Miranda Stewart and Emily Millane, Melbourne Law School - Family Tax Benefits in Australia

Title: Family Tax Benefits in Australia: Objectives, Impact and Directions for Reform

Abstract:  This paper presents work in progress with the Brotherhood of St. Laurence about Australia’s family payments system, whether it is fit for purpose in contemporary family, social and economic conditions, and potential directions for reform. Australia has had a system of government assistance to families raising children for nearly a century. The current system, comprising Family Tax Benefit A and Family Tax Benefit B, was established in 2000 by the Howard Government. Despite their name, FTB A and FTB B are paid as cash transfers to the carer of eligible children, depending on the child’s age, work and residence status of parents or carers, and the income of the family. Family payments are intended to contribute to the cost of raising a child (in particular, FTB A) and to support the care of children (in particular, FTB B). FTB A and B interact in complex ways with other benefits including Paid Parental leave, the Child Care Subsidy, Parenting Payment and JobSeeker Payment, as well as the child support regime and income tax rates. The adequacy of FTB A and FTB B has declined over time, so that fewer than half of Australian families receive FTB A or FTB B today, but they remain an important contributor to household income for low income sole parent and couple families. Eligibility rules are complex and administration is often difficult to navigate, so some miss out and families can end up with overpayment debts. The means testing of the payments contributes to work disincentives, especially for women, and poverty traps. Establishing a direction for reform requires reconciling diverse and sometimes competing policy goals.

Presenter: Miranda Stewart and Emily Millane, Melbourne Law School, University of Melbourne

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