Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard   

Previous Fragment    Next Fragment
Wednesday, 31 August 1994
Page: 656


Senator HARRADINE (12.55 p.m.) —I want to talk today about families and government economic policy. Before I do, I ask the chairman of the Senate Standing Committee on Foreign Affairs, Defence and Trade whether he discussed with his guest yesterday the human rights violations in China. I am happy that Australia has given the PRC the laws under which we govern. I remind the Senate that yesterday a further example of the gross, continuing and probably more drastic violations of human rights that are occurring day by day in the PRC was revealed to us through an international human rights organisation. The organisation indicated that the organs of executed prisoners were extracted without prior approval or consent and that, in order to get them fresh, the executions were being botched.

  That information came out yesterday and it was reported in the press. I would hope that, on occasions such as this, members of parliament might raise with senior PRC officials the absolute abhorrence of the people of Australia and its parliament when they are faced with those sorts of gross and continuing violations of human rights.

  I come to a much more mundane but, nonetheless, important question and that is the future of Australian families. Recently, I gave an address entitled, First . . . do no harm: Families and government economic policy. At the end of my speech today I will seek leave to have that document incorporated in Hansard. It is not a long speech but it does have some information that I think might be interesting to honourable senators.

  The admonition `First . . . do no harm' is important for governments, bureaucrats and parliament when considering the family. It is the admonition in the hippocratic oath to doctors. However, my concern is that governments are not asking themselves whether their policies are actually doing harm. They are not asking themselves: does the policy reflect the fact that the family is the fundamental group unit of society—with pre-eminent rights and functions not to be usurped by the state? Does the policy respect the principal of subsidiarity? Is the apparent need for intervention or aid being driven by other government policies having unintended consequences?

  A government which attempts to solve economic problems of one kind of family at the expense of other kinds of families is doomed to fail. Governments should accept that different families will do things differently. Some families want or need two income earners, others one and a bit, and others will seek to get by with one income. Importantly, families, over their lifetimes, will move between having one or more incomes and between having or not having dependants.

  Government taxes or subsidies should not be used to disadvantage those families in such choices. Governments should avoid social engineering, such as imposing de facto financial penalties on those who wish to undertake their own child care. The paradigm of victim, oppressor and rescuer may be quite naive when it comes to family dynamics. Families are complex organisms and using the coercive power of the state may often do more harm than good.

  Governments should not make it easier for men or women to desert their families or parents to evict their children. They should not make marriage burdensome by ignoring the income sharing function of families or by levying increased indirect taxes which bear more heavily on families. When we strip away the rhetoric about family support, family payments, home child care allowance, et cetera, we see a fiscal system which favours atomistic individuals without dependants.

  Because of the combination of the wage, taxation and social security policies, most families are now working longer for less than was the case in 1980. As a trade unionist, and as a member of this parliament, I believe that this is an indictment on those government family policies which have that result: making families work longer for less. That is not a trade union objective, nor would I have thought that it was an objective of this government.

  Lest misunderstandings occur, I should point out—most would know this—that I have spent 40 years in the trade union movement and in public life supporting women in both the paid and non-paid work force. Indeed, as a union advocator, I was one of the very first in this country to obtain, through a tribunal, equal pay for work of equal value. My concern is for a truly free choice to be exercised without discrimination by the government. The problem is that the government is responsible for gross discrimination.

  Let us look at an example in the document, `Let's Put Families First', by the Melbourne Catholic Archdiocesan Committee for the International Year of the Family. It looks at the case of two families, each comprised of a husband and wife with two pre-school children; each breadwinner falls $2,500 annually below average weekly earnings. Both families need another $10,000 per year to adequately cover their needs.

  Family A decides that the mother should take a part-time job to increase annually their earnings by that $10,000. Family B decides that, for a number of reasons, including that the mother is unable to get a job, the $10,000 required is to be achieved by the breadwinner taking a second job, part-time, or by accepting the offer of a higher paid job.

  Through the tax/social security system, family A—that is, the two-income family—is better off by $4,819 a year or $93 a week. That is not chicken feed. Of course, what is not taken into account is the fact that family A also benefits indirectly from operational subsidies to the child-care centre of $21.25 per place, per week for one child under three, and $14.25 for the other child over three, plus capital grants for non-profit centres of $5,081 per place.

