The Distributional Impact of the Proposed Welfare-to-Work Reforms Upon Sole Parents

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In the May 2005 Budget the Federal Government announced a range of proposed welfare to work measures, to take effect from 1 July 2006. Among the numerous measures announced in the Budget were significant changes for sole parents - including that those sole parents claiming income support after 1 July 2006 with a youngest child aged 6 years or more will be placed on Newstart Allowance, rather than Parenting Payment Single. This report analyses the impact of the proposed changes upon the disposable incomes and effective marginal tax rates of sole parents. It shows that the disposable incomes of sole parents can be up to about $100 a week lower under the proposed new system than under the current system. It also finds that effective marginal tax rates will be sharply increased under the proposed new system, over a reasonably wide range of earned income.


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