Families: the sinking middle

The Howard Government’s tax reforms of two years ago may have changed a lot of things but they certainly didn’t deliver on their promise to improve work incentives for low and middle-income families.

That is why Australian middle-income families – those on modest wages or wages made modest by their childrearing responsibilities – could be better described as the sinking middle.

Frequently families face a triple whammy. Any extra work they perform is taxed away. This work also causes them to lose social security payments that are supposedly designed to help them raise their kids. And at the same time, industrial conditions are forcing them to work longer for less.

Parents shouldn’t have to sacrifice family time to give John Howard 60 cents or more of each extra dollar they earn.

Add to all this new administrative rules for family payments that clawed back nearly $1,000 on average from 650,000 families last financial year.

It is a lethal cocktail!

NATSEM calculates that a family with two children will invest an average of $450,000 raising their kids from birth to age 20.

These costs, combined with the Howard Government’s tax take, help explain why so many families with young children now contain two wage earners.

The latest Australian Bureau of Statistics census data indicates that 51.3 per cent of new mothers in two-parent families return to work within one to two years of the birth of a child. A further 3 per cent are out looking for work.

The cost pressures of raising children leave parents with no choice but to remain in work or to go back soon after the birth of a child.

This highlights why we need to renovate the industrial relations system – such as providing Paid Maternity Leave and additional family leave – to balance the time parents spend raising children and earning a living.

While it has not been mute on the subject of work and family issues, the Howard Government does appear to be both deaf and blind to any suggestion of reform using industrial rules to give families more time together.