The Federal Government’s $4 000 baby bonus is an expensive way to lift the birth-rate and is unneeded according to Griffith University academic Professor Ross Guest.
Professor Guest from the Griffith Business School has published his recent findings in a research paper, The Baby Bonus: A Dubious Policy Initiative.
Professor Guest said the baby bonus wastes money by paying for babies people were going to have anyway.
“Most people would already be having babies, and although the baby bonus encourages some to have a baby sooner, it doesn’t necessarily increase the number of babies Australian women have over their lifetime,” Professor Guest said.
“With 259,800 registered births in Australia in 2005, that amounted to eligible payments of around $780 million. This expenditure should be compared with alternative policies on a cost-benefit basis,” Professor Guest said.
Research on the Canadian Baby Bonus Scheme – which is very similar to Australia’s – found the real cost of each additional child to be $15,000, when the number of extra children born as a result of the bonus was divided by the total child payments made.
“If the baby bonus was restricted to second or third children, or at least paid a smaller amount for the first child like the Singaporean model, it could have the same effect at the margins at much less cost to taxpayers,” Professor Guest said.
“Another strength of the Singaporean model is the government co-contribution, where the government matches every dollar put in by parents for an education fund for the child. This is an option for the Australian government if it is concerned about how the Baby Bonus is spent.”
Professor Guest said the introduction of the baby bonus was accompanied by government comments about the need to increase the fertility rate, and how the policy would do that.
“While the Australian birth-rate edged up slightly after the revised baby bonus was introduced it couldn’t necessarily be contributed to the policy because the birth rate jumps around,” Professor Guest said.
“And Australia doesn’t need an increased birthrate. The country is on or close to an appropriate demographic path. Australia’s growth rate of 1.25 percent is optimal for Australia’s income per capita.
“Increasing the birthrate will actually put strain on current generations and further benefit future generations which will already be better off.”
Professor Guest said there is a view that Australia needs a baby bonus because other countries have one, but there is no chance of Australia’s population decreasing like Japan, Italy and Russia.
“Public spending programs need to be as efficient as possible. If Australia continues to have a baby bonus, modelling the policy on Singapore’s would have the benefits with less waste,” Professor Guest said.