tag:theconversation.com,2011:/us/topics/welfare-dependency-36826/articleswelfare dependency – The Conversation2021-08-01T09:13:04Ztag:theconversation.com,2011:article/1653282021-08-01T09:13:04Z2021-08-01T09:13:04ZFive key reasons why basic income support for poor South Africans makes sense<figure><img src="https://images.theconversation.com/files/413749/original/file-20210729-25-1rnv3s8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Marie Coetzee and her husband Fanie Coetzee live in the poverty stricken shanty town community of Munsieville, west of Johannesburg.
</span> <span class="attribution"><span class="source">EFE-EPA/Kim Ludbrook</span></span></figcaption></figure><p>The basic income grant debate has been rumbling in South Africa for two decades, ever since the grant was recommended by the Committee of Inquiry into a Comprehensive System of <a href="https://sarpn.org/CountryPovertyPapers/SouthAfrica/march2002/report/Transforming_the_Present_pre.pdf">Social Security for South Africa</a> in 2002. </p>
<p>The reintroduction of the “social relief of distress” grant by President Cyril Ramaphosa, for unemployed people and unpaid caregivers who don’t receive any other social grant or <a href="http://www.thepresidency.gov.za/speeches/statement-president-cyril-ramaphosa-progress-national-effort-contain-covid-19-pandemic-4">unemployment insurance</a>, provides the ideal moment to introduce permanent basic income support for poor and unemployed adults.</p>
<p>I prefer the argument for <a href="http://www.blacksash.org.za/images/campaigns/basicincomesupport/BasicIncomeSupport2020.pdf">basic income support</a>, rather than a universal basic income grant. That’s because South Africa already has <a href="https://www.gov.za/faq/services/how-do-i-apply-social-grant">social grants</a> for poor children up to 18 years of age, poor older people over 60 and other vulnerable groups.</p>
<p>What is needed is a social protection instrument that would address the <a href="https://mg.co.za/business/2021-06-01-sa-hits-new-unemployment-record/">country’s unemployment pandemic</a> by assisting people aged 18 to 59 who are living in poverty – basic income support.</p>
<h2>The case for basic income</h2>
<p>There are at least five arguments for basic income support. First is the moral case for providing support to the poor, which in South Africa is also a <a href="https://www.sahrc.org.za/home/21/files/Reports/4th_esr_chap_6.pdf">constitutional right</a>. </p>
<p>Second is the positive economic impact: boosting the purchasing power of the poorest will create <a href="https://www.sciencedirect.com/science/article/pii/S0304387818300105">income multipliers</a>, stimulating local economic growth and livelihoods.</p>
<p>Third is social solidarity and cohesion. The recent spate of <a href="https://www.globalcitizen.org/en/content/everything-you-need-to-know-south-africa-protests/">looting</a> in parts of the country, ostensibly triggered by the imprisonment of former president Jacob Zuma, was just as much an outburst of frustration and anger against a system that excludes millions of citizens who see no hope for their future. </p>
<p>The social relief of distress grant will alleviate some of this hardship and make everyone feel recognised and included.</p>
<p>The fourth argument for a basic income support is COVID-19. The pandemic and the lockdowns affected low-paid and informal workers badly, and prompted a R500 billion (US$34 billion) social and economic support package from the government, including a <a href="https://www.gov.za/sites/default/files/gcis_documents/Covid%2019%20TERS%20Easy%20Aid.pdf">temporary employer/employee relief scheme</a> and the special relief grant.</p>
<p>Though temporary, these interventions highlighted the underlying problems of chronic poverty and unemployment that receive too little policy attention in “normal” times. This has prompted calls to <a href="https://journals.sagepub.com/doi/full/10.1177/14680181211021260">make these emergency relief measures permanent</a>.</p>
<p>Finally, a basic income support would improve the effectiveness of the existing social grants. The <a href="https://www.sassa.gov.za/newsroom/articles/Pages/SASSA_Social_Grants_Increase_2021.aspx">child support grant</a> is intended to meet the basic needs of <a href="http://www.treasury.gov.za/documents/national%20budget/2021/review/Chapter%205.pdf#page=9">13 million children</a> in low-income households. But instead this cash is diluted among the entire family because unemployed parents and carers also need food and clothes.</p>
