Tuesday, March 18, 2008

Tuesday column: Axe the baby bonus

So the carers’ and seniors’ bonuses are safe.

Despite the fact that when each was introduced the government of the day declared it a “one-off” and set aside no money for it to be ever paid again.

Whatever else this past week's repositioning of the Opposition as the “party of compassion” and the Government’s capitulation has demonstrated, it hasn't included good decision-making.

Which is a pity because it has made good decision making even more important.

Before the guarantee to seniors and carers, Lindsay Tanner’s razor gang needed to cut spending by $4 billion in the upcoming budget. It now needs to cut it by $5.7 billion.

Where should it look?

I would start with the $1 billion baby bonus. Not because it will be easy to cut...

Kevin Rudd said it was safe just last week.

But because cutting it might save lives.

Do you think that’s too strong a charge to make? I think it’s justified, and in any event there are other reasons for abolishing the baby bonus.

One is that it goes to the wives of millionaires who can’t possibly be thought of as needy. James Packer’s wife Erica will get $4,187 if her baby is born before the end of June and more if it is born in or after July when the payment jumps to $5,000.

On The Insiders on Sunday the Finance Minister Lindsay Tanner defended the payment saying it was helping to boost the population.

Barrie Cassidy responded by asking whether $1 billion a year was a steep price to pay for a few extra babies.

Tanner replied: “Look, it's important to keep in mind that extra babies do matter in this regard. And it's relatively early days too. We've only seen it in place for a few years.”

It has actually been four years, and it is possible to form some pretty firm conclusions.

One is that Erica Packer and wives like her are highly likely to provide their husbands with heirs whether or not they get a taxpayer-funded bonus. Labor has already promised to withdraw Family Tax Benefit Part B from families earning more than $250,000 a year. It should do the same with the baby bonus.

Another conclusion is that the bonus doesn’t really seem designed to lift the birth rate. Nearly all of it goes to families who were going to have a baby anyway (just as nearly all of the $3.6 billion annual Private Health Insurance Rebate goes to families who were always going to take out private health insurance anyway).

If the bonus was going to boost the birth rate it would probably be paid only to parents who were having a second or a third child, or it might be graduated as it is in Singapore – the more children you have, the higher the payment for each extra one.

And in any event it is not clear that we should be trying to boost the birth rate. There are cheaper ways to increase the population, if that’s what we want to do. Immigrants are keen to boost our population for free.

It would be good to think that a government that claims to be “evidence-based” as this one does would be able to cite evidence that the baby bonus did any good, and it would be good to think that it paid attention to the growing body of evidence that suggests that it in fact does harm.

Something odd happened when the bonus – initially $3,000 - was introduced on July 1, 2004. That day, a Thursday, was the busiest in Australian labour wards in three decades. A record 1,005 babies were born on July 1, compared to only 500 the day before – which happened to be one of the quietest Wednesdays on record.

It can’t have been because people timed their decisions to become pregnant with the bonus in mind. It was only announced two months before it began to be paid.

But can be because, in the quaint word used by Dr Andrew Leigh of the Australian National University, they took actions that would “overcook” their babies.

Dr Leigh and Professor Joshua Gans of Melbourne University can show that around 1,000 births were moved from June to July in 2004, most of them by delaying inductions and cesareans.

Since they published their raw findings back in 2006 they have obtained more detailed data from hospitals that confirm this is how the births were moved.

For many of the later-born babies, the delay was only slight, but for 300 it amounted to more than a week. For 150 it amounted to more than two weeks.

Are those babies as healthy as they would have been without the baby bonus effect? Leigh and Gans say probably not. They tended to be born heavier. Whereas normally around 11 per cent of babies are born weighing an unhealthy 4 kilos or more, during the first week of July the proportion approached 14 per cent.

Leigh says that’s around an extra 140 babies born unhealthily heavy as a result of Peter Costello’s baby bonus, something the former Treasurer might have liked to consider as he posed for the cameras surrounded by smiling healthy babies to celebrate the success of his scheme.

In fact the former Treasurer had an opportunity to reconsider the scheme in 2006 when Leigh and Gans and medical professionals implored him not to go ahead with the plan to boost the bonus to $4000 on July 1.

The Treasurer was unmoved, and Leigh and Gans say 687 births were shifted, about four per cent of the children who would have otherwise been born in June.

Their concern now is that the bonus is due to increase again - to $5,000 - on July 1 this year.

They are certain we are in for another bout of heavy babies and mayhem in delivery wards as perhaps another 500 women attempt to move births from one month into another.

They are this week writing to the Health Minister Nicola Roxon begging her to change things.

Dr Leigh says there are three ways to do it. Abolish the baby bonus or the planned July increase, increase the bonus immediately, or phase in the increase week by week.

As he told me: “If you want to give out middle class welfare because that's how you feel you are going to win the next election, that’s fine. But please don’t do in a way that endangers babies health”.

