The government’s years-long effort to reduce middle-class welfare looks as if it will finally bear some much-shriveled fruit, with the likely passage of a new omnibus bill combining a new version of some long-term zombie savings with changes in childcare benefits as well as an increase in paid parental leave, combined with its controversial end to so-called “double-dipping”.
The government’s journey to significantly reduce Family Tax Benefits A and B began in the 2014 budget with major cuts that never made it through the Senate. The cuts were then scaled back and attached to a retargeting and increase of childcare benefits during Scott Morrison’s time as social services minister in 2015. Today’s package contains further reductions in the savings from FTB cuts: the FTB-A (the one for two-income families) fortnightly payment will be increased by $20 instead of the previous $10, but the annual supplement will still be abolished. But the attempt to cut FTB-B (for single income families) off when the youngest child reaches six, first amended to 13, has now been abandoned, although the annual supplement has been abolished.
The Coalition was always being profoundly hypocritical in its pursuit of cuts to the Family Tax Benefit system: in co-operation with News Corp, it demonised much more limited attempts by Labor when in government to reduce the Baby Bonus and reduce (not end) access to FTB by higher-income earners. Tony Abbott, Joe Hockey, Malcolm Turnbull and Christopher Pyne lined up to savage Labor’s measures as “class warfare” and the “politics of envy”; Christopher Pyne even compared it to China’s one-child policy (Labor’s Andrew Leigh has a good collection of the Coalition’s quotes here). But once in government, it sought to go much further than Labor ever had, and Labor returned the favour in spades, using the cuts as part of its successful campaign against the unfairness of the 2014 budget. At last year’s election, though, Labor, too, proposed to wind back, though not abolish, the annual supplement, for high-income earners.
The government’s proposed cuts were always worthwhile given how wasteful the FTB system is — even now, families earning over $200,000 a year can still receive FTB-A payments and families earning up to $100,000 a year can receive FTB-B. It’s a legacy of the profligacy of the Howard years and a rationale — advanced, ironically, by Tony Abbott some years ago — that welfare for low-income earners is only politically acceptable if middle- and high-income earners get a little, too.
The final form of the cuts will be a shadow of the original proposals — and the government and its media allies are emphasising the FTB fortnightly payment increases while skipping mentioning the end of the annual supplement. And the savings will now be, as per Morrison’s approach in 2015, redirected to its expansion in childcare funding, which will primarily benefit low-income earners.
It has also tried to find a way out of the deep hole it dug for itself when it labelled the use of both employer and government paid parental leave scheme “double dipping” and a “rort” (despite government ministers themselves, and News Corp journalists, benefiting from it). By extending the paid parental leave scheme it inherited from Labor two weeks to 20 weeks, it slightly mitigates the impact of its prohibition on “double dipping” — though whether that will be enough to get it through the Senate unamended remains to be seen.
Labor is still attacking both the PPL change and the FTB changes today. But nearly three years is surely long enough to rub the Coalition’s nose in its hypocrisy over middle-class welfare. The Family Tax Benefit system needs to be dramatically scaled back to target lower-income earners. It’s time Labor stopped standing up for the right of $200,000+ families to get taxpayer handouts.