  Basically we now have a tax system which ignores the cost of dependants or, as I prefer to put it, ignores the personal redistribution of income which naturally occurs as income and is shared with families. Another disturbing trend is the move to increased reliance on indirect taxes and user-pays charges, which hit families harder than other taxpayers.

  The fact is that it is now difficult for many families to survive on one income. The larger the family, the less choice it has: with more children its needs increase and its capacity to earn decreases. Why should not a family be able to survive on one income? After all, that has been the policy for years in the Labor movement.

  It should be remembered that at many stages of the life cycle families will either want to or have to be in the one-income bracket. Many mothers, for example, want to spend more than 12 weeks with their babies and many families will not be able to field two wage earners. I will not give an example because I have one which is to be incorporated about two young marrieds and what happens to them over a life cycle. It is a very interesting example and I commend its reading to honourable senators.

  We must realise that the best policy for families is to genuinely empower them by not overtaxing them. Families are not empowered by becoming state mendicants. Empowering families means letting them support each other. It means not taxing an income shared by several as though only one person depends upon it. It is not necessary for a transfer from wallet to purse to go via the Treasury and the Department of Social Security. In fact, families were short changed by the process of cutting dependants allowances out of the tax system and replacing them with family allowance and family payments. The result is that since 1976 more than $20 billion has been filched by the federal government from the purses of Australian mothers.

  The old British deed of covenant system—as I have got in the paper and I will have that incorporated—would be a better system. One person who undertook a legal obligation to pay income to another and paid it over in cash was allowed to transfer that income—to a specified limit, of course—to the other person for tax purposes. There is not much logic or commonsense in policies on families. Compared to single taxpayers, all families with children have seen a spectacular decline in their economic position over the last 30 years. The great majority of families have seen erosion or withdrawal of family allowance payments. In many families a wife has taken a paid job to help pay the bills and her reward has been a cut. We are told we have a problem with an ageing population and there is unemployment, yet the woman who decides she wants to raise children—that is, further taxpayers—is made to feel that she is a social drop-out. If she has a low income, she will get a parenting allowance. The much vaunted home child-care allowance is only $2.08 over the spouse rebate taken away from her husband.

  There are an increasing number of letters to the editor saying that is a three-card trick. In fact, it is not $30 a week that the mother—mainly the mother—or the carer is getting into his or her hands because the breadwinner is having the spouse rebate taken away. It is a net $2.08. It is worse than that but I would ask honourable senators to read the paper.

  Australia will not have long-term, structurally sound prosperity whilst policy makers in Canberra continue to wage economic warfare on families. Australia will be happier when women and their husbands are economically free to raise families. Children will be happier when their parents no longer dread their responsibilities or feel compelled to juggle them by putting infants in creches from 9 to 5. Families under pressure and disintegrating make for a very sad and long social decline. I seek leave to have the speech incorporated in Hansard.

  Leave granted.

  The document read as follows

"FIRST . . . DO NO HARM"

Families and Government Economic Policy

Address by Senator Brian Harradine to Centacare National Conference, Hobart, Friday 12 August 1994.

1When governments and their policy advisers turn to families, they should remember the principle admonition of the Hippocratic oath "First . . . Do No Harm". The ancients knew that when intervening in the affairs of a living organism you cannot always understand or predicts the effects of intervention.

1.1 Families are not inert clay to be moulded by policy makers under the guise of attacking gender inequality, youth homelessness, child care or whatever. There is always the danger that intervention, however well meaning, will breed further problems as families respond to changed incentives. Criticism that the administration of the Young Homeless Allowance, for example, has undermined parental guidance and facilitated teenage runaways and drug entrapment have been enough to induce the Minister to order a closer look.

1.2 Does this sober caution mean that there is no need for Governments to exercise family policies? Of course not—but the spirit of policy must be based on respect for natural law. I may illustrate this with a story of Francois Quesnay, physician to Louis XV and one of the first economists, the Physiocrats. Louis XV was complaining to Quesnay one day about how difficult it was to govern France—so many decrees to read and sign. Quesnay replied that he did not think it was that difficult and that the King did not have to do everything. The King then asked "But who would then rule?" Quesnay replied "The Law."

1.3 In framing policy for families, Governments must look to the natural law. Rather than trying to rewrite it, they should seek to co-operate with it. Government should always ask itself—Does this policy reflect the fact that the family is the fundamental group unit of society—with pre-eminent rights and functions not to be usurped by the State? Does this policy respect the principle of subsidiarity? Is the apparent need for intervention or aid being driven by other Government policies having unintended consequences?

