Families: the sinking middle

As Australia’s birthrate continues to tumble, debate about babies, families and work has burst out from the behind the backyard fences of Australian suburbs and into the political mainstream.

The declining birthrate – down from an average of 1.75 births to 1.73 in just twelve months – has become a de facto measure of the environment for families.

In other words, the reason families and babies has become such a hot topic is that the all the evidence shows that average Australian parents are slowly sinking.

They are the ones who daily face the growing pressure of a market economy that makes few concessions to workers who have children.

Too many now work in a 24/7 economy where babies and children are viewed as lead in the saddlebags.

Now more than any time in our history our mothers and fathers are feeling squeezed.

Why?

At an institutional level we are undercutting the concept of parenting.

Our tax, social security and industrial relations systems no longer furnish parents with the two most important things they need in raising a family – more time and enough money

Take the National Centre for Social and Economic Modelling’s (NATSEM) discovery that more than 800,000 Australian workers now face effective marginal tax rates (EMTRs) of more than 60 per cent – a significant increase since 1997.

Seventy-four per cent of those with high EMTRs come from the ranks of Australia’s 3.2 million families who have children under the age of 16 years.

In layman’s terms this means that more Australian parents lose 60 cents or more out of each extra dollar they earn than they did five years ago.

The Howard Government’s tax reforms of two years ago may have changed a lot of things but they certainly didn’t deliver on their promise to improve work incentives for low and middle-income families.

That is why Australian middle-income families – those on modest wages or wages made modest by their childrearing responsibilities – could be better described as the sinking middle.

Frequently families face a triple whammy. Any extra work they perform is taxed away. This work also causes them to lose social security payments that are supposedly designed to help them raise their kids. And at the same time, industrial conditions are forcing them to work longer for less.

Parents shouldn’t have to sacrifice family time to give John Howard 60 cents or more of each extra dollar they earn.

Add to all this new administrative rules for family payments that clawed back nearly $1,000 on average from 650,000 families last financial year.

It is a lethal cocktail!

NATSEM calculates that a family with two children will invest an average of $450,000 raising their kids from birth to age 20.

These costs, combined with the Howard Government’s tax take, help explain why so many families with young children now contain two wage earners.

The latest Australian Bureau of Statistics census data indicates that 51.3 per cent of new mothers in two-parent families return to work within one to two years of the birth of a child. A further 3 per cent are out looking for work.

The cost pressures of raising children leave parents with no choice but to remain in work or to go back soon after the birth of a child.

This highlights why we need to renovate the industrial relations system – such as providing Paid Maternity Leave and additional family leave – to balance the time parents spend raising children and earning a living.

While it has not been mute on the subject of work and family issues, the Howard Government does appear to be both deaf and blind to any suggestion of reform using industrial rules to give families more time together.

The ripple of protest among average families that is fast becoming a wave of discontent will not be plugged by soothing rhetoric from a few politicians.

And sop policies like the unfair Baby Bonus, which returns just $10 a week to an average family so long as one parent remains at home for up to five years – won’t buoy those families who are sinking in the middle.

Nor does it address the long-term consequences of having family policies that were designed for a different generation of Australians.

There remains a strong desire on the part of Australian couples to have children. Ninety-three per cent of Australian women say they want kids and around 75 per cent of couples go on to have them.

Our declining birthrate is the consequence of our failure to adjust to the huge changes that conspire against the wishes of a majority of Australian couples.

It is a ticking time bomb that we need to address now or face the economic and social consequences of an ageing population and a childless society – a withered nation.

The birthrate debate isn’t about those who choose not to have children, but those who do have one but who cannot afford the second or third child they want.

We need a wholesale rethink of the values that underpin our approach to Australian families and a new deal that matches support to their circumstances.

We need a combination of tax credits and family payment reforms to make work pay for Australia’s sinking middle. In terms of delivering more family time, we could consider new forms of leave. The starting point for industrial reform for Labor is Paid Maternity Leave.

It does not have to be a pitched battle between employers and unions on the streets. Managers are parents too.

Our children are the key to our economic future but this is secondary to our understanding that children bring irreplaceable hope, imagination and vibrancy to our society.

Strong families are the building blocks of strong communities.

If we are serious about underwriting these kinds of statements we must heed the calls of the sinking middle who are struggling to build a strong foundation for their children.