Forcing single parents on to Newstart has saved budget $5b, but increased poverty

Analysis completed by the Parliamentary Budget Office of laws passed under John Howard and Julia Gillard show a "positive budget impact" - a saving of $5.089 billion, worth hundreds of millions of dollars every year.

In 2005 the Howard government introduced legislation changing the eligibility for the singe parent payment from when the youngest child turned 16, to when they turned eight, introducing work participation requirements when their youngest child turned seven.

When the youngest child turned eight, single parents, predominantly women, were moved to the lower Newstart payment.

Under that change, families with a youngest child over eight but under 16 stayed on the parenting payment, but a change was introduced in 2011 under the Gillard government.

The analysis and final figure also includes tightening eligibility for the disability support pension incapacity for work qualification requirement from 30 hours a week to 15 hours a week, that also may have pushed single parents from the disability payment to the parenting payment.

Greens family and community service spokeswoman Rachel Siewert, who requested the analysis, said the budget savings had come from those least able to pay.

"That's come off the backs of single parents and their children and it's no wonder we've seen a spike in single parents and their children living in poverty," Senator Siewert said.

"Quite frankly it breaks my heart."

READ MORE:

Senator Siewert said the policy needed to be reversed in order to help more families out of poverty.

For Jane, who requested her real name not be published, her youngest's sixth birthday meant she had to start planning, using school holidays to travel to regional towns to look at schools, rentals and the potential to get work. She knew she wouldn't be able to keep living in Brisbane once her payments got cut.

While the aim of the policies was to encourage single mothers to get into the workforce, Jane said she has been working the whole time she's been on the payments, but it's hard to get by with just one income.

"I had two casual jobs, even with that it is still struggle street," she said.

"I moved to a remote regional town, took on a second job, worked weekends and public holidays."

Now after making the move, Jane says she tries to make sure her kids don't miss out, but goes without herself to make ends meet.

While she agrees that there is value in getting out of the house and working, she says the budget savings have come from those with little ability to pay.

"It's targeting people who are struggling more, I have one income and have to feed three people. It is targeting marginalised people."

The chief executive of the National Council for Single Mothers and their Children, Terese Edwards, said the changes had made the poorest families poorer.

"There was no modelling done regarding the impact, it was all based on belief, ideology and budget savings," Ms Edwards said.

"It just threw women into turmoil, things that were standard - heating in the cold, cooling in the heat, having enough food - basic household utilities became a cost-saving measure for women."

"It's a nonsensical horror policy that should be fixed."

Cost pressures are particularly tight in the ACT, where the ACT Council of Social Services has found single parent households are among those worst affected by rising costs in living.

"Single parent households are among those most at risk of struggling to afford energy and food. These households are also effectively locked out of the ACT private rental market," ACTCOSS chief executive Emma Campbell said.

"In our conversations with community organisations and single parents themselves we have heard of how the transition from the Parenting Payment to Newstart has caused significant loss of income while their cost of living has increased, exacerbating their risk of experiencing poverty, food insecurity, and housing stress."

A single mother with two school-aged children told ACTCOSS that when her youngest child turned eight and she moved onto Newstart, it was about $150 less each payment.

"That was a huge chunk ... I mean when you get to teenagers they eat a lot, so that was a big huge jump from managing, to battling, to manage again, so yeah, that was quite hard," she said.

Australian Council of Social Service chief executive Cassandra Goldie said the figures don't count all the ways payments have been cut to single parents.

""These figures would underestimate the total losses for single parents, as they don't include cuts to Family Tax Benefit, or cuts to the Energy Supplement over that time," she said.

Ms Goldie said it was appalling that one third of single parent families in Australia live in poverty.

"These figures show that $5.3 billion, including $700 million just this year, has been ripped from the hands of single parents, which has directly led to an increase in child poverty, with one in six kids in Australia living in poverty."