Perpetual family debt


The family debt crisis is a big political liability for the government. The problem is the numbers: seven out of every ten Australian families were in debt to the government in the last three years, owing around $900 each. What this means is that for many families, the government’s recent $600 bonus for every child was swallowed up by debt, and tax-time won’t mean a refund to take the kids on holiday, fix the car or reduce the mortgage. About this successive government ministers, including the Prime Minister, have been unrepentant. If families are overpaid, even if it’s through no fault of their own, they have to pay the money back. That’s only fair.

But is it really fair? Are the government’s recurring problems with the family payment system ones of their own making? And do these problems mean the government could be hoisted on its own petard?

The answers are ‘no’, ‘yes’ and ‘yes’.

The family benefit system requires families to predict their annual income at the start of the year to get family and child-care payments. However, the increasing casualisation of the Australian labour force, and the flexibility the deregulated labour market gives employers to chop and change working hours, makes it hard for many families to know how much (or even if) they may be working from week to week. This means that even if families do as they’re told and inform Centrelink every time their situation changes, they may still end up being over-payed. The government claimed to have solved this problem several years ago by allowing families to reduce their weekly benefit to avoid overpayment, collecting the proper amount owed at tax time. Most families to whom this measure applied were unimpressed. Their reality is that the benefit isn’t ‘pin money’, but goes towards living essentials like food and rent.

Another cause of family debt is the unfair way the government rigged the tax system when it came into office, to favour single-earner households over those where both parents work. When women return to work – which the vast majority do – they get slugged with a debt arising from the immediate loss of their ‘stay-at-home’ bounty. Again, families to whom this measure applies have been underwhelmed by the government’s ‘solution’ to this problem: namely, deferring one payment until year’s end when the proper amount can be calculated and paid.

Since its early days in office the Howard government has been banging on indignantly about the plethora of ‘welfare cheats’ out to ‘rort’ the system. The last time was only last month, when the Minister for Family and Community Services Kay Patterson put out a press release expressing horror at those ‘[taking]advantage of the system and receiving benefits to which they are not entitled’. This is classic wedge politics, designed to divide different segments of the community, so we won’t feel or act like one anymore. By sowing distrust (instead of compassion) amongst the middle and upper classes for those less well-off, the government continues to ensure little objection is raised to the ruthless dismantling of the legal and institutional framework, and the social programs, on which the most vulnerable depend.

Of course, it was never intended that families end up stuck on the sharp end of this tactic. They were meant to be counted amongst those hardworking Australians who work hard, pay their taxes and are resentful as hell of any assistance provided to those worse off. But it hasn’t worked out that way. Instead, the crisis in the family payment system has made these Australians the target of the government’s rhetoric about cheaters, and the victims of the high-handed and insensitive way Centrelink goes about informing ‘clients’ of debts, and collecting them.

All this has made me think. Perhaps it isn’t just the government that has been hoisted on its own petard when it comes to family payment debts, but some mums and dads, too. How many, I wonder, bought in to the government’s rhetoric about welfare cheats, and lent support to the ever-increasing rigidity of compliance requirements for those on the rolls? That is, until they realised the degrading comments and letters of demand were for them?

Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.