<p>This is one reason why there has been <a href="https://foodsecurity.ac.za/wp-content/uploads/2018/04/Final_Devereux-Waidler-2017-Social-grants-and-food-security-in-SA-25-Jan-17.pdf">no decline in child malnutrition</a> in post-apartheid South Africa. Child stunting rates have plateaued at around one in four children since the early 1990s, despite the introduction of the child support grant in 1998, and its subsequent rollout to two-thirds of all children by 2020. Basic income support that targets low-income adults would allow more child support grant cash to be allocated to the needs of the child.</p>
<h2>The case against basic income</h2>
<p>Two commonly heard arguments against basic income relate to its supposed behavioural effects (“dependency”) and its cost (“unaffordability”). The first refers to the claim that cash transfers make people lazy.</p>
<p>The <a href="https://socialprotection-humanrights.org/wp-content/uploads/2018/07/IWP-2017-06.pdf">myth of the lazy welfare claimant</a> has been comprehensively disproved in the social policy literature. Nonetheless, influential commentators like <a href="https://www.youtube.com/watch?v=a-KSZCtaETs">Mamphela Ramphele</a> have recently argued that South Africans should pull themselves out of poverty through “self-liberating” hard work, and should not continue to depend on the “dummies” of social grants. </p>
<p>This pejorative view implies that poor people are lazy (they choose leisure rather than work, as economists phrase it), that they prefer to live on handouts from the state, and that there are plenty of job vacancies waiting to be filled.</p>
<p>This view is not aligned with reality. South Africa’s social grants are too little to live on, ranging from R460 a month for the child support grant to R1,890 a month for the older person’s and disability grants. Also, the economy is characterised by high structural unemployment. There simply aren’t enough jobs to absorb the millions of unemployed job-seekers. </p>
<p>People who argue against basic income are effectively saying that unemployed South Africans, who cannot find nonexistent jobs, should also be denied their constitutional right to social assistance from the state.</p>
<h2>Is basic income unaffordable?</h2>
<p>The second argument against a basic income grant or basic income support is its cost, and the assertion that it is “unaffordable” or “unsustainable”. </p>
<p>It is true that it will be expensive. Even at its low R350 a month (less than the <a href="http://www.statssa.gov.za/publications/P03101/P031012020.pdf">food poverty line at R585 a month</a>), if 10 million people claim the special relief grant (there are <a href="http://www.statssa.gov.za/publications/P0211/P02111stQuarter2021.pdf">10.3 million unemployed and discouraged work-seekers</a>, only a small minority of whom can claim UIF) the cost would amount to R42 billion (US$2.85 billion) each year. <a href="https://www.youtube.com/watch?v=DK7v9dGWNqI&list=PL5SgYUH3ZX3qa--NbIjFN2ZXmRhxxosmS&index=1">Where will this money come from?</a></p>
<p>One possible source is more efficient government. Reducing corruption, mismanagement and wasteful expenditure would release billions. Cutting <a href="http://www.statssa.gov.za/?p=14484">government spending</a> by 2%-3% would be enough to cover the cost of the basic income support. </p>
<p>The second source of revenue is to raise taxes. This is never popular. If personal income tax is raised, the middle classes will complain that they are already overtaxed. If corporate taxes are increased, business will complain, and some private sector jobs could be at risk. If value added tax is raised, this will <a href="https://www.dailymaverick.co.za/article/2018-02-23-explainer-budget-vat-rise-will-hurt-poor-despite-mitigating-efforts/">affect the poor negatively</a> as well as those better off.</p>
<p>Nonetheless, South Africa is an upper-middle-income economy, and <a href="https://www.worldbank.org/en/country/southafrica/overview">one of the most unequal countries in the world</a>. That suggests that there is much scope for redistribution. And the gap between rich and poor South Africans is so great that more redistribution is a moral, social and political imperative.</p>
<p>A third way of managing the costs of expanded social protection is to grow the economy. The flip side of the ANC government’s social policy success in establishing Africa’s most comprehensive and generous social protection system is the failure of its economic policy to generate broad-based economic growth that creates jobs for the poor. If that can be addressed, then poverty will fall, and the number of people claiming the country’s means-tested social grants will fall in the coming years.</p>
