Symposium: A Decade of Howard Government

Howard’s ‘Choice’: The ideology and politics of work and family policy 1996–2006

Elizabeth Hill, The University of Sydney

Affirmation of ‘the family’ as ‘the most important institution in our society’ (Howard 2005) has been a consistent claim and political touchstone of the Howard Government. On regaining the Liberal leadership Howard made clear his view on the importance of families in his political landscape and called for the establishment of a ‘new compact’ for Australian families. This new compact was to recognise and address the difficulties faced by households wanting to better integrate their paid work and family responsibilities (Howard 2005).

Howard the politician speaks quite adroitly about women as both paid workers and carers.

Since his election in March 1996 Howard has pursued this so-called new compact investing billions of dollars in Australian families with children. But has all the money—now more than $26 billion dollars (Department of Treasury 2005)—helped Australian families better integrate their paid work and caring responsibilities?

In this paper I evaluate the original vision of the new compact with Australian families against a decade of work and family policy initiatives. Of most interest is the explicit disconnect between Howard’s political rhetoric about the diverse life experiences of Australian families in the 21st century, the Government’s role to ‘support families in the choices they wish to make’ (Howard 2005) and the conservative ideology of gender that structures work and family policy initiatives. Embedded within the work and family policies of the Howard Government is an unreconciled confusion over how women who have children should be conceptualised and treated by public policy. Are they workers, are they carers, or are they both?

Howard the politician speaks quite adroitly about women as both paid workers and carers, but Howard the man appears to hold strong views about who should be caring for Australia’s children. This internal clash of ideas has compromised the capacity of public policy interventions to smooth the boundary between work and care for Australian families or provide women with real choice about how they move between paid work and childcare in particular.

Government policy routinely constructs women as primary carers and secondary earners. This has meant that a key feature of the Howard decade has been the delivery of a significant amount of government support to women who stay at home to care for their children. The dominance of the male breadwinner-model that lies at the centre of Howard’s approach to work and family policy has meant that some family types are supported more than others. Howard’s claim that ‘no one policy fits all and the diversity of Australian families calls for a range of policies for a range of different situations’ (Howard 2005) might appear reasonable at face value, but when the financial support available through the family tax benefit rewards single-income couple families more than dual-income couple families and single parent families, critical issues of social equity, equality and inclusion become prominent.

In my view the assumption of a male breadwinner that lingers within the Howard Government’s family policies and the broader institutional environment, leads to inequitable outcomes for women, their opportunities and incomes. Through the Family Tax Benefit system, the Maternity Payment and the Childcare Benefit, the Howard Government’s approach to work and family policy is experienced by many women as work or family policy.

WORK AND FAMILY: A BUDGET PRIORITY

Work and family policy under Howard has used the tax system as the primary mode of delivery.

The Commonwealth Budget papers of the last decade tell an apparently glowing story about the priority that the Howard Government has given to financial support to families with children (See Figure 1). Family payments had been on the rise in the years prior to the ascendency of the Howard Government, and this trend has continued. Family payments to a single income family with two children where the breadwinner earned average weekly earnings (AWE) have risen from an amount equal to 1.8 per cent of AWE in 1990, to 20.4 per cent by August 2003 (Kelly et al 2005, p. 15). Low income families have done particularly well receiving an 18 per cent rise in average income between 1997 and 2004. This has been attributed mainly to the increase in family payments (Australian Institute of Health and Welfare 2005, p. 75).

Significant increases in payments through the Family Tax Benefit were introduced in the 2000 budget, with another steep increase reflected in spending from 2003/2004. The More Help for Families package in the 2004 budget included an immediate increase in the annual Family Tax Benefit of $600 per child. This brought total spending on assistance to families with children to $24.5 billion, equal to around 3 per cent of Australia’s GDP and about 12 per cent of the Federal Budget. Government estimates are that the growth in payments to families will continue, and equal almost $30 billion by 2008/2009 (see Figure 1).

While this budget category covers a range of different types of payments to families with children, more than half of this money is delivered through the Family Tax Benefit, the Childcare Benefit and the Maternity Payment. These three policy instruments are the mainstay of the Government’s strategy to assist households to better integrate their paid work and family responsibilities. They have come to define the conceptual framework within which the Howard Government addresses work and family issues and they provide the primary incentive structure within which families make choices about how they might best manage their lives. The annual budget for each policy are presented in Figure 2.

