What is independence from parents? (part 3)

Backroom girl has been vigorously contesting my view on who should be counted as ‘independent’ of their parents for welfare purposes.

I’d say that the following are normally signs of independence:

* receiving no or trivial financial support from parents
* moving out
* starting own family, marriage and especially own children

Under the current independence test, only children will get you straight onto the welfare roll, though if you have been married or [corrected; comment 1] in a de facto relatationship for 12 months you can also get YA in your own right.

Moving out doesn’t make you independent, unless your parents are a threat to you. However, even if your parents help with the bills I’d say living away from your parents does require self-sufficiency in many other respects.

However working 30 hours a week for 18 months or 15 hours a week for two years does make you independent, though the latter does not in my view meet any reasonable test of what ‘independence’ means. A low-skill worker could not earn enough to live independently on 15 hours a week, even in a shared expense household. As the AVCC student finances report found, that’s routine hours for undergraduates and means that many of them would qualify as ‘independent’ for YA after 2 years at uni, despite their actual circumstances not changing at all.

So in my view the current independence critera are too lax on the work test, and too strict on moving out.

From my perspective, what policy should be achieving here is minimising the cost of Youth Allowance to the taxpayer while trying to encourage university attendance by people with genuine financial hardship issues.

That’s why I am inclined to give kids from rural areas easier access to YA when they have to move to study. It is why I am inclined to make it easier for kids from homes in the $35,000 to $60,000 a year range to get more assistance. It is why I am inclined to increase the amount that can be earned personally before benefits are cut.

And if all this has to be done without blowing the YA budget (about $1 billion a year now) I’d suggest that ‘independent’ at home is the most obvious place to start. Perhaps a compromise between bg’s position and mine would be to tighten the work test to 30 hours a week for 2 years, so that very few people would do it just to get YA.

5 thoughts on “What is independence from parents? (part 3)

  1. Always happy to consider a compromise between your position and mine, Andrew. I’m just glad to know that we agree that student assistance is long overdue for significant reform.

    I think you misread the marriage criterion, though – it’s married or previously married (no duration specified) OR living de facto for 12 months. So as long as you don’t mind having a failed marriage to your name, you can get married in name only and presumably get divorced 12 months later. Same with children – you only have to have given birth, not actually spent any time caring for a child, let alone have one in your care at the time.

    I think I would agree with you that 15 hours a week for two years is not an adequate indicator of financial independence. At least, no-one could seriously argue that it is equivalent to working full-time for 18 months. I suspect that a lot of people meet independence through the third earnings criterion – that is, earning at least 75% of the maximum rate of pay under Wage Level A of the Australian Pay and Classification Scale in an 18 month period (an amount currently equivalent to about $19,000).

    The problem with criteria based on full-time or near full-time work only is that in today’s labour market not everyone is able to get full-time work but might still be able to stitch together sufficient income by taking whatever work is available. In fact, a criterion based solely on full-time work would probably end up privileging the very middle-class kids that you don’t like to see ending up as independent. So one that is based on total earnings over a specified period is in my view preferable to one which requires you to have worked a specified number of hours. How does earning $30,000 over a two year period sound to you?

    I don’t really disagree with you that moving out of home is a marker of independence – it’s just that young people’s lives are pretty fluid these days and in these times of astronomical rents, staying home (even while supporting oneself) might actually be a sensible strategy for many. And I don’t think you can seriously run a regime whereby kids are allowed independent status while living away from home and then stripped of it if they move back.

    As I said earlier, I think I could live with somewhat stricter independence criteria all around (including, for example, having actually lived independently of parents in a couple relationship for 12 months, married or not) as long as there was a significant easing of the parental income test. Doing the latter might, in my view, take a lot of pressure off lower income parents and therefore reduce the incentive for some young people to qualify as independent.

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  2. bg – Marriage point corrected. Though checking the marriage statistics teen and first-half of 20s marriages have continued their historical decline, so I don’t think this will come into effect as a rort mechanism unless the work test is tightened.

    I agree an earnings test has advantages, in that there is an ATO record of it (and this encourages income to be declared) for easy verification and deals with multiple job holders. But there is no getting around the advantages of the middle class, who will probably get better-paying jobs and qualify in less time.

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  3. -“astronomical rents,…staying home…sensible strategy”

    This is an important cross-cultural point — I imagine that given current trends, this is going to be happening more and more, which would make Australia far more like the rest of the world, where people live in family groups much longer than now (often their entire lives). Thus it won’t be a marker of “independence”.
    The other point is that, until the last few decades, most people were thoroughly independent at 18 — when do people get to become mentally independent now? Do we want 25 year olds still thinking they are 15?
    It seems to me that if the main idea of all these rules is really just to stop people collecting welfare, then this should be admitted, and better ways of stopping people collecting welfare could be used.

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  4. “But there is no getting around the advantages of the middle class, who will probably get better-paying jobs and qualify in less time.”

    And thus it has always been and always will be, I expect. Don’t forget that one of the biggest ‘rorts’ of the student assistance system has always been the children of rich self-employed parents qualifying for support when the children of relatively low-income wage and salary earners cannot.

    It’s actually a bit ironic that I have been defending so strongly the right of kids to be independent and live at home, because I think if I had my druthers I would actually rather support full-time students living at home through the FTB system, rather than through YA.

    It is sensible, I think, to pay kids their own money once they leave home since it is important for them to learn how to look after themselves and you want to make sure that they get the benefit of money paid on their behalf. But you probably could still do this through the FTB system if you wanted to, by just carving off the amount that is due to the student living away from home and paying it direct to them.

    The advantage of supporting all dependent children through the one system is that you would only apply a single income test to the parents rather than multiple income tests as at present (an FTB income test for the kids under 16 plus essentially one YA income test for each kid on YA). The current arrangements lead to horrendous EMTRs for families unlucky (or silly) enough to have had a number of children fairly close together in age.

    Under that model, people would only enter the YA system at the point that they were judged independent of their parents. But I still think that once kids were independent and receiving YA, you wouldn’t want to make them go back to being dependent on their parents again.

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  5. Andrew, as a student I completely agree with you. I live out of home at University residence which my parents pay for. Although my rent is covered there seems to be no factoring in welfare schemes that I am paying for my own food, textbooks, clothes and other necessities yet can only work casually as I’m a student. Its frustrating that I have plenty of friends who qualify for youth allowance as their parents are separated whilst they are also living at home. I am surviving with 9 hours work each week however If I could qualify for youth allowance my life would be a lot less stressful.

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