<h2>Conclusion</h2>
<p>A comprehensive social protection system is one that provides social assistance and social insurance to everyone who needs support from the state when they need it, at an adequate level. </p>
<p>R350 is not enough for anyone to live on – and certainly not enough for any recipient to “choose leisure” rather than look for work – but it’s a good start. Most important of all, now that the special relief grant is back, civil society will start campaigning hard to raise it to an adequate level – and to make it permanent.</p><img src="https://counter.theconversation.com/content/165328/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Devereux receives funding from the National Research Foundation of South Africa (Grant Number: 98411), and the Newton Fund, administered by the British Council.</span></em></p>There is no substance to the view that poor people are lazy and prefer to live on handouts from the state rather than seek work.Stephen Devereux, Research Fellow, Institute of Development StudiesLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1230862019-09-30T02:49:49Z2019-09-30T02:49:49ZDisability and single parenthood loom large in inherited poverty<figure><img src="https://images.theconversation.com/files/291455/original/file-20190909-109927-tod1tt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Young Australians aged 18 to 26 are 1.8 times more likely to receive welfare if their parents ever received welfare.</span> <span class="attribution"><span class="source">www.shutterstock.com</span></span></figcaption></figure><p>Australians like to think we live in a country of the fair go, where anyone with the talent and willingness to work hard can succeed.</p>
<p>But the evidence shows success is still partly inherited. Children with poor parents are more likely to grow up and be poor as adults.</p>
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Read more:
<a href="https://theconversation.com/heres-why-its-so-hard-to-say-whether-inequality-is-going-up-or-down-81618">Here's why it's so hard to say whether inequality is going up or down</a>
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<p>The latest biennial report of the <a href="https://www.aihw.gov.au/reports/australias-welfare/australias-welfare-2019-data-insights/contents/summary">Australian Institute of Health and Welfare</a> highlights the ways in which social and economic position is transmitted between generations. </p>
<p>Research points to several key factors in inherited disadvantage — notably parental disability, family structure and unemployment.</p>
<h2>Gender patterns</h2>
<p>Understanding the nature and extent of inherited disadvantaged in Australia has been aided by five significant research studies in the past five years. Four of them use data from the comprehensive Household, Income and Labour Dynamics in Australia (HILDA) Survey. The fifth used tax records to estimate the intergenerational mobility of people born between 1978 and 1982. </p>
<p>Among the results to come from these studies are estimates of the degree to which a 10% increase in fathers’ earnings affect their sons’ earnings. The studies offer a range of 1% to 3.5% – with a higher percentage meaning less social mobility.</p>
<p>One study highlights some interesting gender variations. It found a 10% increase in a father’s earnings associated with a 2% increase in sons’ earnings, but only a 0.8% increase in daughters’ earnings. A 10% increase in mothers’ earnings was linked to a 1.6% increase in sons’ earnings and a 1.5% increase in daughters’ earnings. This suggests girls’ earning trajectories are slightly less determined by their parents’ experience.</p>
<p>Other findings, however, point to certain types of disadvantage being most inherited by women. For example, those raised by a single parent receiving parenting payments are 2.2 times more likely to become a single-parent payment recipient themselves – and women make up <a href="https://www.theguardian.com/australia-news/2019/apr/19/its-soul-destroying-the-stress-and-stigma-of-being-a-single-parent-on-welfare">more than 80%</a> of single-parent payment recipients.</p>
<h2>Patterns of transmission</h2>
<p>The single-parenthood pattern was among those identified in research <a href="https://www.iza.org/publications/dp/11070">published in 2017</a> by myself, Sarah Dahmann, Nicolas Salamanc and Anna Zhu. The importance of family structure is underlined by the fact young adults are more likely to receive a range of welfare payments if they grow up in single-parent families.</p>
