Fact Sheet 5 – Child hardship package as a whole

Summary

• The exact impact of the child hardship package on any given family will depend on individual circumstances, including the types of supplementary assistance they receive.

• The package will have a meaningful impact for recipient families, particularly for those on very low incomes.

What is the financial impact on families?

There are a number of different parts to the child hardship package and the total impact of it depends on each household’s individual circumstances.

In broad terms, there are four main groups of families who benefit from the package:

Beneficiary families

1Beneficiary families get an extra $25 a week after tax. However, as a consequence, some will get slightly less in income related rents, the Accommodation Supplement or Temporary Additional Support. On average, a beneficiary family will receive an in-the-hand income gain – taking these other factors into account – of just over $23 a week. Approximate number of families: 110,000 .

Working families, not receiving a benefit

Very low-income working families, earning less than around $27,000 a year before tax, and receiving the Minimum Family Tax Credit, get an extra $24.50 a week. Approximate number of families: 4,000.

Other low-income working families that are not on a benefit and earning $36,350 or less a year get an extra $12.50 a week. They can also get up to $9 a week extra from the Accommodation Supplement as an indirect consequence of benefits rising. Approximate number of families: 50,000.

Working families earning more than $36,350 a year get less than $12.50 a week, with the exact amount depending on their income. They can also get up to $9 a week extra from the Accommodation Supplement. Approximate number of families: 150,000.

In addition, families in any of these groups could benefit from the increase in Childcare Assistance, depending on their income and use of childcare. Working families will tend to get more from the increase in Childcare Assistance than beneficiary families.

A few working families might also be receiving Temporary Additional Support and have this reduced slightly as a result of increasing In-Work Tax Credit and Minimum Family Tax Credit.

What is the effect of the package?

The child hardship package will have a meaningful impact for recipient families, particularly for those on very low incomes, and reduce the depth of hardship these families and their children experience.

Taken as a whole, the package will have a broadly neutral impact on incentives to work, and a slightly positive impact on overall employment outcomes.

How much does the package cost?

The total cost of the child hardship package is around $240 million in each full year, and $790 million in total over the four-year Budget forecast period.

It follows last year’s $500 million children and families package which included free doctors’ visits and prescriptions for children under 13, extra paid parental leave and an increase in the parental tax credit.

The cost in 2015/16 is lower than other years because the package affects only one-quarter of that financial year, from 1 April 2016 to 30 June 2016.

The cost of the package is being met from within the $1 billion operating allowance for Budget 2015.

ENDS

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