Family pain to reach schools

Mary Fogarty
Research Officer

One-third of Budget cuts ($6 billion) falls on families earning between $45,000 and $63,000 a year, and this will have severe adverse effects on the thousands of school students who come from low socio-economic backgrounds in areas such as south-west Sydney or rural and remote areas of the state.

The burden faced by low to middle-income families with children will worsen each year over the next four years — and this is apart from the retreat from the billions of dollars of Gonski funding commitments to schools that will cause immense disadvantage to students from economically deprived families.

The reality of the Budget is that those on lower incomes are losing far more, as a percentage of their earnings, than those at the top.

The worst impact of the Budget on children will come from moves such as:

The introduction of the $7 co-payment for standard GP consultations and pathology and diagnostic services: Many parents will hesitate to seek medical attention or delay seeking attention because of this cost. Children in families tend to transmit illnesses rapidly to siblings and this often necessitates several visits to a doctor over a short period. Children will continue to attend school while unwell because parents lacking medical guidance will be unaware of the nature or severity of their illness. More parents will seek medical attention in outpatient centres in our hospitals, thus further stretching hospital emergency departments. An additional charge of $5 for each prescription will also mean medication is denied to children in some families.

Six-month wait to receive Newstart or Youth Allowance: Families of a student who has left school and is seeking employment will be forced to support this youth for six months before s/he becomes eligible to receive any government support. This will severely affect the welfare of the entire family including all school-age children.

Research by Alan Morris of the University of Technology, Sydney and Shaun Wilson of Macquarie University shows that two in every three Newstart and Youth Allowance recipients usually remain on the payment for more than a year (“Struggling on the Newstart unemployment benefit in Australia: The experience of a neoliberal form of government assistance”, The Economic and Labour Relations Review, June 2014).

Using OECD data, the research authors found that the Newstart allowance will remain at just 28 per cent of the average wage compared to an average of 47 per cent for unemployment benefits paid in major English-speaking countries such as Canada, New Zealand, Britain and the United States.

Examining the implications of life on Newstart, Morris and Wilson found that many recipients were so deprived that they were ill-equipped to obtain work. Newstart’s very low rate was scarring the unemployed and making it more difficult for them to find a job.

Changes in the fuel excise: This will hurt, in particular, families in rural and remote areas of the state. An increase in fuel prices by 1 cent per litre for 12 months will not be an optional burden for many. Access to many services in rural and remote areas requires the use of a motor vehicle. Many families in disadvantaged urban areas do not have access to public transport or require use of a vehicle to fulfil work requirements.

A freeze on the maximum level of childcare over the next three years and a freeze on income threshold at which families qualify for the Child Care Benefit: Half a million families who use childcare will be hit by this decision to freeze the income eligibility threshold for the Child Care Benefit. This is a means-tested payment that helps low and middle-income families deal with the soaring costs of childcare. The freeze on subsidy thresholds and caps will cause a dramatic increase in the cost of care to families over the next few years. A family currently on a combined income of $75,000 will go backwards by $4143 a child.

Indigenous education: Over five years, $534.4 million will be cut from Indigenous programs administered by the Office of the Prime Minister and Cabinet and Health portfolios. More than 150 programs will be replaced with just five. More than $160 million of the cuts across Indigenous programs will come out of Indigenous health programs. Funding for the Indigenous Languages Support program has been cut by $9.5 million over four years. No ongoing funding was allocated to the 38 Children and Family Centres established in the 2013 Budget.

Increase in university fees and interest rates on HECS-HELP debts: As many as 160,000 school-leavers and mature age students who could enrol at university over the next 18 months are to be exposed to uncertainty over the size of their fee burden. At the moment, students pay the inflation rate on their HECS-HELP debts but in the future students will be charged the 10-year government bond rate (currently 3.6 per cent up to a maximum of 6 per cent.). Students from low-income families will be seeking support from families for these increases or simply decide not to achieve their potential in education.

Income thresholds: A three-year freeze on private income thresholds affecting Parenting Payment Single, Youth Allowance, Austudy, ABSTUDY and Newstart Allowance.

Frozen indexation: The government has also frozen indexation of some Medicare benefits Schedule Fees, the Medicare Levy Surcharge and private Health Insurance Rebate thresholds, all of which amount to increasing out-of-pocket expenses for parents who will then have less to spend on their children.

A two-year freeze on indexation of family payments: Any freezing of indexation for Family Tax benefits hurts those who can least afford it, particularly families with young children.

Reduction in public service jobs: More than 16,000 federal government jobs to be slashed. This will hurt many families where parents could remain unemployed for some time. Major areas of employment affected include the Australian Taxation Office and CSIRO.

Reductions in funding to the states for public hospitals: There will be a reduction of $1.8 billion over four years but much bigger cuts after that. The cuts beyond 2017–18 will come from Commonwealth cuts to indexation on hospital funding. The change will mean there will be around $15 billion less federal funding per year for hospitals by 2024–25.

Pre-Budget cut: Repeal of the School Kids Bonus that paid $410 each year for a child in primary and $820 for one in secondary school.