1.4 A Government which attempts to solve economic problems of one kind of family at the expense of other kinds of families is doomed to fail. Governments should accept that different families will do things differently—some families will want or need two income earners, others one and a bit, others will seek to get by with one income. Importantly over their lifetime, families will shift between having one or more incomes and dependents. Government taxes or subsidies should not be used to disadvantage those families in such choices. Governments should avoid social engineering such as imposing de facto financial penalties on those who wish to undertake their own child care.

1.5 The paradigm of victim, oppressor and rescuer may be quite naive when it comes to family dynamics. Families are complex organisms and using the coercive power of the State may often do more harm than good.

1.6 Governments should not make it easier for men or women to desert their families or parents to evict their children. They should not make marriage burdensome by ignoring the income sharing function of families or by levying increased indirect taxes which bear more heavily on families.

2What do we have?

2.1 The Parliament has statutorily expressed its view that the family is the natural and fundamental group unit of society based on the institution of marriage as the union of a man and a woman voluntarily entered into for life. We would be denying our children their birthright if we failed to hold this concept up as the ideal.

2.2 Marriage used to enjoy the favour of the law. It does so no longer. The extent of the decay may be seen in the proposed Evidence Bill which would make spouses compellable witnesses against each other in civil and criminal matters at the Court's discretion. How is the mutually supportive role of marital communication possible when we will have to add to the words of the wedding vows "and anything you say to each other may be taken down and used in evidence against you?"

2.3 When we strip away the rhetoric about family support, family payments, home child care allowances et cetera, we see a fiscal system which favours atomistic individuals without dependants. Australian Bureau of Statistics figures on the tax/benefit position of households show that families pay their way on average. This holds even without taking account of how families with children are helping the Treasury by endowing it with its future taxpayers.

2.4 Because of the combination of wage taxation and social security policies, most families are now working more for less than was the case in 1980. As a trade unionist and as a Member of Parliament, I believe that this is an indictment on those Government family policies. Lest misunderstandings occur I should point out, as most would know, that I have spent 40 years in the trade union movement and in public life supporting women both in the paid and non-paid workforce. Indeed as a union advocate I was successful in achieving one of the early breakthroughs for equal pay in this country. My concern is for a truly free choice to be exercised without economic discrimination by Government. The problem is the Government is responsible for gross discrimination.

2.5 I take an example from "Let's Put Families First", by the Melbourne Catholic Archdiocesan Committee for IYF. The case is of two families, each comprised of husband and wife and two pre-school children; each breadwinner falls $2,500 annually below average weekly earnings. Family A decides that the wife should take a part-time job to increase annually earnings by $10,000. Family B decides that the additional $10,000 required could be achieved by the bread winner taking a second job (part-time) or accepting the offer of a higher paid job.

2.6 Family A pays $2,760 less in tax and receives $2,054 more in child care assistance. Through the tax/social security system they are better off by $4,819 per year ($93 per week). Not taken into account is the fact that Family A also benefits indirectly from operational subsidies to the child care centre of $21.25 per place per week for one child under 3; $14.25 for the other child over 3; plus capital grants for non-profit centres of $5,081 per place. When all this is realised where is the true economic freedom of choice for the mother in Family B who wishes to care for her own young children in her own home. In a situation of high unemployment as well, it is crazy for Governments to deny a true freedom of choice which would have the added effect of relieving pressure on the labour market.

2.7 Basically we now have a tax system which ignores the costs of dependants or, as I prefer to put it, ignores the personal redistribution of income which naturally occurs as income is shared within families.

2.8 Another disturbing trend is the move to increased reliance on indirect taxes and user pays charges which hit families harder than other taxpayers. For example, having children generally means more water and electricity usage. Because families also spend more of their incomes, indirect taxes such as the petrol and sales tax increases and State franchise taxes tend to affect families more than most taxpayers. Many families get no compensation, not even the $150 low income rebate. "First . . . Do No Harm" is an apt instruction to Treasurers in this area!

