May 03, 2007

In Reply to Baby Bonuses

We have LauraS to thank for her recent post about governmental experimentation with baby bonuses. She shared a riveting 3,000-word white page authored by Ross Guest examining all aspects of this pronatalist policy. His article appeared in the think tank publication Policy, which has been covering big issues and creating a public policy dialogue for Australia and New Zealand since 1984.

Mr. Guest's article is well-researched, but his endnotes alone would take you a half an hour to read -- not a blog reader’s usual attention span, so I decided to post my reaction to it on the front page in order to shed more light on this important topic.

Most noteworthy:

  • One measure of determining appropriate growth rate is to compare it to income per capita, i.e.: What can the people afford on their real incomes?
  • Population growth is a factor of immigration and fertility. How does a country chose a correct demographic path? This also raises some ethical issues. If it’s not about sheer numbers, then what is this policy about?
  • According to the movie, The Hitchhiker’s Guide to the Galaxy the ultimate world population number is 42 -- ha ha! What is that,…one person per country?
  • Everyone knows that the bigger market always gets catered too. It means bigger profits, but did you know:

“A larger market can also stimulate innovation by making it more profitable. A higher population also implies a greater probability of knowledge breakthroughs which have positive snowballing effects on productivity (a process of so-called endogenous growth).”

  • Japan, Russia and Italy…and who knew, Singapore are all experiencing population declines. New Zealand and England are on the list too.
  • Canada has a Baby Bonus program!!!
  • Australia and the U.S. are not in population decline, neither is the world at large. The U.S. population is maintaining replacement rates. Australia's population is projected to grow.
  • U.S. tax benefits have may have attributed to the Baby Boom generation phenom. It's hard to prove.
  • Singapore’s baby bonus comes with strings attached, to be sure some of it goes to benefit the child.
  • The unanswerable question: What is ideal population,, more Catholics? Muslims? We know what the Pope would say.
  • Who pays? All of us. Remember we little people, childfree or not, fund the government.

Here’s the author’s summary:

"In summary, is the Baby Bonus a good pronatalist policy? The negatives are that it wastes expenditure by paying parents who would have had children anyway, and a more debatable negative is that it allows parents to spend the money on whatever they want which may include plasma TVs and so on that may not benefit the child. The positives are that it is simple and transparent, and it allows maximum parental choice with regard to expenditure. My view is that Singapore got it about right with its initial model, in two ways: by paying only for the second and third child, and by having two components—a lump sum cash payment and a co-contribution toward education expenses. Not paying for the first child partly alleviates the ‘waste’ problem, and the economic case for encouraging large families by paying a Baby Bonus for fourth and subsequent children is weak due not least to concerns about the average investment by parents in education per child when there are large numbers of children."
Draw your own conclusions Purple WomenTM.

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Tanya said...

In Australia, the government is offering money for first time parents.

"In 2004, Treasurer Peter Costello urged Australian couples to have ‘one (baby) for your husband and one for your wife and one for the country’. To encourage this, the Budget that year put in place the ‘Baby Bonus’, a lump sum payment to the parents on the birth of each child. It has risen from $3,000 on commencement on 1 July 2004 to its current level of $4,000 and is set to rise to $5,000 on 1 July 2008. With 259,800 registered births in Australia in 2005, that amounted to eligible payments of around $780 million."
(Taken from

Recently on the news there, a new parent, one who had received his bonus for said child, yelled to the politician in charge of this plan "Alright, we had the baby for the country 6 months ago. Can we give her to you now?"

Personally, I don't think this is right at all.

In my opinion, it will encourage those in lower socioeconomic situations to have babies that ultimately they can not pay for long term.

Canada's plan is a monthly check which is designed to offset the costs of childrearing. My family of 3 kids in Canada growing up got about $250 a month from the government. Mum did not have kids for the check. (I hope)

Now I live in Hong Kong where, unlike mainland China, you may have more than one baby, but if you do, you are on your own. There is no government help here at all in the form of baby bonuses or monthly support.

And for the childfree? What do we get as a bonus? Shouldn't we get an environmental bonus for not producing more waste in the form of nappies and broken toys which littler landfills, for keeping the population controlled by not adding more consumers to the planet?

Sadly, no.

But oh, they sure like that we pay our taxes that pay for the babies.

Strawberry Muffin said...

Many of the baby bonuses offered in Western Europe are not about increasing the population but increasing the right kind of population, i.e. the native kind.

Teri said...

Ah, yes, why has no one mentioned the long-term cost of raising children? Why doesn't the governement offer to pay for that?