<p>The following graph shows the results of our research. </p>
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<p>Overall, we found young Australians aged 18-26 were 1.8 times more likely to receive welfare if their parents ever received welfare. That is, 58% of young people whose parents ever received welfare were also on welfare, compared with 31.8% of those whose parent were not.</p>
<p>Young people whose parents received unemployment payments while they were growing up were 1.6 times more likely to receive unemployment payments before age 22, and 1.3 times after age 22.</p>
<h2>Intergenerational disability</h2>
<p>But the strongest relationship in intergenerational disadvantage involves parental disability. </p>
<p>Our results showed young people whose parents received disability support payments were 2.8 times more likely to receive disability support payments. </p>
<p>Young people whose parents received the Disability Support Pension for mental health reasons were almost three times as likely to be receiving the mental health-related disability benefits as other young people. They were also more likely to need other social assistance payments</p>
<p>The intergenerational relationship between youth unemployment and parental disability, for example, and was just as strong as that with parental unemployment.</p>
<p>These findings do not imply that poor children would have been better off had their parents not received social assistance — only that poor children are more likely to need assistance than non-poor children.</p>
<h2>Stretching the rungs</h2>
<p>Social mobility is higher in Australia than many other developed countries (most notably the United States). But it remains lower than the Scandinavian countries, and is threatened by any increase in inequality.</p>
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Read more:
<a href="https://theconversation.com/what-the-bureau-of-statistics-didnt-highlight-our-continuing-upward-redistribution-of-wealth-121731">What the Bureau of Statistics didn't highlight: our continuing upward redistribution of wealth</a>
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<p>A growing gap between richest and poorest grows pulls the the rungs of the socioeconomic ladder further apart, making it harder for disadvantaged Australian children to avoid becoming disadvantaged adults.</p><img src="https://counter.theconversation.com/content/123086/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Deborah Ann Cobb-Clark receives funding from the Australian Research Council. </span></em></p>Parental disability, family structure and unemployment are key factors in transmitting disadvantage between generations.Deborah Ann Cobb-Clark, Professor of Economics, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1233522019-09-16T20:40:22Z2019-09-16T20:40:22Z‘An insult’ – politicians sing the praises of the cashless welfare card, but those forced to use it disagree<figure><img src="https://images.theconversation.com/files/292133/original/file-20190912-190012-19fozeu.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C3872%2C2590&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The grey cashless debit card cannot be used at any alcohol or gambling outlet, nor used to withdraw cash.</span> <span class="attribution"><span class="source">www.shutterstock.com</span></span></figcaption></figure><p>“This is a bit controversial, we know that,” deputy prime minister Michael McCormick told the <a href="https://www.michaelmccormack.com.au/media-releases/2019/9/16/address-to-the-nationals-federal-council-canberra-14-september-2019">National Party’s federal council</a>, which on the weekend voted for a national roll-out of cashless debit cards for anyone younger than 35 on the dole or receiving parenting payments. </p>
<p>The Nationals have joined the chorus within the federal government proclaiming the cards a huge success. </p>
<p>The Minister for Families and Social Services, Anne Ruston, has even gone so far as to claim welfare recipients are “<a href="https://www.canberratimes.com.au/story/6355110/welfare-card-users-full-of-praise-govt/">singing its praises</a>”.</p>
<p>Really? </p>
<p>Both McCormick and Ruston have proclaimed success based on the most recent trial of cashless welfare in Queensland. This trial began barely six months ago, and the independent evaluation by the <a href="https://www.adelaide.edu.au/future-employment-skills/research#review-of-cashless-debit-card-cdc-trial-in-the-goldfields-region-of-wa">Future of Employment and Skills Research Centre</a> at the University of Adelaide is ongoing. </p>