2.9 The fact is that it is now difficult for many families to survive on one income and the larger the family the less choice it has—with more children its needs increase as its capacity to earn decreases. And why should a family not be able to survive on one income? After all, at many stages of the life cycle they will either want to or have to. Many mothers want to spend more than 12 weeks with their babies and many families will not be able to field two wage earners. Take a typical example of how the tax system adversely affects people over the life cycle. Paul and Mary are 20 and 19 and have just got married. She has a job at $18,000 and he is earning $20,000. Their disposable income per head after tax is $16,164 and tax per head as proportion of gross income is 14.93%. Ten years later Mary now has three children at home. She is not in a position to consider paid employment and both she and Paul feel that their young children have a right to have a parent at home. Paul has progressed and is now earning $36,000 (including regular overtime). The family's disposable income per head after tax and family payments is $6,012.30 and tax per head as a proportion of gross income is now 21.07%—it has risen from 14.93% when they were a two income childless couple. The proportionate tax rate has risen while disposable income per family member has been falling. Disposable per capita income has fallen by 62.8% The family, because of Paul's work efforts, have now lost any assistance in the form of Additional Family Payment (FAS) and are substantial net contributors to tax revenue. Paul faces a tax rate of 39.9% on every extra dollar he earns to support the family. To discriminate against one income families as the Government does, is to eventually harm all families.

2.10The parenting allowance is only a token answer. Few families will be able to claim it and it has its own anomalies—Why for example does a parent with one child at home receive the same amount as one parenting 4 children?

2.11We must realize that the best policy for families is to genuinely empower them by not over-taxing them. Families are not empowered by becoming State mendicants.

2.12Empowerment means letting family members support each other. It means not taxing an income shared by several as though only one person depends on it. It is not necessary for a transfer from wallet to purse to go via the Treasury and the Department of Social Security. Families were short changed by the process of cutting dependants' allowances out of the tax system and replacing them with family allowances/family payments. The result is that since 1976 more than 20 billion dollars has been filched by the Federal Government from the purses of Australian mothers.

2.13It would be much better for the tax system to simply recognize transfers of income between spouses and for their children. I have in mind not simple husband/wife income splitting but something like the old British deed of covenant system, where one person who undertook a legal obligation to pay income to another and paid it over in cash was allowed to transfer that income (to a specified limit) to the other person for tax purposes. This sort of approach could ensure that intra-family sharing of income was recognized and encouraged. The recognition of voluntary income sharing in the tax system would leave working families far less exposed to the sorts of cuts the Department of Finance has inflicted on family payments. It would be possible to have such a system side by side with existing family payments so that families not in the tax system did not lose while the majority who could support themselves moved out of the social security system. One parent families could also benefit by transfers of monies for children.

2.14It is, when you think about it, remarkable that marriage is the only form of partnership not recognized by the tax law though it precedes all other partnerships and is the foundation of civil society. Indeed, in thinking about marriage, we can think of it in tax terms as a partnership between the spouses and a trust for their children. Other partnerships and trusts are recognized for tax purposes but not marriage.

2.15Some social theorists seem to think marriage is outmoded and that it is a form of patriarchal repression and an instrument of gender inequality.

2.16Apart from the obvious insult to those millions of happily married couples who quietly get on with raising their families, these pseudo social theorists forget what happens when marriages break down. Women and children are not empowered by being left to fend for themselves.

2.17The Treasury grows poorer as it has to find the money to do what used to be done gladly. When you look at social expenditures much of it is from the functional families to the dysfunctional. And as the burden gets greater more formerly functional families disintegrate under the economic pressure.

2.18How employment is to increase when families' spending power is being eroded further by increased direct and indirect taxes has not been explained. Even the Green Paper had to admit that much of what labour market programs will do is simply to shuffle the deck of the unemployed. I don't regard that as a solution to unemployment. How justice or commitment to reduce unemployment is served by increasing the age when women can claim a pension from 60-65 is beyond me.

2.19How unemployment is being eased when many women are denied the financial means to choose whether they wish to look after their own children at home is also beyond me. Indeed, the White Paper seems designed to push more women into the paid labour market, regardless of their preferences. There is neither parenting allowance nor tax equity for most one income families.

2.20Somehow there is not much logic or common sense in policy on families. Compared to single taxpayers, all families with children have seen a spectacular decline in their economic position over the last 30 years. The great majority of families have seen erosion or withdrawal of family allowances/payments. In many families a wife has taken a paid job to help pay the bills and her reward is a cut in family payments. We are told we have a problem with an ageing population and that there is unemployment. Yet the woman who decides she wants to raise children, that is, future taxpayers, is made to feel she is a social drop out. Only if she has a low income will she get a parenting allowance and the much vaunted home child care allowance is only $2.08 over the spouse rebate taken away from her husband.

