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Social Policy Group

Social Security Payments for People Caring for Children, 1912 to 2006

Dale Daniels - Social Policy Group

Last updated 5 July 2006

This Chronology is issued electronically. It will be kept up-to-date online. The date of the latest update is noted clearly above.

Introduction

Information and Research Services has produced for many years chronologies dealing with the history of Social Security Payments. At present they are in the form of four papers with the following titles:

Social Security Payments: 1 - Children, 1912 to 1995

Social Security Payments: 2 - 1995

Social Security Payments: 3 - Sole Parents and Widowed People, 1942 to 1995

Social Security Payments for the Aged,1998.

This electronic document is part of a new series updated annually. The other electronic chronologies in the series are:

Social Security Payments for the Aged, those with Disabilities and Carers, 1909 to 2006

Social Security Payments for The Unemployed, the Sick and those in Special Circumstances, 1945 to 2006.

Payments for sole parents are included in this document and those for widowed people in the document dealing with payments for those in special circumstances.

The Department of Family and Community Services (FACS) makes, or has made in the past, a number of payments for children and child carers. This paper provides a short history of the development of these payments and a chronology of changes to each payment from their introduction to the present day.

The date from which measures take effect has been used to date changes. This means that certain measures which may have taken effect under one Government may have actually been legislated for under the previous Government. Where changes have been recently announced but not passed into law by the Parliament, they are placed according to the expected date of effect. Many changes that appear at the time of updating to be of minor importance and small administrative modifications to payments have not been included.

Rates of payment are generally not given in the text, but can be found in the tables. In the text, imperial currency is used until 1966 and decimal currency is used after that date. In the tables decimal currency is used throughout.

Note on Sources and further reading

In addition to the Commonwealth Budget Papers and Social Security legislation, the following publications have been used in the preparation of this paper:

Department of Social Security, Annual Report, various

Department of Family and Community Services, Annual Report, various

Department of Social Security, Developments in social security: a compendium of legislative changes since 1908, Research and Statistics Branch Research Paper no. 20, Canberra, 1983

Kewley, T. H., Social security in Australia 1900-72, Sydney University Press, Sydney, 1973

Kewley, T. H., Australian social security today: major developments from 1900 to 1978, Sydney University Press, Sydney, 1980.

List of Acronyms

A Short History of Payments for Families

The First Step

Financial assistance to families with children was first introduced by the Fisher Government in October 1912. It took the form of a Maternity Allowance of five pounds (over two weeks wages for an unskilled worker) paid without a means test to both married and unmarried mothers. The measure was presented as an anti-poverty measure paid as a universal payment to avoid the stigma of charity. A similar payment had been introduced in 1911 in the UK, but it had been less generous and insurance based. The allowance received considerable public support and was claimed automatically in practically all cases of confinement by the late 1920s. It survived the cost cutting by Government during the Depression but was paid at a lower rate and subject to a means test from 1931 until 1943. The allowance was eventually abolished in 1978 by which time other child payments were considered to have made it unnecessary.

Recognising the Costs of Children

The introduction of a form of child endowment was a subject of political debate during the inter-war years both in Australia and the UK. Finally in 1941 the Menzies Government introduced a payment of five shillings per week for each child in a family after the first. A similar payment was not introduced in the UK until 1945. The introduction of child endowment dovetailed with the view expressed by the Chief Judge of the Court of Conciliation and Arbitration when delivering the judgement in the Basic Wage Enquiry 1940-41 that the basic wage was only adequate for a family of three. The new payment was also used to justify the deferment of any increase in the basic wage for six months. Eligibility for Child Endowment was extended to the first child in a family in 1950 by which time the original rationale based on the basic wage had ceased to hold sway.

Further payments for children of invalid pensioners and beneficiaries were introduced during the war years (child allowance in 1943 and Additional Benefit in 1945) to assist with the support of the first or unendowed children of pensioners and beneficiaries. The rate of Widow Pension when introduced in 1942 was also adjusted to cater for the maintenance of one child. In 1950 when Child Endowment began to be paid to all children it was paid in addition to these other child payments. Between 1956 and 1965 these payments were extended to all children of pensioners and beneficiaries and paid in addition to the Child Endowment.

Table 1 shows trends in the numbers of recipients of child endowment and other payments added later.

The Introduction of Widow Pensions

Income support for widows and some sole parents was introduced in 1942 by the Curtin Government. Curtin had included a commitment to introduce pensions for widows in his 1940 election campaign policy speech. This form of income support had been included in most proposals from all sides of politics to expand the Commonwealth's involvement in income support since age and invalid pensions were introduced in 1909 and 1910 respectively. Unlike widow pensions introduced in the UK in 1925 and the USA in 1939, the Australian widow pension was not a contributory insurance-based payment and was therefore available to all widows who qualified under the means test. The structure of the new payment was drawn from the report of the Joint Parliamentary Committee on Social Security which had been asked in 1941 by the Menzies Government to inquire into widow pensions. Consequently the legislation received bipartisan support.

