Craig Emerson (Rankin, Australian Labor Party) Share this | Hansard source

They are required to move to a second form of welfare, Newstart—a transition from welfare to welfare—and that involves a loss of $29 a week. We heard from the member for Hasluck—and I am sure we will be hearing from the member for Bowman—that we have a great and compassionate government. But sole parents, immediately upon their youngest child turning eight, lose $29 a week. Let us understand who sole parents are. Overwhelmingly, sole parents are women who are struggling to bring up their children. They have been deserted—and, in many cases, physically and sexually abused—by a male. They deserve our support and they deserve our encouragement to move from welfare to work when that is feasible. But they do not deserve the brutality of the legislation that was introduced and passed by this government in this parliament last year—and that is what they get.

In addition to losing $29 a week as they move from sole parent pension to Newstart, when sole parents look for work—and they are obliged to—the income-free area for Newstart is narrower than the income-free area for the sole parent pension, which means they start paying tax and losing benefits at a lower level of earned income. In the transition from sole parent pension to Newstart, and then into work, there is an increased disincentive to move from welfare to work. In addition, the rate at which Newstart is phased out is harsher than the rate at which sole parent pension is phased out—a second strong disincentive to move from Newstart into work. Rather than encouraging sole parents to move from welfare to work, the legislation obliges them to move to a lower level of welfare and, in the process, erects heavier and more punitive barriers to moving from there—Newstart—to work. That is why I say it would be very difficult to come up with a scheme that is more calculated to weaken the incentive to move from welfare to work than this government has managed to come up with after five years consideration.

The government announced a review because it knew there were problems with this legislation. We on this side of the House felt that perhaps the government had listened to the pleas by welfare organisations, other representative groups and the Australian Labor Party to provide genuine incentives—a carrot to move from welfare to work—rather than a very big stick. But the government made no such amendments in that direction. And so, as a result of this legislation passed last year, the stick got bigger and the carrot got smaller—and member after member of this government has stood up and said, ‘Aren’t we a great and compassionate government helping people in this way?’

The truth is that, even given the budget measures announced on Tuesday night, those disincentives for single mothers to move from welfare to work remain very heavy. Calculations performed by NATSEM and some calculations that I did myself confirm that female sole parents in this situation who move off the Newstart allowance and into work lose so much through the loss of benefits, income tax paid, child-care costs and work and travel costs that they are effectively working for between $2 and $3 an hour. The government did do something positive in the budget on Tuesday night by increasing the low-income tax offset from $235 to $600 a week. I am especially happy to acknowledge that, as a number of my colleagues have, because I proposed it in the prebudget submission that I sent to Treasury. In fact, I proposed that the low-income tax offset be lifted from $235 to $625. The government lifted it to $600, but I acknowledge that provides some benefit because there is effectively a tax-free threshold for sole parents of around $10,000 compared with the smaller threshold before that.

But, even after taking account of that effective lift in the tax-free threshold for low-income earners to around $10,000, according to the Brotherhood of St Laurence, who have had the time to do this work, a sole parent of two schoolchildren aged over eight years who is on the minimum wage and is taking up a 30 hour a week paid job will still lose around 64 per cent of their additional earnings, such that they are effectively working for an hourly rate of $2.66. So the figure is still in the same range that I and NATSEM calculated: that is, poor single mothers are required by this government to work for between $2 and $3 an hour.

But let us have a look at the story for high-income mothers who are in millionaire families. They are paid $3,300 a year to stay at home while poor single mothers are required by this government to go out and work when their youngest child turns eight for as little as $2.66 an hour. That is this government’s idea of fairness. It is a brutal piece of legislation.

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