BEHIND THE BILLIONS

In reviewing the Howard record on work and family policy there are three points of immediate interest. First, the increase of $2 billion in the Family Tax Benefit scheme in the May 2004 budget. This was the budget at which the government asserted most strongly their commitment to assisting families to integrate their work and family responsibilities. Second is the more than tripling of the payment provided to mothers on the birth or adoption of a child between the 2003 and 2004 budgets. And third is the relatively fixed amount of assistance provided for families through the Childcare Benefit. In the following discussion I assess the extent to which these policies and the billions of dollars attached to them support Australian families.

Entrenching women’s ‘choice’ as secondary earner

A key feature of work and family policy under Howard has been use of the tax system as the primary mode of delivery. This approach is not unique to the Howard Government but the delivery of work and family policy through the tax system has become so entrenched over the past decade that the debate about work and family is largely defined by the structure of the latest family tax package.

High EMTRs remain an endemic problem in Australia’s system of family payments.

On coming to office Howard introduced the Family Tax Initiative (FTI) in January 1997. This increased the tax-free threshold for families with dependent children and treated single income families (single parents and couples) more favourably than dual income families. In July 2000 the FTI was enhanced and a new Family Tax Benefit (FTB) system launched. Under the new scheme twelve pre-existing family assistance benefits were rolled into three: Family Tax Benefit Part A, Family Tax Benefit Part B; and the Child Care Benefit (CCB).

While the new FTB and CCB simplified the system of family support payments, ‘secondary earners’ (read women) who sought to move from caring duties into the labour market continued to experience the very high effective marginal tax rates (EMTR), that had plagued the old system of family payments. The government made its first move to reduce EMTRs—sometimes as high as 85 per cent—by dropping the income test for FTB Part A. But in spite of these changes EMTRs remained as high as 61.5 per cent and a strong disincentive to mothers wanting to increase their participation in the labour market (Whiteford 2000, p. 91). High EMTRs remain an endemic problem in Australia’s system of family payments (Apps 2004), and as a critical influence on women’s choice to participate (or not) in the labour force (Jaumotte 2004) EMTRs are of interest to feminist political economists and labour economists alike.

In a context of growing political pressure and a Federal election due late 2004, the government returned to the problem of high EMTRs. The More Help for Families package was the centre-piece of the 2004 Budget, touted to be ‘the largest package of assistance ever put in place by an Australian Government’. It was pitched to the electorate as ‘a further major instalment in the ongoing reform of the Australian family assistance and tax system to help families raise their children, help them to balance their work and family responsibilities and improve the rewards from work’ (Australian Government 2004).

It appeared that the concerns about Australia’s ageing population and shrinking labour force raised in the Intergenerational Report 2002–03 were being taken seriously by the Howard Government and women’s status as breeders and carers was going to be transformed to include worker. The economic case for prioritising women’s participation in the labour market had been clearly articulated and it seemed the old Howard vision of the white picket fence with the stay-at-home wife, three children and breadwinner husband was finally being abandoned.

This did not, however, turn out to be the case. Instead the More Help for Families package allocated the majority of financial support to families in which one parent either withdrew from the workforce or maintained only a part-time involvement. In the tables that accompanied the government’s Budget Overview it was made clear that the maximum financial benefits of the new family-tax package—including income tax cuts, family payments and the government superannuation co-contribution—were dual income families with children in which the ‘primary earner’ (read male) contributes 80 per cent of the household income and his ‘secondary earner’ (read female) the other 20 per cent. This was true for every income category, in families with one, two, and three children. In families in which both parents contribute more equally to the household the financial support they received was less (Hill 2004).

The Howard Government’s family tax package asserts a very specific view of ‘the family’.

The Family Tax Benefit scheme rewards most highly households that approximate most closely the traditional male breadwinner household and in which new mothers exchange paid employment for either unpaid caring work, or secondary earner status. The sexual division of labour within a household is therefore a critical variable in the calculation of the FTB.

The problem is FTB Part B. With family payments income tested against both total household income (FTB Part A) and the secondary earner’s income (FTB Part B), the proportion of household income being earned by each worker becomes a significant variable in calculating the total amount of FTB payable. So while total household income might remain stable, when a couple chooses to share the responsibility for paid work equally, the amount of FTB Part B paid to the secondary earner is decreased, leading to an overall reduction in the total amount of FTB paid to the family. The structure of the FTB makes it financially irrational for many households to increase the secondary earner’s participation in the labour market. The ‘choice’ for women to return to or increase their paid work is therefore highly circumscribed by a system of financial incentives that rewards married women with children who do less paid work rather than more.