By the 1940s considerable numbers of widows were in need of assistance. The 1947 Census counted 134 766 widows under 60 years of age. (Sole parents who were not widows were not counted at that time.) Many of these widows were eligible for war widow pensions but sufficient sole parents and other civilian widows were in financial need to push the numbers receiving Social Security Widow Pensions up to approximately 40 000 by 1950.

From the beginning the name of the payment was misleading. It was designed to assist women who had lost a partner and could not be expected to engage in employment due to child care responsibilities or age. Not all women in this category were eligible. De facto widows, deserted wives, divorced women and women whose husbands were in institutions for the insane were included but single mothers, wives of prisoners, women deserted by de facto husbands and women who had deserted their husband or agreed to separate were excluded. These exclusions reflected the influence on legislators of contemporary moral standards as did the requirement that pensioners be of 'good character' and 'deserving of a pension'. The result was the exclusion of many sole parents from eligibility. An indication of the public attitude to such assistance can be found in the protests from some conservative women's groups about the provision of assistance to de facto widows. Such assistance was condemned as encouraging adultery and undermining the institution of marriage.

Three types of Widow Pension were introduced in 1942. Widows with children were given a Class A pension while they had a dependent child. Those without children were given a Class B pension until retirement age if they were aged 50 years or older. Those without children and not old enough for a Class B pension were given a Class C pension for 26 weeks immediately after the death of their husband. Only Class A pensions for widows with children are covered in this publication.

Family Allowances Replace Tax Allowances for Children

When Child Endowment was introduced, the Curtin Government abolished tax concessions for children to prevent wealthier parents gaining more assistance than parents ineligible for tax concessions. However concessions were reintroduced to the tax system. The monetary value of these concessions grew during the 1950s and 1960s while Child Endowment was eroded by inflation. The 1975 Henderson Poverty Inquiry Final Report recommended the abolition of tax concessions and an increase in the rate of Child Endowment especially for large families in order to redirect assistance to the poorest families. In 1976 the Fraser Government acted on this recommendation by abolishing tax concessions and introducing Family Allowance. The new payment was the same as Child Endowment in most respects but was paid at much higher rates. This was possible because revenue savings from abolishing tax concessions for children were used to increase expenditure on Family Allowance by 300 per cent when compared to expenditure on Child Endowment.

Assistance Extended to Sole Parents

Single women with children who were not eligible for Widow Pension because they were deserted wives who had not been deserted for six months, or who had not been married, or in a de facto relationship for the required three years, were given varying amounts of assistance by state government payments. In 1968 the Gorton Government began to partially fund that assistance under the States Grants (Deserted Wives) Act 1968. This form of assistance was the main income support for this growing group who were not catered for by the Widow Pension. Commonwealth expenditure under this Act increased from $1.9m in 1969-70 to $9.7m in 1972-73. Sole parents numbered 124 000 at the time of the 1966 Census. Their numbers had grown to 183 100 in 1974 when the first ABS Family Survey was conducted.

The Whitlam Government introduced the Supporting Mother's Benefit in 1973 to provide support for single mothers who were not being adequately catered for by existing arrangements. The rate of payment for this benefit was the same as for pensions in spite of the name it was given. Eligibility for Supporting Mother's Benefit did not commence until six months after the date of separation or birth of a child. As a result the States continued to provide assistance to single mothers until 1980 when immediate eligibility was introduced by the Fraser Government. That Government also extended eligibility to male sole parents and renamed the payment Supporting Parent's Benefit in 1977. By 1980 DSS payments were finally available to all categories of sole parents.

Targeting Low Income Working Families

The effectiveness of Family Allowance as a means of redistributing income to low income and larger families was severely eroded by the high inflation of the late 1970s and early 1980s in the absence of indexation. In 1982 the Fraser Government passed legislation for a new payment called Family Income Supplement (FIS) which commenced in May 1983 after the Hawke Government had been elected. This type of payment was new to Australia because it was directed at low income working families with the objective of ensuring that low income working families could receive more while in employment than when unemployed. This was achieved by giving them entitlement to the equivalent of additional benefit for children.

FIS proved to be too limited a payment with a limited take up rate. Against a background of increasing concern over the extent of child poverty the Hawke Government made a commitment during the 1987 election campaign that by 1990 no Australian child would live in poverty. The main means employed to fulfil this commitment was a reworking of the system of income tested child payments. Rates of payment increased considerably, Rent Assistance was made available to low income working families and FIS was renamed Family Allowance Supplement and the income test was made more generous. Further development of family payments continued under the Hawke and Keating Governments. The main developments were indexation of rates, assets testing, the amalgamation of Family Allowance Supplement with Additional Pension and Benefit to form Additional Family Payment and the merging of Basic and Additional Family Payment to form Family Payment.

