AUSTRALIANS have been dealt a relatively good hand when it comes to government financial aid through the pandemic, with the likes of employment benefits and tax-return incentives.
A new Deloitte Access Economics report released last week predicted Australia’s downturn would be significantly less than experienced by the rest of the world.
“It says our downturn is going to be rather less than the world is facing but you still need to give people some confidence around the worst that can happen – if they become unemployed, what does that mean in terms of their dollars,” Deloitte economist Chris Richardson told the ABC on July 5.
“Right now Australian families are spending much, much more than the Treasury and the Reserve Bank feared.”
Spending confidence may be higher than expected, but Australian Family Association officer Luke McCormack believes the government could do more for families by considering what they don’t take from them in the first place.
Mr McCormack said the tax system, which taxes the individual without regard for any dependents, namely mums who choose to stay home with their children, needed a complete overhaul.
“One simple way the AFA thinks we could address this would be to automatically give single income families the use of two tax-free thresholds,” Mr McCormack said.
“An alternative, and many other OECD (Organisation for Economic Co-operation and Development) countries do this, would be to at least consider a spouse and children before your pay as you go (PAYG) income tax, so before it’s deducted from pay packet.
“The point here is, it’s far more efficient to leave a family with the income it rightly deserves to hold on to, rather than have a system of churn where the money’s taken and handed back again (through Family Tax Benefit schemes).”
Such changes to the tax system could even put the Family Tax Benefit schemes into extinction.
“Just tax the family in a more fair way in the first place and you wouldn’t need FTB part A,” he said.
Mr McCormack’s views have the backing of at least one senator.
On June 11, Senator Matthew Canavan gave a speech supporting the proposed changes to the Australian paid parental leave scheme, which from June 30 offered eligible parents a fixed 12-week leave period and a flexible six-week (30 day) period that can be taken at any time within 24 months of receiving the scheme.
This is opposed to the previous scheme which offered 18-weeks of paid parental leave that needed to be taken in one hit.
But Senator Canavan said in his speech that while there was increased flexibility and choice for parents under the amended paid parental leave scheme bill, the current tax system did not provide the same freedom of choice for families with one breadwinner.
Senator Canavan detailed the calculations he had made using the Australian Taxation Office’s tax calculator, saying that families with only one spouse in the workforce earning $100,000 a year would be liable for $24,497 of taxes in one financial year, leaving the family with $75,000 of take-home pay.
However a family with two parents who earned $100,000 collectively would pay just $7797 in taxes each, so a total of $15,594.
The difference in tax for the families, who earn the same amount before tax, is close to $9000.
“That’s a lot of money and it doesn’t particularly support families making choices to look after their own children and potentially have just one breadwinner, at least for a period of time while they have young children in the household,” Senator Canavan said.
“If they make that choice, if they decide, ‘Yes, one of us should stay home and look after the child,’ they are at a $9000 disadvantage a year.
“When you’ve got a young child and you’ve got the costs of having a new family, that is a big, big hit.
“We could and should have a better tax system based on family needs, not just on individual needs.”
According the AFA, and particularly Mr McCormack, who is a Catholic father of five with one of the way, the discrepancies in the tax system could also negatively affect Australia’s birth rate.
In December last year the Australian birthrate fell to an historic low of 1.74 births per woman.
Mr McCormack said if the government helped families in the long run to fund “the most basic things” parents might have the confidence to have more children.
“On average in Australia, families in Australia are having one less child than they would like to have had,” Mr McCormack said.
“The birth rate is at 1.74, imagine at 2.74, how much healthier, capable and better it would be doing economically.
“These things matter, they’re not small things.
“A simple thing government can do, is A, give a bit of hope, but help the most basic things…in the long term, help families to make doing life and spending money on your children, and buying groceries, just a little bit easier.
“The economy runs well when families are thriving, and raising children is expensive.”
Then there’s the obvious question – who would fund the betterment of families? In Mr McCormack’s view, the abolished government-backed bank could help.
“Australia privatised all its governmentbacked banks – now is the time to reintroduce them,” Mr McCormack said.
“Government would have enough funds to do things, for infrastructure and future proofing the country, using a government-backed bank, or a people’s bank, like we used to do.
“You can have a people’s bank for different purposes – one for restructuring loans on farms to make it farmer friendly, or just purely for major investment, or have one that acts a bit like a normal bank where you and I could go and get a mortgage.
“There’s definitely room for the reintroduction of such banks.”