Can it really be true? [HT: Sinclair Davidson]
Parents of newborns will be able to receive a $500 early payment of their baby bonus, Prime Minister Julia Gillard has announced.
From July 2011, eligible parents will receive a larger, more flexible advance on their Family Tax Benefit entitlement.
Apparently so. If there is one piece of evidence that is non-controversial and surely solid enough for actual policy impact, it is the fact that when you introduce a payment for delivery that rises $500 or more on a particular day, you will cause babies to be shifted to that day. Here is the link to my paper with Andrew Leigh on the subject.
So what is the Prime Minster proposing? To do just that on the 1st July, 2011 (if they are re-elected that is). Now this is different from the distortions provided by the Howard Government (in 2004 and 2006), the Rudd Government (in 2008) and the Rudd Government possibly again at the end of 2008. It is smaller and it is also a brought forward payment rather than a new payment. But it doesn’t look good because it is simply unnecessary to time things this way. If you are trying to portray yourself as believing in evidence-based policy together with market design, doing things this way strikes me as a big negative.
That said, the alternative is a party that wants to design the labour market to give firms the biggest incentive to entrench gender discrimination all in the name of supporting women. At the same time, there is an apparent 1.5% hike in company taxes for one year only (yes, one year only) to fund this. I think earnings might be low that year.