In commenting on the proposal in the 2014 Budget to remove Family Tax Benefit, Part B (FTB B) from single breadwinner families, former prime minister John Howard described himself as the 'father' of the FTB scheme.
Perceptions about the paternity of the FTB B family payment could impact on post-Budget strategies and positions in the Senate. The Government might be happy to see Howard claiming paternity in the hope that it will reinforce a view that the FTB B was the product of his 'white picket fence' view of family life, and/or an unsustainable distribution of the benefits of the mining boom. The Government might hope that the other parties will not want to preserve Howard's claimed legacy.
In a sense Howard is right because the current system of family payments was introduced by his government as part of a package of compensatory messages to accompany the introduction of the GST in 2000.
FTB B is paid to single breadwinner couples and sole parents with children. The maximum FTB B weekly payment of $51.50 per week is a very significant part of the budgets of low-income single-breadwinner families. In families where the youngest child is under five, the maximum weekly payment is about 43 per cent higher. Since 2004, families have received an annual supplement currently at $354.05 and equal to $6.79 per week.
The most significant change in the Family Tax Benefits system since 2000 has been to the per child Part A payments. These payments have been extended into middle Australia: a family with two children and an income moving with Average Weekly Ordinary Time Earnings (now over $1440 per week) has had increases of over 210 per cent. This was Howard's major contribution to the family payments system.
The Budget seeks to withdraw the FTB B weekly payments from families who do not have a child under six years of age and to convert the annual supplement into a Single Income Family Supplement of $300 per year, or $5.75 per week. On current figures, this would mean losses of $52.14 per week for couple parent families. The position of sole parent families is slightly different because they would pick up a payment of $750 per year for each child between the ages of six and 12.
If paternity matters in this debate, it is Paul Keating who can claim the credit for the family payments that are now under attack.
For decades taxation law