The Rationalisation of Pensions for Sole Parent Families

The reform of Widow Pensions continued in 1989 with the amalgamation of Widow Pension Class A and Supporting Parent's Benefit. The new payment was called Sole Parent Pension. The two payments had over time become almost identical and catered for essentially the same group. The demise of the Widow Pension marked the end of a transition from payments for 'respectable' widows with a few categories of less reputable sole parents hidden under the umbrella term Widow Pension, to payments based on the objective fact of sole parenthood.

New Payments for Two Parent Families

During the 1993 election campaign the Keating Government committed itself to introduce a Home Child Care Allowance to provide a source of independent income for women caring for children at home. This payment effectively replaced the tax rebate for dependent spouses with children. The payment was set at a level which was a slight increase on the value of the rebate but it was payable on a fortnightly basis. This allowed parents who were out of the work force for periods as short as a fortnight to qualify. The rebate had been inaccessible to parents who had earned even modest amounts during a financial year. Home Child Care Allowance was absorbed within a new payment within a year of its introduction. It became the basic component of a new Parenting Allowance in 1995. This new payment which was first announced in the Working Nation statement of 1994, was paid to the parent caring for children in low income families, irrespective of whether their spouse was working or in receipt of an income support payment.

During 1994 the Keating Government also committed itself to introduce a form of paid maternity leave in the spirit of ILO convention number 103 as part of the Accord Mark 7 agreement with the ACTU. In 1996 Maternity allowance was reintroduced as a lump sum payment equivalent to six weeks of Parenting Allowance.

Payments for Parents Simplified

In 1998 the Sole Parent Pension and the Parenting Allowance were amalgamated to form a single payment for people caring for children. The new payment called Parenting Payment was a tentative move towards simplification of the growing range of payments for families. Many of the distinctions between the two superseded payments were maintained in order to avoid reduced assistance for sole parents or the increased cost that a single set of rates and eligibility criteria would involve.

Family Assistance Simplified

Simplification of the structure of family payments was carried further in 2000 when a range of payments, child-care fee subsidies and tax concessions for families with children were replaced by three payments. The introduction in 1997 of the Family Tax Initiative, while directing extra assistance to families, did further increase the complexity of the system. The need for simplification was clear.

The new Family Tax Benefit provided income tested assistance for each dependent child (Part A) plus a payment for parents who stayed at home to care for children (Part B). Child Care Benefit brought the two existing child care fee subsidies into one payment.

Timed to coincide with the introduction of a Goods and Services Tax, these reforms also involved an element of compensation for the effects of that tax on families with children and an attempt to reduce poverty traps for low and middle income families.

Payments for Parents and Welfare to Work Reforms

In 2003 participation requirements were introduced for Parenting Payment recipients with a youngest child of high school age. This move was prompted by concerns that parents should be encouraged to retrain and reattach to the workforce. The eligibility criteria and paticipation requirements for Parenting Payment underwent major changes in 2006. As part of a broader set of Welfare to Work reforms, eligibility for new applicants for Parenting Payment was restricted to those with a youngest child aged less than eight years of age if single or six years of age if partnered. Those who would formerly been eligible were now eligible for Newstart Allowance but with a requirement to look for part-time work only. Participation requirements for those remaining on Parenting Payment were also increased.

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Table 1: Payments for People caring for Children Recipient Numbers from 1942

Part A: 1942-1975

Part B: From 1976

Notes:
(a) Child Endowment families data for 1964 to 1976 does not include those with students aged 16 to 21 only.
(b) Includes Widow Pension Class A from 1942 and Supporting Mothers Benefit from 1973.
(c) Includes Family Allowance 1976 to 1992, Basic Family Payment 1993 to 1995, minimum rate of Family payment 1996 to 1998, minimum rate of Family Allowance 1998 to 2000 and at least base rate of Family Tax Benefit Part A from 2000.
(d) Children for whom more than the basic rate was paid would also have received the basic rate, and are therefore counted under both headings. Includes Additional Pension or Benefit for Children 1976 to 1992, Family Income Supplement 1983 to 1987, Family Allowance Supplement 1988 to 1992, Additional Family Payment 1993 to 1995, more than minimum rate of Family Payment 1996 to 1998, more than minimum rate of Family Allowance 1998 to 2000 and more than base rate of Family Tax Benefit Part A from 2000. Data for Childs Allowance and Additional Pension and Benefit for 1943 to 1975 are not publicly available. Payments for children of Special beneficiaries are not included prior to 1993.
(e) Includes Supporting Mothers Benefit 1976 to 1977, Supporting Parents Benefit 1977 to 1989, Widow Pension Class A 1976 to 1989, Sole Parent Pension 1989 to 1998 and Parenting Payment (Single) from 1998.
(f) Includes Parenting Allowance 1996 to 1998, Parenting Payment (Partnered) from 1998. Prior to 1996 payments for partnered parents were paid as part of income support for their spouses. No data on the numbers involved is available.
(g) Family Tax Benefit data does not include payments made through the Australian Taxation Office.

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Maternity Allowance 1912 to 1978, and 1996 to 2004, Maternity Immunisation Allowance from 1998, Maternity Payment from 2004

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