservative pro-family voters was the fact that he wouldn’t budge on PPL while, at the same time, he demanded Budget reforms that hit families hardest — in particular, the proposal to scale back Family Tax Benefit (B). Under this, single-earner families whose youngest child was over 6 years-of-age would no longer be entitled to the payment. 

The measure looks like it was designed to force stay-at-home mothers back into the workforce. 

The government still wants to implement this change – something that penalizes poorer families that choose to focus on nurturing children in the home environment. The measure is presently before the Senate and the government is arguing that, unless the Senate agrees to scale back the benefit, the government will drop its new childcare proposals – proposals that will be of greatest advantage to well-to-do women in work. Indeed, if you don’t take a serious job, you can’t benefit from them.

The implication seems clear: working is greater than mothering. 

Well, my Facebook network has lit up over that one. The idea that higher income working women will miss out on new childcare payments, unless lower income stay-at-home mothers lose their FTBs, has led to some unkind remarks about the some of the highest people in the land – and by folks who voted for them in 2013. 

Sanguine me 

Unlike, however, my Facebook friends and connections who are going ballistic over this bizarre bargain, I am not too worried. It won’t happen.

Labor won’t vote for the Family Tax Benefit changes. We can rely upon Bill Shorten for that: he can’t go back on his word now.  So the proposed childcare reforms will lapse. 

And maybe, just maybe, the government won’t be too grieved by the result. This happy failure will give Prime Minister Tony Abbott, Treasurer Joe Hockey, and Social Services Minister Scott Morrison time to rethink.  The proposed White Paper on taxation, due in December this year, should provide the occasion. 

For my part, I have no problems at all with eliminating Family Tax Benefits in their present form. They are not really tax benefits. They are social welfare, paid in lieu of tax deductions.

If a two-income family that benefits from two tax-free thresholds gets paid welfare to hold down two jobs, then why can’t a single-income family split its income while saving the state the cost of childcare? 

We need to remember that FTBs were introduced by John Howard to compensate lower income families for the GST. Instead, however, of offering them a tax deduction, which recognized the numbers in a family dependent on its income, he offered a welfare payment. 

This was a bad idea for a couple of reasons: first, because welfare usually weakens the incentive to work; and, secondly, because family income is made dependent on the largesse of the state. 

Putting families – putting anyone sound in mind and body — on the government slate is a bad idea.  It’s bad in many ways.  It’s bad for politicians because it offers them a temptation to bribe voters. It’s nasty for governments (as we’ve seen) when circumstances oblige them to turn off the spigot. The pain they suffer is off the scale, especially when don’t have a policy alternative to offer. It is also bad for families — the basic units of society — because it deprives them, to the degree they are dependent upon the state, of financial independence. 

Reasons for hope

My own view is that FTBs should not, however, be abolished without restoring tax equity to families. That is to say, to ensure that the tax system recognises the number of people in a family dependent on total family income. Minimally, this means splitting household income between the parents. Without this kind of reform, mere abolition of FTBs would be cruel, unjust and profoundly anti-social. 

Think equity. If a middle class member of a two-income family that already benefits from two tax-free thresholds gets paid welfare to go to work, then why can’t a single-income family split its income and secure the same tax-free earnings ($36,000 per annum) while saving the state the cost of childcare?

I mean, you’d have to be dim not to get the point. And I don’t think that dim people lead the government.  Oh, sure, they made some almighty blues in 2014, but they want to be re-elected. That’s why I’m confident that, in 2016, Tony Abbott, Joe Hockey and Scott Morrison will deliver on a fairer tax treatment for single-income families. 

This article is an edited version of one originally published on the Henry Thornton blog.