Every week my family has to make difficult choices regarding our household budget. With one income and three children with one on the way, there are many sacrifices we make on a daily basis.
So I watched the federal budget on Monday night with interest. Joe Hockey repeatedly warned that tough decisions would have to be made. I know all about that from my daily life – making my $70,000 teacher’s salary stretch to supporting five people. I was prepared to welcome a tough budget. After all – it’s about time to unwind Howard-era middle class welfare even though this would go against my best (financial) interests.
With all the rhetoric leading into this budget – the rallying cries that this would be the End of the Age of Entitlement – I expected serious reform along the lines of Keating in 1985, Dawkins in 1994 or Costello in 1996 and 1998. The budget doesn’t live up to that hype, although there are some deep cuts to the public service. Structural reform through the deregulation of tertiary education and the establishment of a directly funded Medical Research Future Fund give some indication of things to come.
I hold growing concerns about the government’s attitude about the challenging task of raising a family and funding it.
HELP repayments were the sleeping monster in the budget. As a parent in a single income family with three children and a fourth soon to arrive, my deepest concern regards the changes to HELP repayment schedules. For a family such as ours, they already bite, and there was a nasty shock in the tax return of many individuals after the Rudd Government quietly changed the indexation of HELP repayments in 2012. The prospect of paying it back on a lower income ($50,000) creates logistical problems for partners wanting to return to work part time after maternity/paternity leave, while the switch from indexation to real interest is genuinely concerning. There seems no doubt that a family on a middle income will be paying HELP longer, and paying considerably more yearly.
Despite some niggling irritation at the prospect of paying $7.00 to go to the doctor, I can live with it given the promise of a safety net directed at children, and the prospect of the research fund as a direct consequence of it. Likewise, an extra few cents per litre at the bowser doesn’t trouble me particularly. The budget will affect my life in the immediate term with perhaps an extra $21.00 monthly on medical bills , maybe $15- $20.00 more per month on fuel, and a possible maximum reduction of up to $40.00 monthly on Family Tax Benefit. The bigger hit will come at tax time, with less of an offset for Family Assistance overpayments.
I don’t (and probably won’t) earn $180,000, so the debt levy doesn’t impact my bottom line at all. Slightly more concerning is the loss of Family Assistance Payments. For a single income family (like mine) on about $70,000 any extra income earned over $30,000 will be offset by reductions in our budget bottom line. Still, it shouldn’t trouble us unduly after an initial adjustment: we already make hard choices in our weekly budget, and won’t struggle too hard with a few more. I was skeptical about how necessary generous family assistance measures were when Howard introduced them, and it would probably be hypocritical to complain too much about their loss.
It is difficult to justify this change without at the same time addressing the key reform missing from the budget: childcare. It seems curious that a government could make such deep cuts to balance its budget while championing a goldplated paid parental leave (PPL) scheme, but not address the cost of childcare. However much PPL a parent receives, they will eventually need to return to work. In many areas, it costs more to send a child to long day care five days a week than it costs to send a teenager to most private schools. It is this, much more than the cost of maternity leave, that dissuades parents from full workforce participation. Until the government recognises this, its attempts to sell its PPL scheme, its cuts to Family Assistance and changes to HELP will be hard to listen to.
There are many good things about this budget, and many would agree that deep cuts to government bureaucracy and reduction of regulation are overdue. I would also agree that reducing the overall spend of government was a much needed step forward, and would be willing to make some sacrifices to be a part of it.
There are, however, loose ends in the delivery of the cuts. I don’t feel that the immediate impact of this budget will hammer our bottom line, but hold growing concerns about the government’s attitude about the challenging task of raising a family and funding it.
Jonathan Hastie is a History and Languages Teacher in the Central West of NSW. He is married to another teacher, and is the father of three children with a fourth on the way.