Family payments under scrutiny in report

THE government must fix existing family payments instead of focusing on its expensive paid parental scheme if it wants to improve female workplace participation, a conservative think tank warns.

THE current system is complex, difficult for families to navigate and discourages parents to work, the Centre for Independent Studies says in a report to be released on Wednesday.

The report examined 10 different family payments - including family tax benefits A and B, the school kids bonus and single parent payments - and calls for an overhaul.It says the payments overlap, have different goals and create disincentives for people to work due to payment withdrawal as a result of earnings.And that's not helping the government reach its goal of improving workforce participation, particularly among women, it argues.But report author Trisha Jha says throwing money at the complex system, in the form of childcare subsidies or the government's proposed paid parental leave scheme, will not fix the problems.Instead, the government must reform family tax benefits to reduce the impact of high effective marginal tax rates, simplify the income test for family tax benefit A and frame child care as a workforce participation measure."Not only is child care in itself a massive impost on families but the combined effect is a system that sometimes pays for people not to work at capacity," she said.A recently released interim report on welfare reform proposes cutting payment categories from 20 to four: a tiered working-age payment, a disability support pension, an age pension and a child payment.The new child payment would replace Family Tax Benefit Part A, Youth Allowance, Abstudy and other payments.But Ms Jha says the interim report failed to recognise the problems of payment withdrawal when a parent starts working and the consequences for work incentives.The government has faced criticism over its proposed paid parental scheme which would pay up to $50,000 to mothers of newborn babies.The scheme is due to start in July next year.

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