Redemption does not come easily in politics. A bad call can haunt a political leader, and even an entire government, when a key decision triggers aftershocks that last for years. Labor learnt this lesson the hard way when it cut income support for single mothers a decade ago – a shard of ice in the heart of a party that talks so much about helping the vulnerable.
Anthony Albanese has a rare chance to gain redemption on that policy in the next few weeks – and it looks like he will take it. A decision has been made to undo most of the 2012 policy and ensure single mothers gain income support until their children enter high school. The prime minister, the son of a single mother, will include the change in the May 9 budget.
Labor agonised about its treatment of single mothers during its nine years out of power. Too late, it realised it had gone too far. The 2012 decision cut household incomes for single mothers by $200 a fortnight when their youngest child turned eight because it moved them from the “parenting payment” to the unemployment benefit.
How the decision was made is now central to how it is being undone. Julia Gillard oversaw the change as prime minister in the lead-up to the federal budget in May 2012, when Wayne Swan, as treasurer, and Penny Wong, as finance minister, were trying hard to return the budget to surplus after the global financial crisis. The change saved $685.8 million over four years and was decided by the expenditure review committee of federal cabinet. It came out of the employment portfolio, held by Bill Shorten. The families minister, Jenny Macklin, was on ERC.
You would think the proposal sparked a robust debate around the federal cabinet table to scale back the move, but that is not how the budget works. Most decisions are made entirely by the expenditure review committee and put to full cabinet as done deals. “None of us knew,” says one of the ministers at the cabinet table at the time. “It was an ERC decision.” Shorten was not on the committee and had to act on its decisions about where to save money. The full cabinet saw the final budget on the day it was announced, May 8. It was too late for ministers in other portfolios, such as Albanese, to muscle up and block the change.
The regret came later. Some caucus members spoke out against the change at the time, but the policy rethink came after Labor lost power the following year. Albanese and Shorten both rejected the policy when they ran for the Labor leadership in September 2013. “The sole parent payment is an area where we made a mistake,” Albanese told the ABC’s program. Asked who drove the policy, he said: “I think we have to take collective responsibility.” Macklin conceded in 2014 that Labor got it wrong.
Only now can Labor use its power to repair the mistake. Eight members of federal cabinet have a special interest in doing so because they were part of the collective decision in 2012: Albanese, Wong, Shorten, Chris Bowen, Brendan O’Connor, Tony Burke, Tanya Plibersek and Mark Butler.
It’s important to note that the idea of taking people off the parenting payment when the youngest child turned eight was first imposed by the Howard government in 2006 for new recipients. This reduced the previous cut-off age of 16 years. The decision in 2012 extended this to earlier recipients as well. (In the jargon, it removed the “grandfathering” in the initial decision). The ERC decision in recent days, revealed by Rachel Clun in a news break on Anzac Day, has been to lift the eligibility age by at least four years. There is still a debate about whether the final cut-off age will be 12 or 13 or possibly 14, but a return to 16 is off the table.
Anne Summers has done compelling work as professor of domestic and family violence at the University of Technology, Sydney, on the fact that 60 per cent of single mothers have suffered domestic violence. Her findings have had an influence on ministers. Other work shows that only about one third of single mothers moved into the workforce after the 2012 changes. The others took a cut to income, which meant less money to help their children.
There is a strong view within the government that continuing the income support until a child turns 16 would keep some women out of the workforce for such a long time they would never rejoin. That runs counter to one of the priorities for the government in this budget: getting more people into jobs and spending more on training.
In fact, there are workforce shortages everywhere and Labor does not want to end up in a position where it relies solely on migration reform – and the review issued on Thursday – to expand the workforce. This is not the message social service groups want to hear after the Economic Inclusion Advisory Committee, chaired by Macklin, delivered its wish-list of income support increases. Yet it is the message they will get in the budget on May 9.
Cabinet ministers have not signed off on a boost to JobSeeker because they believe the budget cannot afford all the Macklin report’s ideas. Treasurer Jim Chalmers has made that clear. The cost of all the JobSeeker boost, at $24 billion over four years, is simply too great, and that means the only foreseeable compromise is a small and gradual increase, if there is an increase at all. Labor would be taking a significant risk in boosting welfare payments in the same year workers lose up to $1500 when the Low And Middle Income Tax Offset comes to an end.
Inflation is at 7 per cent, real wages are falling, the economy is slowing and households are paying higher interest rates on their loans. The prime minister, the treasurer and the ERC are not about to green-light spending that puts the slightest upward pressure on inflation, which hurts people on low wages the most. The essential calculation is that being complacent about inflation will only expose Labor to attack if interest rates stay higher for longer.
The government cannot spend money on everyone, so ministers will ultimately decide that some groups are more vulnerable than others and should take priority. Carers, for instance. Single mothers, certainly. More than a decade after it cut the parenting payment, Labor will gain a sort of policy redemption.
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