Wednesday, 15 May 2013

Government cuts baby bonus... FINALLY!

[DISCLAIMER: I fully support people who want children having children. I know people, both in relationships and single, whose biggest delight is their child or children. I know people who have considered the issue, and made a decision, and been blessed with a squalling, pooping, bundle of love. What I DON'T support is people having children because of the baby bonus.]

When Howard first introduced the 'Baby Bonus', I was shocked. Imagine, paying people to have children! Too many people don't need any encouragement to do that!

I thought that the policy was horrifically irresponsible. For one thing, I don't believe in a 'Bigger Australia.' Sure, the economy has to grow, but it doesn't have to grow by being fueled by population booms! This nation, this planet, doesn't need higher populations!

Children having Children:
Secondly, I thought that it was irresponsible because of the target audience. $2,000 (later raised to $3,000, then $4,000, then indexed to inflation, as of January 2012, $5,437.) is a very attractive sum, especially when paid as a lump sum. For a person who has been working for five years, $5,000 doesn't seem like a huge amount, but for a person who has never worked, or is just coming into the workforce, that is a massive amount.

I am talking, of course, about children and young people. For 16- and 17-year-olds who have just left school, what could be easier than having a child to earn $5,000? You even get to have sex to make it happen! (What does sex for money remind me of???)

Even after the payment was divided into fortnightly sums, I still felt that it was an irresponsible policy, promoting young people to have children by the promise of easy, quick cash. First time parents, especially, would have no idea of the true costs of raising a child. What happens when the baby bonus runs out?

To add to that, once the baby-bonus was finished, those young people would most likely then be eligible for Parenting Payments through Centrelink. So instead of having people finishing school and looking for further education or work, you have a generation of young people who have had the opportunity to skip working, and go straight onto the welfare system via a policy promoted by the government. And once the bonus runs out, why stop at one?

Even once their children are old enough for child-care, it will seem daunting to enter the work force heavily enough to make child-care affordable. Also, that person now has the everlasting responsibility of having a child to care for. Their opportunities are always going to be so much more limited. Entire blogs have been dedicated to the difficulties faced by mothers re-entering the work-force. Add to that a complete lack of employment skills, and you have a recipe for frustration.

Low-Income Earners:
I am going to open a can of worms by bringing the economic view into things. I have already discussed how young people would find that $5,000 attractive enough to go through pregnancy, but there is another group, not necessarily (but often) comprised of young people, who would find this attractive. Poor people.

Without wanting to enliven the eugenics debate, it is hard to argue that people on lower incomes aren't going to find the bonus more attractive than people on higher incomes. An economic rationalist argument is that someone who is earning more than $5,000 per month is going to realise that pregnancy is going to take them out of the workforce for more than a month, and that having a child isn't going to help their finances!

On the other hand, someone who is receiving $522 per fortnight on NewStart is going to see a bonus of 18 weeks' pay, all in one hit! What's not to like?

So the relative benefit is skewed towards lower-income earners, but even more so towards people who are already receiving benefits, and not working.

As I stated in relation to young people, having children is, unfortunately, a barrier to employment. So when you are on NewStart for your 4th consecutive year, having consistently failed to obtain employment, you might see a shining light, a squalling child, and maybe a few extra cans of Jim Beam. Gotta be better than working, right? Plus, you now have the excuse of 'looking after your child' to add to your reasons for not working.

I won't go into the well-discussed issues of inter-generational poverty, and cyclical welfare dependency, but I argue that this policy fuels these problems, rather than abating them.

The Purpose of the Baby Bonus:
What I have ignored so far is the stated purpose of the baby bonus. Wikipedia states this:
"A baby bonus is a government payment to parents of a newborn baby or adopted child to assist with the costs of childrearing."
The Department of Human Services (Centrelink) website says this:
"A payment made in 13 fortnightly instalments that helps with the costs of a newborn baby or adopted child under 16 years."
The purpose of the bonus is to assist with the costs of child-rearing. That is the justification for the current budgetary move to balance the reduction of baby bonus into the Family Tax benefit.

But wouldn't it be smarter to subsidise things like strollers, prams, formula, nappies, etc., rather than paying money? It will still assist with the costs of child-rearing, but it won't have the effect of encouraging people in tenuous financial circumstances to produce more offspring!

What do you think? Have I gone too far down the eugenics path? Am I being overly paternalistic?

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