Release type: Media Release

Date:

Rewarding and supporting parents to engage in work

Ministers:

Senator the Hon Chris Evans
Minister for Tertiary Education, Skills, Jobs and Workplace Relations

The Gillard Government will increase assistance for parents on income support and create new incentives to help them into work, through new participation measures in the 2011-12 Budget.

Joblessness is associated with higher rates of poverty, poorer health and lower education attainment for both parents and their children. It can lead to entrenched disadvantage across generations.

In Australia only 50 per cent of single parents are in work, well below the OECD average. Single parents also make up around 70 per cent of jobless families.

Reforms in the 2011-12 Budget will:

  • Introduce a more generous income test for single parents on Newstart Allowance with school age children, which better supports part-time work;
  • Make Parenting Payment eligibility more equitable by gradually reducing grandfathering provisions, so eligibility is better aligned with other single parents receiving income support; and
  • Provide additional training, career advice and parenting support to parenting payment recipients.

More generous income test for single principal carer parents

The Australian Government believes that work should be rewarded and understands that part-time work is more accessible and manageable for many single parents.

The current system imposes high effective rates of tax on single parents who work part time – greatly reducing their income support payments when a small number of hours are worked. Given single principal carer parents are balancing work and care responsibilities, a more generous taper is appropriate.

To turn this around and encourage parents to move into part-time work, the Government will provide $179 million to reward part-time work by reforming the income test for single parents on Newstart Allowance.

Changing the taper rate from the current 50 or 60 cents in the dollar to 40 cents from 1 January 2013 will mean single parents keep up to an extra $3900 of their income from part-time work each year.

This will better support part-time work for 50,000 single parents on Newstart Allowance with children aged 8 years and over.

Single parents on Newstart Allowance will be able to earn up to nearly $400 extra to a total of up to $1346 per fortnight, before they lose eligibility for payment.

Fairer treatment of Parenting Payment recipients The Government is also introducing new measures to ensure that, over time, all single parents will be subject to the same rules and be treated in the same way.

Currently, grandfathered recipients stay on Parenting Payment Single (PPS) and Parenting Payment Partnered (PPP) until their youngest child turns 16, while new recipients are only eligible until their youngest child turns 6 (PPP) or 8 (PPS).

From 1 January 2013, the Government will gradually phase out grandfathering arrangements for Parenting Payment recipients with a youngest child aged 12 to 15 years, to make the treatment of parents in similar circumstances more consistent. This will mean that grandfathered recipients stay on Parenting Payment until their youngest turns 12, or 13 for those whose youngest child was born in 2000.

Grandfathered recipients whose youngest child was born before 1 January 2000 will be exempt from this change.

Any children born from 1 July 2011 to grandfathered recipients will only extend Parenting Payment eligibility until those children are aged 6 (for partnered parents) or8 (for single parents).

More services and support for single parents

The Government understands that it can be tough for single parents and will ensure they get the support they need.

The budget will include a targeted package of assistance totalling up to $103 million over four years aimed at supporting single parents in their parenting role as well as preparing them for work once their child is settled in school.

Targeted assistance will include:

  • $80 million for additional training places for single and teenage parents so they can get the skills they need to get a good job when they return to the workforce.
  • $19 million for additional community based support for parents like play groups, and mentoring through the Communities for Children program.
  • $4 million for access to career counselling through Job Services providers. This career advice will be available to grandfathered parents in the year before they move onto Newstart so they can plan their return to work and access the training they need.