A policy that provides disincentives for households wishing to pursue a more equitable division of paid and unpaid work does not suit the skills, needs and aspirations of contemporary Australian parents. Nor does it fulfil Howard’s promise of a new compact with Australian families. I suggest there are two things driving inequity in the Family Tax Benefit scheme.

First is the government’s assumption and continued preference for a society made up of male breadwinner households. The 2004 Budget did modify this assumption slightly, but only to allow women the ‘choice’ to take up a small amount of very part-time, low paid work without penalty. This was tinkering at the margins and has only served to embed women’s status as secondary earners within the policy and incentive structure. For all the billions of dollars delivered to families through the family tax benefit scheme, the Howard Government rewards households in which the sexual division of labour remains tailored along ‘traditional’ lines with women cast as primary carers and men as primary earners.

Formalising the assumption of ‘primary’ and ‘secondary’ earners in the structure of the Family Tax Benefit scheme underwrites weak labour force attachment by women with children and effectively entrenches the status of mothers as ‘secondary earners’ and primary carers. The Howard Government’s family tax package therefore asserts both an ‘ideal’ sexual division of labour, and a very specific view of ‘the family’ in which mothers and fathers do not experience equality of opportunity. Moreover, public policy that defines mothers as ‘secondary earners’ impacts negatively on women’s wages, conditions and career prospects, further institutionalising their secondary status as earners, leaving fathers with no choice but to continue in their traditional ‘breadwinner’ role.

Second, are the entrenched inequities associated with delivering work and family policy through the tax system, in particular the high effective marginal tax rates imposed on secondary earners re-entering or increasing their participation in paid employment. These act as very real disincentives to women who would like to choose to integrate paid work along side their caring responsibilities. And while the Howard Government sought to address high EMTRs quite aggressively in the 2004 and 2005 Budgets, they continue to compromise the capacity of the FTB to support women’s choice to work (Apps 2004).

The Maternity Payment: But what about work?

The government prioritised women’s role as carer over worker.

The apparent confusion within the Howard Government as to how women should be conceptualised and which choices should be supported is reflected clearly in the politics of the Baby Bonus and its replacement, the Maternity Payment. With political pressure building around the need to support women as they move between work and childbearing, the 2002 Budget included a new payment called the Baby Bonus. This was an extremely complicated policy that reimbursed a portion of the income tax paid by women who left the workforce on the birth of a child. The policy was interesting because it was aimed directly at working women. However the Baby Bonus was only paid when a woman exited the workforce and women on high pre-baby incomes who stayed out of the workforce for five years received the maximum payment. The policy was inequitable, complicated and ultimately failed with the budget for the Baby Bonus significantly underutilised (Lewis 2004).

In the 2004 Budget the Baby Bonus was shelved and replaced with the Maternity Payment. This is a universal payment, initially of $3000, available to all new mothers irrespective of their work arrangements. The Maternity Payment will increase in July 2006, to $4000, and in July 2008, to $5000, and is indexed in line with the Consumer Price Index in March and September each year. This will more than triple Commonwealth support for parents at the birth of a child.

The Maternity Payment is a generous payment, but it is not the universal system of paid maternity leave women’s groups and the Sex Discrimination Commissioner, Pru Goward, had been campaigning for and which set the political context within which Howard introduced the Maternity Payment. In maintaining its resistance to a government-funded paid maternity leave scheme and instead choosing to support an increased maternity payment, the Howard Government once again demonstrated its lack of commitment to supporting women’s attachment to the labour force during the childbearing years.

Instead the government prioritised women’s role as carer over worker and left support for women’s role in the labour market to be negotiated by individual workers with their employers. For women working in the public sector and some areas of private enterprise improvements in the private provision of paid maternity leave have been forthcoming during the Howard decade. But for the majority of working women, paid maternity leave remains illusive and a critical ‘gap’ in the Howard Government’s approach to work and family policy (Baird 2004).

Childcare Benefit: Too little for too few?

The Child Care Benefit (CCB) is a government subsidy for the cost of child care. It is means tested against total household income down to a minimum payment, and the amount varies according to the number of children in care and whether they are school going or non-school going. CCB is only available to children in approved centres that comply with Commonwealth quality assurance programs. This includes most long day care centres, family day care, before and after school centres and vacation care. With its focus on reducing the cost of childcare the CCB is the policy instrument most explicitly designed to support women integrate their dual responsibilities as worker and carer.

What is most interesting in the budget figures since 2002 is not so much the limited budget for the CCB, although that is of concern, but the relatively small rate of increase in the amount provided for childcare support through the CCB. While there have been very significant increases in the FTB and Maternity Payment, the budget for the payment that most directly supports parents manage the ‘work/life collision’ (Pocock 2003) has increased by only 20 per cent since 2002 (See Figure 2). This means there has been only minimal increase in the coverage and amount of CCB available to working parents.

