Media Release by The Hon Jenny Macklin MP

Helping families meet the costs of raising children

Legislation introduced into Parliament today delivers on the Government’s election commitments to help families meet the costs of raising children.

Under significant reforms, the maximum payment rate of Family Tax Benefit part A will increase by more than $160 per fortnight for teenagers aged 16 to 19 who are in secondary school or equivalent vocational training.

The Government has extended our election commitment to deliver increased payments for families of teenagers aged 16 to 18, to include 19 year olds.

Each year, the families of about 130,000 teenagers will benefit from increased support. Families with teenagers turning 16, 17, 18 or 19 in 2012 will be the first to benefit if their children are in school.

From 1 January 2012 Australian families will receive increases of up to $4,200 a year per teenager to help them meet the higher costs of raising older children and encourage more teenagers to stay in school. Some of these families may also now be eligible to receive Rent Assistance or Family Tax Benefit Part B.

Every family’s circumstances are different. The exact amount that each family will receive depends on the family income, and the age and number of their children.

Under the changes, the 16 to19 rate will be the same as the 13 to 15 year old rate. We recognise that children do not get cheaper to care for as they get older. The cost of groceries, clothes and family activities can all increase as children grow.

But under current rules, the maximum rate of Family Tax Benefit Part A would drop from $214 per fortnight to $53 per fortnight when a child turns 16. Rent Assistance also stops when the youngest child turns 16 and families may lose eligibility for Family Tax Benefit Part B, the Large Family Supplement and Multiple Birth Allowance.

This sharp drop in family support can encourage teenagers to leave school early if their family is unable to support them in full-time study or training.

By supporting families through this initiative we expect more students, particularly those from lower socioeconomic backgrounds, can finish school and better prepare themselves for further education or training.

These reforms also implement the recommendation of the Independent Review into Australia’s Future Tax System that ‘family payments should be the main form of assistance for families up to the end of the secondary school or the school year in which they turn 18 (the earlier of the two)’.

The increased Family Tax Benefit Part A for older teenagers will cost $766 million over five years and has been funded as part of our election commitments, consistent with the Government’s commitment to return the budget to surplus in 2013, three years ahead of schedule.

Today’s legislation also delivers on our commitment to help new parents with the upfront costs of having a baby such as buying a pram, baby clothes and setting up a bedroom.

From 1 July this year, families will receive $500 more of their Baby Bonus payment in their first fortnightly instalment, bringing it to almost $880. The total amount of the Baby Bonus will remain the same, and the 12 subsequent payments will help parents meet ongoing costs during the baby’s first six months