Poverty on rise in single-parent families as childcare costs bite

Extract from The Guardian

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Welfare in Australia

Hilda survey also reveals increasing mortgage debt, declining home ownership rates and later retirement ages

Child poverty in single-parent families has increased every year between 2012 and 2015. Photograph: Lukas Coch/AAP

Christopher Knaus

Wednesday 2 August 2017 04.01 AEST Last modified on Wednesday 2 August 2017 04.02 AEST

Child poverty is rising in single-parent families, as the doubling of childcare costs combines with stagnant wage growth, falling home ownership and low child support payments to fuel financial strain.
The University of Melbourne’s report – known as household, income and labour dynamics in Australia (Hilda) – has also revealed significant trends of increasing mortgage debt, declining home ownership rates and later retirement ages.
But this year’s survey, which tracked 17,000 people in 9,500 households, paints a particularly bleak picture for single-parent families.

The report described the likelihood of child poverty in single-parent families as “very high”, hovering at a rate between 20% to 25%, well above the general community rate of about 10%.
Child poverty in single-parent families has increased every year between 2012 and 2015, bucking an otherwise downward trend in overall poverty in Australia.

Single parents have borne the brunt of rising childcare costs, which the Hilda survey finds have doubled in real terms in 10 years.
The median weekly expenditure on childcare for single-parent families rose from $56 to $114 in 13 years, an increase of 104%. The increase was not as large for couple families, whose weekly childcare bill rose from $93 to $162, an increase of 74%.

Single parents were consistently more likely to use paid care than couple parents. In 2014 and 2015, 50.7% of single parents with children were using paid childcare, compared with 46.5% of couple parents.
Home ownership rates for single parents are now also the lowest of any family type, at 11.2%. Despite already having a low chance of owning a home, the proportion of single parent home owners fell a further 8.2 percentage points between 2002 and 2014.

At the same time, only about 40% of majority-care parents, who were usually single parents, received child support from the second parent.
The report’s author, Roger Wilkins, said the welfare system had also become “less accommodating” for single parents.
“The way I’d describe it, many single-parent families are doing it tough,” Wilkins said.
“Not all are, there are some that are doing quite well. But they have much higher rates of poverty than the general population. For those using childcare, for preschool aged children, their cost has almost doubled,” he said.
“They have low home ownership rates, that also has implications for their future income.”
More broadly, Wilkins said the survey showed the economic picture was not “nearly as rosy” as previous years.
“You wouldn’t want to say that we’re in an economic crisis, that would be overstating it,” Wilkins said.
“The overall employment rate is still high by modern historical standards in Australia, and overall poverty rates have actually been coming down somewhat.”
The survey found average mortgage debt rose from $169,201 to $336,586 among 18- to 39-year-olds between 2002 and 2014. The rate of home ownership fell from 36% to 25% over the same period.
Hilda also shows that incomes have flatlined. The worst increase in median income growth was recorded in Sydney, at 13.1% between 2001 and 2015.
Income growth in Sydney went from being the highest in 2001 to the second-lowest in 2015, behind only Adelaide.

Australians are also retiring much later. Those who retired by the ages of 60 to 64 dropped by 40% for men and 30% for women since 2001.
And younger Australians are taking much longer to leave the family home.
The number of men still living at home at age 22 to 25 rose from 43% to 60% between 2001 and 2015. The jump was higher for women, rising from 27% to 48% during the same period.
Despite the federal government’s rhetoric on welfare dependency, the survey found downward trends for welfare reliance between 2004 and 2009, and then remaining constant until 2012.
The report largely found the welfare system was performing its role as a temporary safety net, rather than a long-term form of assistance.
It found the welfare system “is potentially playing a very important safety net role”.
The Hilda survey has tracked the same respondents since 2001.