The ‘choices’ of single mothers and married mothers are shaped by very different incentive structures.

In the 2005 Budget the government did, however, enhance its support for childcare with the announcement of The 30 per cent Child Care Tax Rebate (CCR). The CCR is linked to the existing CCB scheme and covers 30 per cent of the secondary earner’s out-of-pocket child care expenses. That is, fees paid for approved care less Child Care Benefit. The rebate is payable up to a maximum rebate of $4,000 per child per year. While the tax rebate provides a significant boost to the financial support available to working parents, it is only available to parents with access to childcare in an approved centre. This is in contrast to the more generous payments and ease of access experienced by families receiving the FTB and Maternity Payment.

Restrictions on the coverage and amount of CCB provided to working families limits both the effectiveness and equity of these policies. All families with children have access to the FTB and Maternity Payment, but working parents seeking government support for the costs of childcare must first find childcare at an approved centre. In June 2002 some 189,400 of the 787,400 children in formal childcare—long day care, pre-school, after school care, family day care and occasional care—did not claim any CCB. The main reasons given by these parents for not claiming CCB was lack of awareness and the carer or centre not being eligible (ABS 2003, p. 6). Where a place at a Commonwealth approved centre is not available families must use an alternative form of care which makes them ineligible for the CCB and the associated CCR. With the cost of childcare rising—up 60 per cent over the past four years (ABS 2006)—access to benefits like the CCB and CCR are critical planks in an effective work and family policy. By limiting the scope and budget of the CCB the Howard Government’s preference to support women as carers rather than workers is underscored.

The Howard Government’s confusion about the role of women with children in the economy and society is also evident in the further $300 increase to FTB Part B that accompanied the introduction of the CCR. Uncomfortable with providing extra assistance only to working mothers, Howard chose to increase the FTB Part B payable to mothers who care for children at home. Again the Howard Government’s approach to delivering work and family policy is to promote and reward mothers in their role as carers while limiting the scope and generosity of benefits designed to facilitate women in their role as workers.

Different families, different ‘choices’

Finally, a comparison of the experience of married mothers and single mothers under the family payments system graphically illustrates the way in which current work and family policy provides greater choice for some family types and less for others. The introduction of the welfare reform policy in the 2005 Budget reframed the incentive structure within which single mothers choose a mix of caring responsibilities and paid employment. The new rules stipulate that those receiving the Parenting Allowance are required to work at least part-time once their youngest child turns six years old. Failure to find up to fifteen hours of paid work will result in a reduction in the amount of assistance provided to single parents.

Work and family policy initiatives remain compromised by a clash of ideas.

The introduction of this new measure means that the ‘choices’ single mothers and married mothers have about how they might best manage their roles as worker and carer are shaped by very different incentive structures. While single mothers responsible for primary school aged children are required to work at least part-time in order to maintain maximum government support, married mothers retain the right to choose not to work at all and still be eligible for the maximum FTB Part B until their youngest child is eighteen.

Different rules for different women and different family types leads to different outcomes for children. That women from ‘traditional’ family households are treated differently to women from single parent households is not new. At every twist and turn of the work and family debate the Howard Government has established rules and economic incentives that reward mothers (and families) that adhere closest to the Howard version of the ‘ideal’ family.

CONCLUSION

Australian parents who wish integrate family responsibilities and paid work are not well supported by the government’s policies of the last decade. Billions of dollars have been forthcoming, but work and family policy initiatives remain compromised by a clash of ideas within the government reflected in policy confusion about how women who have children should be conceptualised: are they workers, are they carers, or are they both?

A keen political ear has led Howard to talk a lot about the need for better work and family policies, but the ideology of gender that informs the Howard Government has meant that a decade of developments in this policy arena favour families that most conform with Howard’s vision of the ideal family. Howard claims that the role of his government is to ‘support families in the choices they wish to make’ about how to best integrate paid and caring work. But for many families Howard’s choice is not much of a choice at all.

REFERENCES

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Howard, J. 2001, Interview with Phillip Clarke, Radio 2GB, 8 October.

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Dr Elizabeth Hill is Associate Lecturer in the School of Economics and Political Science in the Faculty of Economics and Business at The University of Sydney. Elizabeth is the co-convenor, with Professor Barabar Pocock, of the Australian Work + Family Policy Roundtable http://www.familypolicyroundtable.com.au.