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Assistance for families: An assessment of Australian family policies from an international perspective. Peter Whiteford, Social Policy Research Centre, University of New South Wales. Scope and objectives of family assistance.
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Peter Whiteford, Social Policy Research Centre, University of New South Wales
All government programmes can impact on family life and family finances. However, main forms of assistance include cash benefits and tax provisions that supplement family incomes, income support payments that support families not in paid employment, payments during periods of caring for children, support and services for childcare, and education and health care programmes for children.
Objectives can include: contribute to the costs of raising children; redistribute over the lifecycle; increase fertility; provide equity in taxation; relieve child poverty; enable parents to care for children independent of the labour market; promote gender equity; boost low earnings; reduce demands for a minimum wage; increase incentives to work and relieve unemployment or low income traps
Progressivity of family assistance in OECD countriesRatio of family cash benefits received by poorest quintile of working age to benefits to richest quintile
Family benefits vary significantly by income level – Australia is generous to low-income to average income families but not to the well-offAssistance for children as % of average wage, by gross income as % of average wage, 2007
Australia and the United Kingdom provide the most generous in-work payments to familiesNet family assistance for families working at the minimum wage, USD PPPs
Effective tax rates can be high for parents seeking full-time work, but are lower in Australia than most other countriesAETR from zero to 67% APW, 2004
Australian public spending on maternity and parental benefits is amongst the lowest in the OECDSpending on maternity and parental leave per child born in 2001 - % of GDP per person
19 of 30 OECD countries have the individual as the tax unit, but most countries have elements of joint taxation such as transferable tax reliefs and income-tested benefits such as social assistance income-tested family payments or housing benefits.
Income-tested benefits cover a higher proportion of low income families in Australia than in many other countries; social insurance can have similar incentive effects for single people or lone parents as social assistance, but generally avoids income-testing second earners.
Incentives for second earners when the spouse is low paid are worst in Denmark, and Australia ranks 4th worst, but are relatively good in France and Luxembourg (with family tax units).
Most countries (except Germany and Czech Republic) are relatively neutral or support second earners at around the average wage.
Child care costs and availability could well be a major influence on incentives.
See OECD Family Database www.oecd.org/els/social/family/database PF4
Australia spends less than 60% of the OECD average on child care and pre-school.
Enrolment rates for children under 3 years are 10th highest in the OECD, but relatively lower for older children.
Fees (before assistance) are roughly 40% higher than OECD average.
Child care assistance reduces costs significantly, particularly for low-income parents – in 2004, fees for a high income couple were about 14% of net family income (2 % points above average), but for a low income lone parent they were 7% of net income (5% points below average), comparable to France, Austria and Denmark.