The challenge
Over the past two decades, Australian family policies have evolved significantly, including major developments in paid parental leave, childcare subsidies, and family tax benefits. During this period, the Australian personal income tax system has also undergone reforms aimed at simplification, improved progressivity, and incentives for workforce participation.
Despite these reforms, Australia continues to face a high “motherhood penalty”—the gap in employment outcomes between mothers and fathers—which remains above many OECD countries. Child poverty also persists: since the 1990s, one in six Australian children has lived in poverty (ACOSS, 2022). The transition to parenthood often triggers substantial reductions in household income and changes in labour market outcomes, contributing to gender inequality, poverty, and intergenerational disadvantage.
The research
This project examines how tax and family policies influence parents’ decisions on income, employment, and gender dynamics during the early years of parenthood.
It currently encompasses four key strands:
- Child Penalty and the Tax and Transfer System
Parenthood is associated with significant income reductions and labour market disruptions, known as the “child penalty.” Using data from the HILDA Survey (2001–2021), this research analyses how Australia’s tax, welfare, and family policies relate to the child penalty.
- Family Benefits in High-Income Countries
This scoping review examines family benefits in 36 high-income countries, including Australia. It investigates (i) cash transfer and tax credit policies, and (ii) their impacts on parents and children, covering income, employment, gender dynamics, health, and education.
- Financial Hardship and Wellbeing Experiences of Families in Australia
Using three repeated cross-sectional datasets (Royal Children’s Hospital National Child Health Poll, Australian Unity Wellbeing Index, Taking the Pulse of the Nation survey), this study explores financial hardship and wellbeing, including mental health, among Australian families.
- Family Background and Adult Labour Market Success
This strand examines how family socio-economic background—including timing, duration, and sequencing of economic hardship—affects young adults’ labour market outcomes in Australia.
The impact
This project provides policymakers with a comprehensive understanding of the challenges families face during the early years of parenthood. By highlighting the interplay between labour, family, and tax policies, it informs strategies to reduce the child penalty, improve gender equality, and address child poverty.
Our researchers
Melbourne Institute - Dr Ana Gamarra Rondinel (Lead).
Spanish National Research Council - Esperanza Vera-Toscano (International Collaborator).
The Centre for Community Child Health, Murdoch Children's Research Institute - Dr Anna Price (Investigator).
Our partners
Australian Research Council - this is an ARC Linkage Project (ARC LP190100117)
Reports and media
- Do Taxation and Transfer Policies Mitigate the Child Penalty? Evidence from Australia
- When a Baby Arrives: How Taxes and Transfers Shape the Child Penalty in Australia
- Many parents – mostly mothers – lose family payments from the first dollar they earn. Here’s how we could fix it
- Contribution to Economic Reform Roundtable, Submission to Australian Government Treasury, 2025
- Spend Now, Save Later on Poverty-Curbing Policies
- Too Many Aussie Families Are Starting a Family and Raising Their Kids in Poverty
- Raising Children in the Lucky Country: Understanding the Income Penalty and Poverty at Childbirth
- Which Families Are Feeling the Pinch of the Pandemic the Most?