Susan St John: Children off to a good start thanks to Aussie generosity

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Sydney Harbour. Photo / Supplied
Sydney Harbour. Photo / Supplied

Next week we can expect a tight Budget and little or no relief for hard-pressed families. Last week the Australians showed a different way forward despite tough times.

Maybe that is because they put more emphasis on social inclusion and sharing the wealth of the country.

They understand it is important to use policy to deliberately counter the widening gaps in society.

Thus the Australian Budget reflects much more progressive thinking about supporting young children. Families were given a real increase in their family tax credits which are already far more generous than in New Zealand.

Take, for example, a low-income one-earner family with 2 children under 13.

In Australia, whether on a benefit or not, the family will now get A$260 ($336) a week if the two children are aged 5-13 and A$282 a week if the youngest child is under 5.

Moreover, if the child is a newborn there is a bonus of an extra A$5000 per year.

In New Zealand this family gets just $216 a week for their children if they satisfy the hours of work and are not on any benefit.

If they are on a benefit, or have simply lost work because of the earthquake or protracted recession, they get only $156 a week.

We know how important the first year of a baby's life is, but only some babies are helped in New Zealand.

Low income parents with a newborn who don't meet the stringent requirements for paid parental leave, get at the most an extra $1200 parental tax. Parents who are on a benefit get no extra financial assistance at all.

All babies count for generous assistance in the more inclusive Australian approach that recognises that the needs of the child don't change because of the benefit status of the parent.

Time is well overdue for a complete rethink of catching up with Australia, and rejecting the punitive aspects of Working for Families.

Because the Australians do it better they have a less severe child poverty problem. All Australian low income families qualify for full family tax credits instead of being partly determined by the work status of parents as in New Zealand.

The Australians don't tie work incentives to having children as we do with the discredited In Work Tax Credit. They use mechanisms such as a large zero tax bracket (now A$18,200), to reward the work effort of low income people.

And a family's disposable income goes further in Australia as GST is still only 10 per cent with exemptions for most health and medical care services, most educational services and most food for human consumption (sensibly, prepared foods, confectionery, snacks, icecream, biscuits, alcohol, soft drinks and certain other drinks do incur GST).

They also have a finely tuned Working Credit that is not related to children and is designed to help workers in transition from a benefit to paid work.

It is a modest affair, unlike New Zealand's In Work Tax Credit that is paid to families right up the income scale, and to caregivers who may not necessarily themselves be in paid work.

The thresholds for family tax credits in Australia continue to be fully indexed for inflation - compared to an actual reduction being forced on the threshold in New Zealand.

By 2018, the New Zealand threshold will be down to a very low $35,000 while, by then, the threshold in Australia will be around A$54,000.

In the meantime their rate of clawback for family tax credits remains at 20 per cent while ours will rise to 25 per cent by 2018.

By then we will not just be the poor cousins as far as family policy is concerned, we might be lucky to have any families here at all.

We should take no comfort from the fact that the Australian Budget is by no means perfect.

The Australian Council of Social Services, while applauding many of the budget measures, describe the budget as "Robin Hood comes good, except for single parent families".

It is dismayed that sole parents with a youngest child over 8 are to be regarded in the benefit system as the same as a single person without children, affecting 100,000 of the poorest Australian families.

One black mark on an otherwise favourable picture.

Especially in a recession, any cuts to sole parents' incomes will just result in more child poverty.

Let us hope the Government does not emulate this policy of taking from sole parent families, especially when the other parts of New Zealand's family assistance are so badly designed and ungenerous.

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