<p>A more complex story emerges out of my research into lived experiences of the first cashless debit card trial, which began in Ceduna, South Australia, <a href="https://www.dss.gov.au/families-and-children-programs-services-welfare-quarantining-cashless-debit-card/cashless-debit-card-ceduna-region">in March 2016</a> </p>
<p>I spent about three months in the town of Ceduna between mid 2017 and the end of 2018 talking to people <a href="https://insidestory.org.au/weve-lost-our-vision-a-card-cannot-give-vision-to-the-community">about life on the card</a>.</p>
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<img alt="" src="https://images.theconversation.com/files/292554/original/file-20190916-19049-1y6nf9g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/292554/original/file-20190916-19049-1y6nf9g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/292554/original/file-20190916-19049-1y6nf9g.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/292554/original/file-20190916-19049-1y6nf9g.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/292554/original/file-20190916-19049-1y6nf9g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/292554/original/file-20190916-19049-1y6nf9g.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/292554/original/file-20190916-19049-1y6nf9g.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Ceduna is located on the north-west coast of Eyre Peninsula, South Australia.</span>
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<p>All communities are diverse and people’s experiences diverge. Some liked the card, or had come to accept it, others were caught up dealing with far more significant problems. </p>
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Read more:
<a href="https://theconversation.com/the-cashless-debit-card-trial-is-working-and-it-is-vital-heres-why-76951">The Cashless Debit Card Trial is working and it is vital – here's why</a>
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<p>But I talked to people who found the card “an insult”. They told me it made them feel “targeted” and “punished”. They talked of degradation and defiance. They also told me the card didn’t work. </p>
<p>As for the the claim by both Ruston (and her ministerial predecessor <a href="https://www.paulfletcher.com.au/portfolio-speeches/speech-to-sydney-institute-welfare-personal-responsibility-and-the-cashless">Paul Fletcher</a>) that the card empowers people to “demonstrate responsibility”, the opposite was true. In the words of June*, an Indigenous grandmother, foster carer and talented artist: “It has taken responsibility away from me. It’s treating me like a little kid again.” </p>
<h2>Indigenous testing grounds</h2>
<p>Ceduna, in the far west of South Australia, was the first of four sites chosen to trial cashless debit cards. The second was in the East Kimberley </p>
<p>The location of these two trial sites meant early trial participants have been predominately Indigenous. I am of the view that Indigenous communities are being used as testing grounds for new technologies and controversial measures.</p>
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Read more:
<a href="https://theconversation.com/expansion-of-cashless-welfare-card-shows-shock-tactics-speak-louder-than-evidence-82585">Expansion of cashless welfare card shows shock tactics speak louder than evidence</a>
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<p>In the first two trial sites, income support recipients younger than 65 have just 20% of their payment deposited into their bank account. The remaining 80% goes on to their debit card, which cannot be used at any alcohol or gambling outlet across the nation. Nor can they be used to withdraw cash.</p>
<p>The lead-grey cashless debit card is similar but different to the lime-green BasicsCard, introduced as part of the 2007 Northern Territory National Emergency Response (the “Intervention”). The use of the BasicsCard as an “income management” tool was extended to non-Indigenous people in the Northern Territory in 2010, and to other states in 2012. </p>
<p>The BasicsCard generally quarantines 50% of a social security recipient’s income so that it cannot be spent on alcohol, gambling, tobacco or pornography. BasicsCard holders need to shop at approved stores. In contrast, the cashless debit card, administered by financial services company <a href="https://www2.indue.com.au/">Indue</a>, can theoretically be used wherever there are Eftpos facilities. </p>
<h2>Shame and humiliation</h2>
<p>My research wasn’t based on collecting statistics but “hanging out” and getting to know people. I came to see the stigma associated with the “grey card” sometimes resonated with past experiences. </p>
