The Abbott government should listen to calls to put their paid parental leave scheme on the backburner and instead reform family payments to help parents who are disincentivised from working as much as they wish, according to a new Centre for Independent Studies report.
Removing the complicated design of family payments, and the overlap between different payments, would enable families to more easily compare the financial benefits of their work and life choices, argues Trisha Jha, author of Complex Family Payments.
Government spending on family payments has increased from $23 billion in 2003-04 to $32 billion in 2013-14 in real terms, yet this money is inefficiently spent because of poor program design, according to Ms Jha.
'The federal government should act now to fix the problems in the family payments system and make it easier for parents to make decisions about returning to work when they have young children.'
'Recent budget changes tinkered around the edges with family payments, but the government has not done nearly enough to fix structural problems. Families still face cumulative reductions in Family Tax Benefit, reductions in Child Care Benefit, and higher rates of income tax when they return to work or take on additional hours.'
'The government should take the opportunity to fix the anomalies in the family payments system which keep some women at home when they would prefer to work or expand their working hours.'
'Women working less than they would like has worrying long-term consequences including lower retirement income and loss of financial security,' says Ms Jha.
The high costs of child care on families also add to the disincentives many families face in returning to the labour force, even though government spending on child care subsidies is expected to grow rapidly.
'My message to the government is: Reform family tax benefits to include simpler income tests for Family Tax Benefit Part A, supplement personal tax cuts, and reduce barriers in child care,' says Ms Jha.
'The Productivity Commission's review into child care is a positive step but the government should reframe child care as a workforce participation measure and reduce the regulations in the system to free up access.'
Trisha Jha is a policy analyst at The Centre for Independent Studies. She is available for comment.