2.21There is a great expansion in subsidization of the paid employment of married women with child care centres being funded, child care fee relief and now a 30% child care cash rebate. The woman at home is really a second class citizen when it comes to recognition in cold hard cash. Indeed, the tax exemption for child care from the fringe benefits tax explicitly excludes the care of a child in his or her own home by a relative. Only the Canberra bureaucracy could dream up a definition of child care which excludes the care of a child in his or her own home by a parent. Whatever happened to the level playing field?

2.22Yet to quote Professor Shirley Burggraff "Before we embark on a program of paying everyone else—day care workers, foster parents, the juvenile justice system—to care for children on a massive scale (with taxes collected from families), shouldn't we, at least, consider the most qualified and interested parties for the job? In a world where both men and women are free to choose how they invest their time and money, perhaps what the family needs most is a contract with society that provides some protection for return on investment." Why should governments think that they can tax families with dependants ever more harshly without seeing fewer people volunteering to have children or look after their aged or infirm relatives? The caring function of every family is valuable but recognition is non existent in the tax system and grudging in the social security system.

2.23Do the policy makers know what they are doing? The closest clue I have found is in the Government's 1994 statement for the Cairo population and development conference. In that statement, the government admitted that Australia's problem was not over-population but an ageing population. It also stated that among its policies to cope with an ageing population was to increase further labour force participation by married women. Interesting, isn't it? All this bureaucratic emphasis on labour force participation, which makes work almost sound like Nirvana—arbeit macht frei—has less to do with women's real aspirations than finding tax fodder for the Treasury.

2.24One of the less attractive aspects of certain human behaviour is to get people to do what you want them to do by convincing them they want to do it for themselves or they would feel guilty if they did otherwise. It's called manipulation.

2.25Not only are women being made to feel guilty about wanting to stay with their babies at home instead of being heroic workers for the Treasury, they are even being made to feel guilty now for raising future taxpayers. We are being told that we must pay more for water, electricity and petrol to save the planet. And guess who is going to pay more than most? Families with kids struggling on one income and getting no social security concessions. The push for greenhouse gas taxes and user pays for essential public services has more to do with revenue greed than the environment. Just ask poorer Tasmanians forced to pay more for leaded petrol when there was no evidence of a problem in Tasmania and when leaded petrol usage was going down anyway.

3There is much deceit and self deception in social policy. Governments want to buy votes by being seen to do something. The damage done by the taxes imposed to pay for those promises is rarely seen. At the same time, Government realize that voters may resent the pinch they cannot always see. So a lot of propaganda is put out on women in the workforce, on the environment or anything else to make women and their families think they are greedy, stupid, guilty or wasteful of the planet if all they want or expect to do is to stay home and raise some dinkum little Aussies. It is a sad commentary on Australian society that you are now regarded as a deviant by Canberra policy makers if you think a family should expect to be able to thrive on one income.

3.1Every economic recognition for families other than the poorest is being gradually eroded.

3.1.0.1The wage system has long since ceased to recognize dependency

3.1.0.2The tax system no longer allows for dependants

3.1.0.3Savings banks no longer favour young couples with low interest loans.

3.1.0.4Nor does the tax system allow for family expenses such as life assurance, rates, health insurance or doctors', dentists' and chemists' bills. If BHP can get deductions for investing in a steel mill it is odd that a family gets nothing for investing in the workers to run that steel mill.

3.1.0.5Child endowment is no longer universal but the payroll tax introduced to pay for it is there and bigger than ever

3.1.0.6Superannuation is another burden being placed on those with families to support. Why should those who are raising future taxpayers be saddled with the same burdens as those who are not contributing to the future tax base? Because they are not covered by the Government's superannuation plans mothers currently suffering economic discrimination by the Federal Government whilst caring full-time for their children will continue to suffer this discrimination throughout their retirement years.

4Australia will not have long term structurally sound prosperity whilst policy makers in Canberra continue to wage economic warfare on families. Australia will be happier when women and their husbands are economically free to raise families. Children will be happier when their parents no longer dread their responsibilities or feel compelled to juggle them by putting infants in 9 to 5 creches. Families under pressure and disintegrating make for a very sad and long social decline.