The rich get richer while child poverty just increases

The Tax Package 2024 includes tax bracket increases, Family boost, $25 per week In Work Tax Credit (IWTC) , and $10 for the Independent Tax Credit per week.

The figures in Treasury’s graph can be used to show the total tax package is $2.9 billion per annum or around $30 per household on average.  

The top 2 quintiles (40% of households) gain $1.6 billion or 55% of the total.  But they also benefit by $750m a year from the landlords’ tax reduction. When that is Included, they get 64%, by far the lion’s share of the total.  What is so shocking is that the lowest quintile gets just 5.4% of the total.   About 130,000 households get nothing at all and 8000 are slightly worse-off. 

No one seems to have worked out how the many spending cuts will be distributed, but increased transport costs, prescription charges, lower quality school lunches will hurt the poor most. We know that rents are rising along with rates and insurance. Cut-backs to budget advisory services and foodbank funding increase the misery along with changes to price indexation for benefits and an inadequately adjusted minimum wage. 

Remember, the worst-off families get no tax relief in this budget and miss out on the IWTC because they are on benefits The IWTC payment (which assist with the costs of raising children) is now nearly $100 per week for 1-3 children with an extra $15 a week per additional child.  In this recession, as low-income families lose work, as they will, they also lose $100 per week (more for larger families) FOR THEIR CHILDREN.

We can infer from the Child Poverty Report that the coalition government is abandoning any pretence to reduce child poverty.   They think forcing mothers into paid work is the way to address their poverty, ignoring and devaluing the demanding work of parenting.  

The ideology of the government clearly is to view all benefits, and even a part benefit as bad and paid work always better and more valued than unpaid work.

Some few sole mothers will get the Minimum Family Tax Credit (MFTC) to top up their earnings but only if they get completely off a benefit.  That is, the state rewards getting off a benefit, with another costly tax credit that somehow is deemed morally superior to a part benefit

But the MTFC is just a state funded replacement of their part benefit and is the worst designed benefit imaginable (reduces dollar for dollar for any extra dollar earned!) But hey– being off benefit even if in ill-paid, dangerous unsuitable and low skilled work must be the key to a better life. Looking after your own children is clearly viewed as inferior and unworthy work.

Working for Families (WFF) is supposed to reduce child poverty, but the poorest children are denied a poverty reducing payment in order to provide a ‘work incentive’. National have a history of promoting the work conditional aspects of WFF as they have done in the latest budget. The price is that families denied the IWTC fall into deeper poverty. 

Despite their names, neither the IWTC, nor the weird MFTC are effective work incentives. The IWTC rewards being entirely off a benefit, not the extra hour of work, while the MFTC has huge work disincentives with its 100% abatement for extra earnings.  

Until we get a proper review of WFF that puts poor children at the centre not paid work, child poverty will continue to get worse.