Welfare Should Not Pay More Than Work

by on 28 October, 2016

It has been revealed that thousands of parents are earning more by going on welfare than they do by working. This harmful policy development is both unfair and unsustainable for Australian taxpayers. Extensive reforms are necessary to ensure that there are plenty more incentives to work, rather than to stay on the dole.

Figures obtained by the Australian show that the top 10 per cent of those on parenting benefits received at least $45,032 in 2014-15. With a range of further benefits including family tax benefits and childcare rebates, there are more financial rewards for staying on welfare than there are for obtaining a full time career.

In detail:

“Under the current system, a single parent with four children who did not work and was not ¬receiving child support income could receive more than $50,000 a year from the government, the equivalent of someone earning $65,000 a year before tax, such as a full-time teacher, nurse or entry-level public servant.

A single parent with four children aged 13, 10, seven and four years, who paid $400 a week in rent without any employment ¬income or child support, would ¬receive a basic parenting payment of $738.50 a fortnight, along with an energy supplement of $12 a fortnight and a pharmaceutical allowance of $6.20 fortnight.

This provides a base payment of $19,728 a year, which would then be augmented by family tax benefits A and B, further supplements for each child and rent ¬assistance, which would pay an extra $32,331 a year.
Finally, energy supplements for each child receiving family tax benefits would total an additional $463 a year, bringing the total take-home pay to $52,523.”

By comparison:

“The median full-time wage for 2014-15 was $61,300 a year. After tax, this leaves the median wage at $49,831. However, the median overall wage — including part-time workers — was $46,500, which equates to $39,841 as take-home pay after tax.

The difference between a $52, 523 income on welfare and $39, 841 salary from working is extraordinary, and falls well out of range of the Australian way. Instead of seeking to ease the burden on working families, successive legislation has imposed unnecessary costs on working families to pay for unnecessary dole entitlements for non-working families.

Our unchecked welfare system has enforced excessive financial and opportunity costs for working families in the present day, but what is even more alarming are the costs it will impose on the next generation:

“Taxpayers will spend an ­estimated $191 billion on future welfare payments for all people currently receiving the Parenting Payment, with current recipients having the highest average future lifetime cost of all payment groups, at $441,000 per person.”

With both Social Services Minister Christian Porter and Treasurer Scott Morrison urgently calling on the need for welfare reform, this is one of the most important issues for Australian taxpayers that has to be addressed as soon as possible.

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