The women of Australia are on notice: Senator Matt Canavan wants “more Australian babies”.
In the remarks he made following his election as Nationals’ leader on Wednesday, the Queensland senator did not specify who would be having the babies, or who would primarily raise them, but perhaps we can infer that – Canavan is a family traditionalist who clearly enjoys trolling feminists.
In 2020, he posted on social media that he had bought his wife a clothesline for Mother’s Day.
The post, small though it was, served as an effective display of Canavan’s significant political talents.
He made headlines – the post was widely shared on social media (often by people who missed its irony), it was discussed on breakfast television, and it had the welcome side effect of upsetting snowflakes on Twitter (now X), thereby shoring up Canavan’s political brand as a refreshing iconoclast.
But Canavan was also making a nationalistic point about economic sovereignty – the type of clothesline he bought for his wife was not a traditional Hills Hoist, a brand now made in China, he said.
It was an “100 per cent Aussie made Austral clothesline”.
Canavan’s protectionist instincts are not surprising for a Nationals politician, but they are surprising for a former Productivity Commission economist, which he is.
Also surprising, for an economist, is his insistence that the taxpayer subsidise ongoing coal production, and his insistent preference for fossil fuels.
The latter is a particularly puzzling stance at a moment when the war-disrupted oil supply chain is threatening to damage the Australian economy.
The surge in oil prices and our reliance on “foreign” oil are acting as an effective carbon price for Australian consumers. You won’t hear the fossil-fuel fetishists admit that.
It was Canavan’s interest in the fiscal policy of “income splitting” that drew the attention of the sorts of people he was hoping to irritate with his clothesline post.
Income splitting is when the higher-income-earning half of a couple diverts some of his/her income to their spouse, who is on a lower income or even no income, so each member of the couple is taxed at a lower rate.
For example, if a husband earns $100,000 and his wife earns $40,000, he could apportion her $30,000 of his salary, so they are both taxed on the marginal rate for income of $70,000.
It is a tax-reduction measure that treats households as a socialistic entity, where each member gives according to their means and takes according to their needs.
This, of course, is how most families work.
Canavan has supported the policy for more than a decade, and in an interview with The Australian last week, he made it clear he will push for the policy as leader.
“Our tax system should encourage parental bonds, not penalise them by not treating families as a team,” he said.
“Childcare works for some but not all. Providing more choice will (benefit) all parents because it will take the pressure off our straining childcare system.”
Taylor and his deputy, Jane Hume, seem open to considering income splitting.
They have repeatedly said they want to see “more tax flexibility” and choice for families in how they raise their kids, and last year Hume introduced a bill to allow couples to split their superannuation balances.
Income splitting is already practised in Australia – anyone who sets up a family trust can do it, in effect, by apportioning income from the trust to different family members.
Given that family trusts are used as a tax minimisation scheme for the wealthy, income splitting through the marginal tax system is a way of making it accessible for all.
As a tax minimisation strategy, it does, of course, leave a large hole in the federal budget.
A few years ago, Senator Gerard Rennick asked the Parliamentary Budget Office to cost his income splitting proposal – it came back with a figure of $68.9 billion over a decade.
In 2015, Canavan put out a press release proposing a more modest form of income splitting, with total annual tax relief capped at $2000 per couple.
But still, the sacrificed tax revenue would have to come from somewhere.
Most likely it would be filched from other parts of the family-support budget, such as the Family Tax Benefit, or from childcare subsidies.
Helen Hodgson, professor of taxation at Curtin University law school, did her PhD on income splitting.
“It’s very inefficient,” she says of the policy.
“It restrains productivity because the lower earner will be paying a marginal tax rate at the threshold of the household, which will be higher than what she would pay as a lower earner.”
The lower earner is giving her partner a benefit by scoring him a tax break, but she doesn’t get one herself. In fact, her tax bill will increase because she gets pushed to the higher bracket. But the household pays less overall.
That’s fine for couples who can afford to live (largely) from one salary, and fine for women who are certain they will never need to support themselves.
But if the reasoning for the policy is to give couples more choice, it won’t necessarily achieve that for the lower earner – she will be disincentivised from earning more.
Income splitting tends to benefit higher-income families – who can afford to live on one salary (or 1.5 salaries).
The policy is also inequitable for split couples – by giving tax relief to intact families, the system is deliberately preferencing a traditional family over a divorced family.
Not very fair for children of divorce, who are more likely to live in poverty anyway.
For all these reasons, Liberal elder (and co-author of the party’s controversial election review) Pru Goward labelled the policy regressive, too expensive and favourable to the rich, and that was 22 years ago, when she was Sex Discrimination Commissioner.
“I can imagine that some families would respond to this policy by having the lower-income partner work less,” says Professor Robert Breunig, the director of the Tax and Transfer Policy Institute at the Australian National University.
“Given gender roles, that would be more likely to be the woman. But that could be a welfare-enhancing thing.”
Breunig says that government policy should be about “making choices better, not about making people work”.
But choice only holds up when there is genuine equality within a relationship.
Says Professor Miranda Stewart of Melbourne University: “Income splitting discriminates against dual earner families – the majority – and has the effect of over-taxing the wages of mothers returning to work”.
The most targeted, efficient way to support families is “individual taxation combined with broad family payments and child care subsidies”, she says.
Professor Hodgson points out that income splitting doesn’t account for what we now know about financial control within abusive relationships, not to mention women’s increasing desire for financial autonomy within marriage.
“The policy is a throwback to the main breadwinner model that we became accustomed to until the ’70s and ’80s, when it was normal to have one person earning and the other person at home,” says Professor Hodgson.
And here lies the social narrative behind the fiscal arguments for income splitting.
Last year, the opposition inflicted untold damage on itself with its election policy to restrict working-from-home for public servants.
The Liberals were blindsided by the huge backlash against that policy – it was as though no one in their ranks had spoken to, or even passed in the street, a contemporary working family in the previous five years.
The fiasco over that policy only worsened the Liberals’ so-called “Woman Problem”.
There are benefits to income splitting, and as teal independent Allegra Spender keeps saying, our system taxes incomes too highly, and wealth too lightly.
But the Coalition needs to be careful in proposing a tax strategy that preferences the male-breadwinner family model, which penalises single parents, and which threatens to hamper female workforce participation.
They risk repeating the mistakes of the past, and projecting themselves, again, as a party that refuses to accept the reality of how working families manage themselves in 2026.
Not how they used to, in a romanticised past – a rose-tinted time when families could survive on a single income, when women were discouraged from working outside the home, and when Hills Hoists were still proudly Australian.
Jacqueline Maley is a senior writer, author and columnist.
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