Back in July 2006, parenting payment rules were changed so that new applicants could only be paid if their youngest child was under 6 years (for partnered parents) or 8 years (for single parents). At the time I remember a friend suggesting that every cloud has a silver lining, insofar as the change would at least have a positive impact on the partnering penalty.The partnering penalty is a murky subject that seems to have an almost “dare not speak its name” air about it. In an earlier form it was described by its reverse – a financial incentive to separate – a concept almost too ugly to consider, at least publicly. The basic idea was that if the financial assistance for low income single parents was too generous compared to the entitlements for low income couple parents it might provide an inducement of sorts for relationship breakdown. These days if the idea is discussed at all it’s usually in terms of whether differences in the assistance packages between singles and couples might be a barrier to the reconciliation of estranged couples or the formation of new cohabiting couple relationships – a partnering penalty.
I was reminded of the partnering penalty issue by the repeated demands to undo the changes to single parents introduced this year. Those changes abolished the special rules for parenting payment that had applied to people who had been getting it since before the July 2006 rule changes. But a change that is only applied to single parents will almost inevitably alter the relativities between them and partnered parents and hence affect the partnering penalty.
So, do we have a partnering penalty under the current arrangements, and if so, how big is it?