Threat to benefits a marriage turn-off

By John Garnaut

July 14, 2004

It used to be said women chose between marriage and career. Now more women are getting both, or none.

A leading labour market economist has crunched the latest census figures to find the traditional relationship between marriage and education has all but reversed.

In 1981, marriage rates among unskilled women aged 25-34 were 28 per cent higher than those for educated women in the same age bracket.

By 2001 they were equal.

The collapse of marriage rates among unskilled males is even more stark.

Professor Bob Gregory, of the Australian National University, will argue in a lecture today at Parliament House in Canberra that this trend towards unskilled bachelors and spinsters was driven by increasingly generous family welfare payments.

"For a woman with welfare and children, it's so hard to find a well-paid unskilled man who can bring to her a better financial outcome than what she's got by herself on welfare," Professor Gregory said.

He said the threat of withdrawn welfare payments presented an even greater disincentive to marriage than it did to finding a job.

It also explains why one in five of Australia's children under 16 years of age live in a female sole-parent family, he said.

Take the hypothetical case of Martha and Max. Martha, a mother with two children who earns $200 a week from a part-time job, would bring home $590 a week after receiving the sole parents payment, family tax benefits (A and B) and rent assistance.

Max receives $112 from Newstart unemployment benefits.

But if Max moves in with Martha, Centrelink would switch Martha from the sole parent payment to Newstart and their combined income would plummet by 18 per cent, or $125. They would earn $13 less combined than Martha did on her own.

Because of the complexity of calculating payments, Professor Gregory said the withdrawal of benefits was more likely to create friction within marriages and contribute to separations than stop partnerships forming.

The calculations are based on welfare payments as at July 2003. Professor Gregory said the May budget changes had reduced marriage disincentives for some but exacerbated them for others. He predicted this distortion would increase.

http://www.smh.com.au/articles/2004/07/13/1089694362610.html