<p>Robert*, for example, told me about growing up on a mission and then suddenly finding himself as “one little blackfella” in a large high school. He was acutely sensitive to the “smirks” and judgements of others whenever he used the grey card to pay for things. </p>
<p>Pete* left high school after a couple of weeks to join an itinerant rural workforce that has since vanished. After decades of manual work, finding himself unemployed due to ill health was devastating enough. Being issued the grey card compounded his humiliation. </p>
<p>Others voiced their belief the grey card was designed to induce shame. But they refused that shame, expressing instead a defiant belief in the legitimacy of their need for support. </p>
<p>The welfare system often defines people by the one thing they are not currently doing – waged employment. But many people I spent time with in fact laboured constantly: it just wasn’t recognised as work. People like June*, for example, looked after sick kin, the elderly and children. Yet the grey card treated <em>them</em> as dependents. </p>
<p>I heard about ways of getting around the card’s restrictions. As one acquaintance put it: “Drunks gonna drink!” One strategy involved exchanging temporary use of the card for cash. With terms that nearly always disadvantage the card holder, it has the potential to make life tougher for people living in hardship.</p>
<p>These observations concur with the sober assessments of experts such as the <a href="https://www.smh.com.au/politics/federal/cashless-welfare-card-trial-not-working-drug-and-alcohol-centre-says-20190910-p52pv5.html">South Australian Aboriginal Drug and Alcohol Council</a>.</p>
<p>The evaluation of the Ceduna trial for <a href="https://www.dss.gov.au/sites/default/files/documents/10_2018/cashless-debit-card-trial-final-evaluation-report_2.pdf">the Department of Social Services</a> was more positive, noting that alcohol drinkers and gamblers reported doing so less frequently. But it also noted no reduction in crime statistics related to alcohol consumption, illegal drug use or gambling. And the Australian National Audit office was so critical of the government’s evaluation it <a href="https://www.anao.gov.au/work/performance-audit/implementation-and-performance-cashless-debit-card-trial">concluded</a> that it was difficult to ascertain “whether there had been a reduction in social harm” as a result of the card’s introduction. </p>
<p>Which makes simplistic claims about the card’s success look a bit rich.</p>
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<p>*<em>Pseudonyms are used throughout</em>.</p><img src="https://counter.theconversation.com/content/123352/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Eve Vincent does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The lived experience of the lead-grey cashless debit card is a world away from the black-and-white impressions of federal politicians.Eve Vincent, Senior Lecturer, Macquarie UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/739022017-03-20T19:17:29Z2017-03-20T19:17:29ZHigher child support doesn’t lead to welfare dependency for single mums<p>Child support <a href="http://www.ingentaconnect.com/contentone/tpp/jpsj/2017/00000025/00000001/art00006">reduces poverty</a> among single mothers in Australia and does not discourage employment or reduce the number of hours worked. <a href="http://onlinelibrary.wiley.com/doi/10.1111/1475-4932.12314/full">My analysis</a> of data from the Household, Income and Labour Dynamics in Australia survey studies how the amount of child support a single mother receives, affects how much she works. </p>
<p><a href="https://aifs.gov.au/publications/impact-child-support-payments-labour-supply-de">Previous research</a> has found that single mums with bigger child support payments worked less than those with lower payments. This is partly due to the <a href="https://www.humanservices.gov.au/customer/enablers/working-out-child-support-payments-using-basic-formula">formula</a> that determines how much child support should be paid.</p>
<p>The formula means that when the non-resident father’s income is higher, child support increases. But if a single mother stops working and the father’s income stays the same, her child support payments increase. </p>
<p>The formula directly causes child support to increase if hours of work decrease. My analysis adjusts for this and finds that receiving a higher child support payment leads to an increase in the employment rate of single mothers and an increase in the number of hours worked each week.</p>
