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Baby bonus/parental leave
May 15, 2008 | 5 Comments | Joshua Gans
One budget change that I haven’t commented on yet is the move from a lump-sum to a fortnightly payment (to be $385) for the baby bonus. This is going to make the increase in the baby bonus from 1st July a markedly different affair. Sure it will rise substantially but it will also, in large part, by deferred. Impatient but not economically rational parents may choose to get in early rather than wait.
What is more interesting about this change is that it looks more paid parental leave like. To be sure, you don’t actually have to take leave from your job to obtain the payment but that is a relatively minor detail when you are talking about a payment that looks more like social insurance than a universal handout. The new payment is not at the level of the minimum wage but I suspect in the future that that could change with the baby bonus rising and the income threshold falling as perhaps a more thought out system of parental leave is put in place.
That said, there are details of this I am still not on top of. The income threshold test is based on household earnings in the first six months after a baby is born. Does that mean that households who end up earning more have to pay the bonus back? If so that is looking tantlisingly like the first part of an income contingent loan.
Comments
5 Responses to “Baby bonus/parental leave”
Yeah, I’ve wondered about the payback issue too. Didn’t the Libs go through hell making people pay back in some scheme five years back or so?
According to a report in the paper today, the Government is just going to ask parents to ‘guesstimate’ their income for the next 6 months, but has no plans to make them pay it back if their guesstimate turns out to be wrong. Sounds like a bit of a moral hazard there
I agree with you Joshua that the new baby bonus scheme is beginning to look a lot more like income replacement. Which may make it relatively easy to move the next step to some form of paid maternity leave, but also begs the question of what the rationale is for people who haven’t given up any income in order to have a baby (ie those who are already receiving income support).
[...] if we took some of the higher education fund and used it to patch up his cuts to the ABS?), and Joshua Gans’ characterisation of the revamped Baby Bonus as parental leave lite (will those folks in the OECD [...]
I agree with you Joshua that the new baby bonus scheme is beginning to look a lot more like income replacement. Which may make it relatively easy to move the next step to some form of paid maternity leave, but also begs the question of what the rationale is for people who havenâ??t given up any income in order to have a baby (ie those who are already receiving income support).