A government concerned with evidence would listen.


oldeboots said...

The critical measure here is not how much the planned birthdate is being moved as a result of the baby bonus, but what effect (if any) is the baby bonus having on the length of gestation.

A former obstetrician that I just told about this said that it doesn't really matter that birthdates are moved, as such.

This is because the births being moved are planned births -- inductions and caesarians. These are often scheduled for 38 weeks into the pregnancy, and so there is no real problem in moving them to 40 weeks (He did say that he would be getting quite concerned about the health of the baby at about 41.5 weeks).

Because of all this, I am not that raising the bonus poses health risks. This doesn't change in any way the fact that it should be means tested!

Salient Green said...

Brendan Nelson reminded The Press Club today that the Baby Bonus is causing problems in aboriginal communities.
Unwanted babies, millionaire welfare, and the stupidity of encouraging population growth when the global ecological debt of humans is now at 1.3 planets, compared to 0.5 planets in 1961.
The baby Bonus has to go, completely.

Anonymous said...

I enjoyed reading your post Peter and agree with what you say.

I was quite disappointed to see the Rudd Government continue those 'bonus' payments to carers and pensioners. I believe they should have cut them and given those people more permanent welfare support where needed.

I agree that the Baby Bonus should go. It's not a good scheme and a huge waste of expenditure.

Unfortunately, it would appear that Rudd is more concerned about making decisions which cause minimal public criticism. He's just been elected in a landslide and with overwhelming public support, now's the best time to make prudent but politically unpopular decisions.


Les said...

Nice comments Peter; your type of logic arguing against the narrow-minded policies of the previous government has been long overdue in the public domain. The current Government needs to realise that the baby bonus should be scrapped. It has no scope and besides, do we really need more babies anyway?

White Australia ? said...

"And in any event it is not clear that we should be trying to boost the birth rate. There are cheaper ways to increase the population, if that’s what we want to do. Immigrants are keen to boost our population for free."

What sort of immigrants. Black, White, Yellow or does it matter at all ?

The media has been most pious in remembering the sailors of the HMAS Sydney. Some even published a list of names of the lost crew. Nearly all appear to be of Anglo/Celt origin. Did they knowingly fight and die for Multicultural Australia, or do we just patronise their memory now that they don't have a choice in the matter, to make ourselves feel good about what may have been by some, a betrayal of their cause.

Should disingenuous pecuniarists have a say in social policy that implies homogenous European communities are morally, economically and societally ineffectual to the extant that their engineered extinction via 'multiculturalism' is a desirable goal.

Why not "White Australia" ? or Europe for that matter.

LETTERS said...

LETTERS, March 20, 2008

No place for baby-bonus boom in Australia's future

Congratulations to Peter Martin on his article on the lack of sense in having a baby bonus, let alone increasing it (''Policy pregnant with danger'', March 18, p17).

The bonus is based on the wrong premise that we need an increase in population. More than 20 years will pass before these children will gain enough skills to contribute to the skills shortage, if indeed they all do.

By then the world will be a different place. Global warming projections are that Australia will be drier and hotter and could have difficulty in feeding our current population.

Populations displaced by rising seas will likely want entry here. So will those who find their lands cannot support them because of world population increases, currently at a rate equivalent to a city of 1.5 million per week.The boom will probably be over when we start running out of minerals, China's and India's mineral needs have been satisfied, or the world has been plunged into recession or depression.

Daily, the last of these appears increasingly likely. I read in The CanberraTimes some time ago that the then $3000 baby bonus had resulted in early teenage pregnancies in some remote Aboriginal settlements to gain the bonus.

It didn't take long for reality to step in and the babies were handed over to grannies and aunties for care.One wonders what sort of a life these children will enjoy.

When added to Peter Martin's reasons, the bonus should clearly go.

Julia Richards, Kambah

LETTERS said...

LETTERS, March 29, 2008

It seems everyone likes criticising new mothers and their understandable desire to pocket those extra baby bonus dollars.

There may be many good reasons for not increasing the baby bonus, but I am not convinced by Andrew Leigh or Joshua Gans, who argue that it will cause ''another bout of unhealthy babies'' (''Health warning on baby bonus'', March 18, p1).

Dr Leigh's and Professor Gans's evidence for this is that heavier babies have lower Apgar scores.

The Apgar score is a quick test given to babies in their first minutes of life and usually repeated after five minutes.It is a set of observations about the newborn baby's colour, pulse, reflexes and so on.

It is not meant to be used as a long-term assessment of the child's health or development; it is just a check of which babies need more careful watching then and there.

For all but the frailest babies, a lower Apgar score tells you precisely nothing at all about the future health of a child and it does not mean that are "unhealthy".

To suggest otherwise is mere scare-mongering.

Leigh and Gans are economists, not doctors.

Says it all, really.

Katy (not a doctor either)Kavanagh, Aranda

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