Wednesday, 20 May 2015

Happy about the proposed changes to paid Parental Leave?

Until recently, the federal budget held as much interest to me as NRL does (that is, next to none!). Then I got married, inherited a mortgage and had two kids. When the federal budget came out last week, I was interested.

One of the major talking points has been the proposed 
$3.5 billion Jobs for Families Package which would alter the Paid Parental Leave ("PPL") scheme, childcare subsidies and family welfare for single income parents.

Without boring you as much as NRL will, briefly, the Government, in an effort to promote women in the workforce (at arguably the expense of young children), is proposing the following:

  • Increased childcare subsidies for dual income families; and
  • Capping the Family Tax Benefit B ("FTB") for single income families and stay at home parents (this benefit will cease once the child turns 6); and
  • Eradicating the so called "double dipping" by not providing families with Government parental leave if they receive any form of PPL from an employer.
Here are some of the arguments I've heard on both sides.

Pro changes

National debt 

Thanks to Kevin Rudd and Julia Gillard's apparent belief that money grows on trees, we have a national debt of approximately $250 billion.

While stay at home parents may not receive the Government assistance they are used to, there is a solid argument that the Government is not in the business of handing out free money while paying $1 billion a week in interest on the budget deficit Labor left us with.

Free money 

Speaking of free money, is anyone entitled to kick and scream if they don't receive a handout? What happened to living within your means? On a world scale, Australia is an affluent country. Even families on say $60,000 a year are much better off than millions of other families around the world.

A friend told me last week that Pope Leo XIII stated that wages in society should be such that a single income family has enough to support a family. While this would be ideal, unfortunately, simple economic supply and demand doesn't allow that in today's society. The median house price in Sydney is circa $1 million. The average single income family cannot afford an average house in Sydney. That's an unfortunate reality. 

Economy and the workforce 

Economically thinking, a sensible way to pull ourselves out of this financial hole is to get more people in the workforce.

It is no secret the Government, through its Jobs for Families package, want more mothers in the workforce. Its plan is to provide greater incentives to families with dual incomes (via childcare rebates) at the expense of single income families (the capping and subsequent scrapping of FTB).

Yet more people in the workforce creates greater productivity. Greater productivity creates higher wages, greater tax revenue and ultimately, a reduction in the national debt.

In turn a debt free country will prosper in terms of lower taxes, more affordable housing, education, health etc which in turn raises the standard of living and creates a better country for our kids.

So while it may not be ideal for stay at home parents in the present, increasing the workforce is better for kids of the next generation.

Anti changes

Children need their mothers

As much as we need people in the workforce, our kids are the future generation(s). They are our future decision makers, leaders, workers and mentors. In order to give these children the best start to life, it is essential that mothers (or at least a parent in the case of stay at home dads) spend the majority of their children's formative years (pre primary school) with their kids at home. This is essential in order to show them love, affection, right and wrong and the meaning of family in the way they as parents agree upon. 

The problem with childcare

Forcing mums to work and send their kids to childcare introduces a quasi or third party parent in as much as the child is being partly raised by a childcare worker who may have differing styles or opinions to the child's parents, thus potentially confusing the child in their formative years.

While it is important for kids to learn social skills and how to mix with other people, there is a risk that they are influenced by other kids and make the job of parents that much more difficult in the formative years. 

It's no secret many kids feel separation anxiety when put in childcare and taken away from a parent. The Government, by trying to increase the level of children in childcare, would seemingly be in favour of playing with young children's emotions which is arguably not in the best interests of the community.

Devaluing mothers

The proposed changes to PPL devalues a woman's role in the home. Essentially the Government is saying that mothers who go back to the workforce will financially benefit from increased childcare subsidies and lower tax liabilities than stay at home mums and single income families. 

Check this link out for a comparison of single and dual income families earning $110,000 a year under current laws. The single income family pays over $8,000 more in tax. Fair? It will not get any fairer under the Jobs for Families package.

Ultimately, stay at home mums who arguably work harder than career mums do not get paid and face higher tax bills. 

Double dipping

Private enterprises that chose to provide their employees with PPL (on top of what they'd receive from the Government) are entitled to do what they wish with their own funds. Why should the Government penalise families based on what employers do with their own funds? 

Is claiming PPL through an employer and also through the Government even double dipping? Arguably, families are only dipping into the Government's funds once while their employer, in an effort to promote itself as an attractive employer, has a prerogative to provide whatever benefits to their employees they wish.

So who's right?

Not sure! But I'll tell you who I think is right.

Yes we are in a financial hole and yes we need more people in the workforce. But do they need to be mothers? 

In the past 12 months, the unemployment rate has increased. This means more people are looking for jobs now than they were 12 months ago. Why don't we target these people, rather than mums?

I believe that the upbringing of children is more important than the financial state of the national economy. The raising of kids is a cultural and social issue that trumps an economic financial position. Stable, emotionally healthy children will in turn lead to a stable and healthy environment in the future.

As such, I believe kids need to spend as much time with their parents, especially their stay at home parent, as financially possible. Having both parents work five days a week doesn't allow them to spend the quality time needed with their kids. I know from experience that it is possible to live on a single, low wage with two children and a mortgage so I don't buy into the argument that both parents HAVE to work five days a week. 

Based on what my wife goes through bringing up our two beautiful kids under two, stay at home mothers are seriously undervalued. The fact my wife says going back to work would provide a break paints a picture. Stay at home mothers are arguably working harder than those in the workforce and not only are not being paid, but are being taxed more and receiving less in terms of family tax benefits. 

Yes we might not have a valid position to scream at not receiving free money but if the Government is dishing it out, at least dish it fairly.

So while Prime Minister Abbott continues to tell us this budget is fair for all, is it really? 

It certainly isn't in terms of Jobs for Families and it sets a dangerous precedent for the upbringing of future generations. 

All the best,
Dom Meese

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