Australia’s economic prosperity has been luring Kiwis across the ditch for years. After a talk this week at The New Zealand Initiative by The Australian newspaper’s economic correspondent, Adam Creighton, it is beginning to become clear why.
In Australia, the government pays people to have children.
A family with a combined income of less than AU$75,000 in the first six months after the arrival of a child receives the Baby Bonus (yes, that is its name). With a national median weekly income of AU$1,234 in 2011, this means just over 50 per cent of working Australians could be eligible.
And the benefits don’t stop there.
Family Tax Benefit (FTB) A is similar to the Working for Families scheme in New Zealand. Parents who receive the FTB A are also given the School Kids Bonus to congratulate them for ensuring their children survived the early years. This is a flat bi-annual payment of $205 per primary aged child or $410 per secondary and tertiary aged child.
The FTB B (colloquially called the ‘we want women to stay at home’ payment) is available for single parents or couples with one main income of less than AU$150,000. (The rules allow a small secondary income if one partner takes up a part-time job). A nuclear family with a child under five, where one partner raises the child at home full time and the other partner earns AU$125,000, will receive AU$128.80 per fortnight to assist with the crippling costs of raising a child.
For the moment, Australia is relatively fiscally secure because of its historically high terms of trade, and it can maintain generous subsidies for its better-off citizens. But serious questions are being raised about the sustainability of such payments, especially in light of the looming economic downturn.
New Zealand does not have the option to further assist the working and middle class through such cash payments. According to 2011 budget papers, the cost of the Working for Families tax credits has doubled between 2005–06 and 2011–12. In a way, New Zealand is fortunate: the conspicuous lack of a mining boom has restricted the proliferation of such largesse.
Supporting low income earners is one thing, but it is not government’s role to incentivise the middle class to procreate. People have been having babies for centuries and did so during plagues, depressions, recessions, war, famine, and disasters, all without government assistance. It is safe to say they will continue to do so, both in Australia and New Zealand, regardless of the existence of middle class welfare schemes.