Cut to single parent payment may be a false economy

Financial Counselling Australia (FCA) is disappointed that changes to the Single Parent Payment, mooted earlier this year by the Federal government, have now passed the Senate. FCA fears that these changes will cause added financial stress for many already struggling households.

“In the May 2012 budget, the Federal government proposed to save around $700 million over four years by shifting eligible parents from the Single Parent Payment to the dole, once their youngest child turns eight,” said Fiona Guthrie, Executive Director of FCA. “The reasoning behind the move is to encourage higher workforce participation.  Our fear is that, in a two-speed economy, the minority of sole parents who are not already working will struggle to find a job that can fit around their primary-carer responsibilities. Instead, these parents will face cuts to their household income of up to $73 per week. This will inevitably have a flow-on effect for their children.”

According to Australian Bureau of Statistics figures, approximately 87% of single parent families are headed by the mother.  Approximately 60% of single mothers are in the workforce and a further 9% are looking for full or part-time work.[1]These figures are comparable to the 66% of partnered mothers participating in the workforce and 3% of partnered mothers looking for work.

“Whether partnered or single, the statistics indicate that almost seventy percent of mothers actively want or are available to be in the workforce,” says Ms Guthrie. “Single parents face additional practical hurdles to obtaining employment, which explains the slightly lower participation rate, however the figures clearly show that they are already out there looking for work. As such these payment changes won’t serve to increase their job search efforts as much as financially punish them for not being able to find work.”

Some of the work-related challenges faced by some sole parents include: [2]

  • Lack of access to/affordability of outside school hours care
  • Lower levels of educational attainment
  • Lack of job-relevant skills
  • Lack of recent workforce experience
  • Lack of availability of flexible jobs
  • Mental health barriers
  • A lower level of family support

The timing of these cuts, scheduled to commence on 1st January 2013, mean that many households will experience a stressful Christmas and a less-than-ideal start to a new school year.

Anyone who is in financial difficulty can contact a free and independent financial counsellor on 1800 007 007.

[1] Australian Bureau of Statistics, Australian Social Trends, 2007.