Analysis of the impact increasing the rate and extending eligibility of Parenting Payment Single on financial living standards

Authors: Matthew Gray and Ben Phillips (ANU Centre for Social Research and Method)

According to the 2021 Census there were just over half-a-million single parent families with a dependent child under 15 years of age and just over 1.5 million people living in single parent families (Australian Bureau of Statistics (ABS) 2022). The vast majority of single parents are women. Single parent families experience much higher rates of poverty financial stress than couple parent families (Bradbury and Saunders 2021; de Gendre et al 2021; Phillips and Narayanan 2021).

Concerns about the high rates of poverty experienced by single parents are long standing and there has been a recognition of the importance of both ensuring that social security payments are adequate and that paid employment is vital for the welfare of many single parent over the longer-term.

Until 2006, single parents with a youngest child under 16-years of age were eligible to receive the sole parent pension (Parenting Payment Single (PPS)) which was paid at a higher rate than unemployment benefits. In 2003 participation and activity requirements were introduced and from 1 July 2006 eligibility for PPS was tightened so that eligibility ceased once the youngest child turned eight at which time single parents moved to the unemployment payment, which is paid at a substantially lower rate than the single parent payment. This was grandfathered so that those receiving PPS at the time of the change were allowed to continue until their youngest child reached the age of 16. The decision was subsequently made to end the grandfathering arrangements in 2013.

The gap between the unemployment and the higher rate pension payments (including the single parent pension) has been increasing due to differences in the indexation arrangements with the level of the unemployment payments indexed to the Consumer Price Index (CPI) and the pension indexed to wages. Generally, wages have increased at faster rate than the CPI in Australia and this has been the case for virtually all of the period since 2006. Furthermore, the level of the unemployment benefit which single parents with a youngest child over eight are eligible for has fallen relative to average earnings due to the differences in the indexation arrangements (Whiteford et al. 2018).

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