<p>One explanation for these results is the way that child support and welfare payments interact. When the level of child support increases, there is a change in the trade-offs single mums face when deciding how much to work. </p>
<p>Family Tax Benefit A is reduced by 50 cents <a href="https://www.humanservices.gov.au/customer/enablers/income-test-family-tax-benefit-part">for every dollar of child support received above a certain amount</a>. So mothers with a high child support payment, get less Family Tax Benefit A. This means that there is less Family Tax Benefit A to lose as a mother’s income increases and so the incentive to work is stronger. </p>
<h2>Welfare dependency</h2>
<p>A popular concern is that higher levels of child support could enable long-term welfare dependence. Single mothers may rely on child support and parenting payments and then transition to other income support payments as their children grow up.</p>
<p>However I found that more child support can increase employment for single mothers, this means that higher levels of child support could in fact reduce long-term welfare dependency for this high-risk group.</p>
<p>Single mother households make up <a href="http://www.ingentaconnect.com/contentone/tpp/jpsj/2017/00000025/00000001/art00006">over 87% of child support recipients</a> in Australia, and are significantly more likely to be in poverty than other households. <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/allprimarymainfeatures/5F4BB49C975C64C9CA256D6B00827ADB?opendocument">43% of single parent households</a> rely on welfare payments as their main source of income. </p>
<p>The recent government <a href="https://www.dss.gov.au/sites/default/files/documents/09_2016/baseline_valuation_results_report_accessible_version_12_july_2016_2pwc._2.pdf">Baseline Evaluation Report</a> into the lifetime costs of Australia’s welfare system identified young parents as a group who will access welfare payments intensively across their lifetime.</p>
<h2>A case for higher child support?</h2>
<p>Single mothers work more when their child support increases and other welfare payments such as the Parenting Payment fall by less than the increase in earnings. This means that when child support increases, single mothers have higher household income.</p>
<p>Some of this increased income will be taken up by childcare costs. Despite this, increased employment is likely to increase the wellbeing of single mothers and their children. </p>
<p>When these women work more it <a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1475-4932.2005.00261.x/full">increases their superannuation and their future earnings</a>, reducing the chances of old-age poverty. Children growing up in households that are not reliant on income support are <a href="http://ftp.iza.org/dp4618.pdf">less likely to become income support recipients in early adulthood</a>.</p>
<p>In terms of eligibility, <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/allprimarymainfeatures/E6A9286119FA0A85CA25699000255C89?opendocument">21% of children in Australia have a parent living elsewhere</a> and so qualify to receive child support. Changes to the level of child support payments can therefore affect the long-term employment outcomes of many parents.</p>
<p>However, the level of child support payments is an understandably contentious issue. Parents paying child support <a href="https://www.ag.gov.au/Publications/Documents/Post-SeparationParentingPropertyAndRelationshipDynamicsAfterFiveYears/post-separation-parenting-property-and-relationship-dynamics-after-five-years-chapter-7b.pdf">describe the amount they pay as unfair</a>, and parents receiving child support find the amount received insufficient. </p>
<p>The finding that higher levels of child support do not discourage single mothers’ employment gives confidence that an increase in child support would not increase their welfare dependence. However there’s room to research the effect on single fathers, so that the full implications of such an increase can be fully understood.</p>
<p><em>Dr Fisher will be online for an Author Q&A between 12.30pm, and 1.30pm on Tuesday, 21 March, 2017. Post any questions you have in the comments below.</em></p><img src="https://counter.theconversation.com/content/73902/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Hayley Fisher receives funding from the Australian Research Council. </span></em></p>Higher child support payments actually lead to an increase in the employment rate of single mums, research finds.Hayley Fisher, Senior Lecturer in Economics, University of SydneyLicensed as Creative Commons – attribution, no derivatives.