New Report Renews Calls to Raise Welfare Payments

A new study has found the estimated costs of raising children in Australia have risen substantially over the past two decades, leading to renewed calls for an increase in Newstart and Youth Allowance payments.      

The Australian Institute of Family Studies published a new study on the costs of children on Tuesday, containing analysis from researchers at the University of New South Wales’ Social Policy Research Centre.

The researchers found the estimated weekly costs of raising a child ranged from $140 for unemployed families to $170 for low-paid families.

They used a “budget standards” approach to estimate children’s cost for things like food, clothing and school expenses, as well for their share of household expenses like household goods and services and transport costs.

Co-author Professor Peter Saunders said the budget standards approach identifies and costs all the items needed to achieve a “minimum income standard for healthy living” in Australia today.

“We updated the existing budget standards using new ABS data on what Australians own, what they do and what they spend their money on,” Saunders said.

“For example, we included the costs of mobile phones, which are now commonplace, and what it costs to feed and clothe children by pricing shelf items in nationwide stores, such as Woolworths and Kmart.

“A series of focus group interviews with low-income families told us how they manage on their budgets, which turned up important trends, including clothes swapping for school uniforms and buying more home-brand or generic items in supermarkets and chain stores.”

Institute director Anne Hollonds said the costs of raising children addressed in this report were of great interest to families and policy makers.

“Families are very aware of increasing costs and the need to make decisions about managing the household budget and the costs of raising children. Policy makers need robust information to inform family policies, including the adequacy of minimum incomes,” Hollonds said.

Saunders added that the new estimates of the cost of children were considerably higher than those produced by updating the original budget standards from 1995.

“A key advantage of the budget standards approach is that it makes transparent the key decisions, choices and assumptions required to estimate how much is needed to achieve the minimum healthy living standard, consistent with adequate levels of social participation and inclusion,” he said.

“The results provide important data for assessing how much income unemployed and low-paid families need and can thus guide the setting of the Newstart Allowance and the minimum wage.”

Research from @SPRC_UNSW & @FamilyStudies shows the cost of raising #children has risen in the past 20 yrs, with implications for families & policy makers https://t.co/FpnyAspKbT

— UNSW News (@UNSWnews) April 17, 2018

Welfare advocates used the findings of the report to call for an increase to social security payments.

Edwina MacDonald, the director of policy and advocacy at the Australian Council of Social Service, told Pro Bono News that since the global financial crisis, billions of dollars had been unfairly cut from family payments.

“For instance Family Tax Benefit – a government payment to help families with the increasing cost of children – has been frozen by the government for two years,” MacDonald said.

“Freezing this payment means that families have to cover higher living costs with less money in their pocket. As a result, many families go without food, transport, telecommunications and activities to make ends meet.

“We often hear of single parents skipping meals to ensure their children can eat. Parents struggle to cover the cost of new school shoes and uniforms, excursions, and internet and phone connection for the home.”

MacDonald called for family payments to be benchmarked to basic living costs, and said a budget standard provided a useful tool to assess these costs.

“At the moment, a single parent loses $85 per week when their youngest child turns eight years old. This policy ignores the increasing cost of raising children and entrenches poverty,” she said.

“The budget standards have provided the tool showing that Newstart and related allowances are well below the amount people need to cover the most basic of living costs, such as a roof over their head and food on the table.

“On the basis of this research we’re calling for Newstart to be increased by $75 per week to alleviate the incredible pressure on people just trying to survive, let alone look for paid work in an employment market where there is only one job for every eight applicants.”

The Greens also renewed their calls to increase Newstart and Youth Allowance payments by $75 a week.

“It has been clear for a long time that Newstart and Youth Allowance were woefully low and urgently needed increasing, [and] this study’s findings that family costs are significantly higher than previously thought reinforces again the urgent need for an increase”, Greens Senator Rachel Siewert said.

“Newstart in particular has become a politicised payment that both Liberal and Labor governments have refused to increase in real terms for over two decades.

“These latest study findings means that families living on or below the poverty line are struggling even more than previously thought… [And] we shouldn’t be forcing people to live in poverty just because of a lack of political will.”

Labor’s shadow minister for families and social services, Jenny Macklin, said in response to the report that the government should drop its plan to axe the fortnightly Energy Supplement and scrap the proposed cuts to Family Tax Benefits.

“Australian families are doing it tough under the Turnbull government – and lower income families are being stretched to breaking point,” Macklin said.

“It’s time for Turnbull to drop his unfair cuts to families for good.”

The report concluded that it was difficult to fathom how Australia – once a world leader in budget standards research – had “allowed itself to fall so far behind what others are now doing”.

“We do not claim that the new estimates alone should form the basis of a campaign to ensure that family payments and other components of the social safety net should be increased to cover the new estimates of the costs of children,” the report said.

“However, the onus is on those who argue against such a move to demonstrate how families with children can meet prevailing community standards if they receive incomes that are below those implied by the new budget standards.”