KJ Elizabeth

by KJ Elizabeth

Unpublished, 2004

In 2002 the Federal Liberal Government delivered on one of its election promises and introduced a First Child Tax Refund, known as the Baby Bonus. Since its introduction, the Bonus has attracted criticism from the major political parties, unions and welfare agencies. It has also added fuel to the debate surrounding paid parental leave.

The Baby Bonus provides tax relief to parents (generally women) who give up work to care for their first child. Every year for a maximum of five years, parents can claim up to $2,500 of the tax payable on their income, earned in the year prior to the birth of their child. For parents with annual incomes of $25,000 or less, a minimum annual benefit of $500 is available.

According to the Government, the introduction of the Baby Bonus was in recognition that “one of the hardest times for families financially is the birth of a first child, where one parent may give up or reduce paid employment to care for the child.” (2002-03 Women’s Budget Statement)

Despite there being evidence that the hardest financial times for families is generally at the birth of their second or third child, there is no question that when one parent leaves the workforce to have and/or care for a child, this can add significant stress to a family’s finances. Therefore any initiative to ease this stress, at first glance, may appear to be a positive step forward. However you only need to scratch the surface of the Baby Bonus scheme to reveal inadequacies that fail to address the pressing issues confronting young families. Also revealed, is an underlying ideology within the Federal Government that is ill equipped to facilitate a better balance (and choice) between work and family responsibilities, especially for women.

One of the main criticisms of the Baby Bonus is that it benefits those who least need it. According to the governments own figures, only those women who earn in excess of $52,666 pa. will have access to the maximum $2,500 rebate.

An independent analysis of the scheme by the Federal Parliamentary Library, released by (then) Labor shadow treasurer Bob McMullan in January 2003, found that that only 7 per cent of women earn in excess of $52,666 pa. The analysis made a number of key findings, which according to Mr McMullan showed the scheme to be “unfair and seriously flawed”.

One question of fairness centers around the fact the bonus is not means tested, and, as mentioned above, is designed to benefit those on higher incomes. Furthermore, in order to gain the maximum tax relief, women must remain at home and out of full time work for 5 years.

On this point McMullan said the research showed the baby bonus was biased against women who return to work. Which gives weight to the criticism often leveled at the Government that it wants women back in the home and out of the full-time work force.

The Democrats, Greens and Labour Parties have all called for the scrapping of the Baby Bonus, suggesting the money could be better spent on paid parental leave. Unions and welfare bodies such as The Australian Education Union and ACOSS (Australian Council of Social Service) have also called for the Bonus to be abolished claiming it to be inequitable and that it does little to assist women on average or low incomes.

On September 8 of this year, the Senate voted in support of a Greens’ amendment that condemned the Baby Bonus as ‘an inequitable payment that does nothing to assist parents to maintain their attachment to the workforce.’ It also called for the Government to ‘redirect the funds into policies that assist families to balance their work and family responsibilities, including paid parental leave.’ The Government however remained adamant the Baby Bonus would provide tax relief to hundreds of thousands of Australians and they had no plans to scrap the scheme.

However disquiet about the Baby Bonus has emerged within the Government, with questions about the appropriateness of the scheme coming from (then) Family and Community Services Minister Amanda Vanstone. In an article for a Liberal Party discussion paper, Senator Vanstone wrote: “I suspect if you asked most working women who left the workforce to have a baby if they wanted a limited amount of cash in hand now or greater certainty of childcare availability and the chance to return to work, they would not choose the cash.”

Ballarat City Council’s Manager of Family Services, Anne Scott echoes this view, “The feeling out there is that the Baby Bonus is a nice thing to have, but it does not replace an income.”

While Senator Vanstone has stated that she is not personally opposed to the baby bonus scheme, it’s fair to assume that her comments were designed to point out to her Liberal colleges that there are issues of much greater concern to working women. It also implies that their policies could be better directed to address these concerns, and that a failure to do so may effect the government’s standing with mothers who want to work.

If what women want is access to affordable childcare and the opportunity to work and advance their careers while raising children, why has the Government introduced legislation that fails on both these counts?

It is been suggested that other factors may have motivated the Government’s introduction of the scheme. Some have linked the Baby Bonus legislation to population policy, suggesting it may be designed to help address the issue of Australia’s declining birth rate by providing a financial incentive for women to have more babies. If this is the case it is clearly inadequate. A $500 bonus for low income earners hardly offsets the costs incurred over 12 months in caring for a child.

Eminent Australian feminist and author Anne Summers supports this view. She argues “If it were a birth-rate driven policy, i.e. a policy designed to encourage women to have more babies, it would apply to the second children. Perhaps it would apply only to the second and subsequent child as an incentive to women to have more children.”

Those more skeptical of the government’s motives have suggested the Bonus is designed to encourage women to stay at home and stay out of the workforce. Summers supports this view also, and is in no doubt that the Bonus was “clearly designed to entice women from the workforce - and then to force them to stay home for as long as five years.”

In today’s competitive job market, taking a break from the workforce for such a long time seriously disadvantages women who wish to return to work. Summers believes the scheme “blatantly seeks to remove women from economic activity and to de-skill them, ensuring they can never return to anything like the same level of employment.”

Is this Howard’s plan? Is the Baby Bonus a vain attempt to encourage the kind of traditional family and gender roles he so fondly espouses? Or perhaps it is a genuine attempt to ease the tax burden on families. If the later is true, it is obvious the bonus will do little to help those most in need, nor assist them at the most appropriate time. Regarding the former - whether it is an actual motivation for the scheme or not, it is a reason for Australian women, especially those who wish to work and raise children, to be concerned.

It’s 2004, and despite women now being told they can do anything they want, the reality, sadly, is that the supposed progress on the equality front is not as far as many of us are led to believe. The Howard Government’s Baby Bonus scheme, is only one example of the structural inequities that continue to place pressure on women to withdraw from the work force in order to care for their children and forgo advancing their professional careers.

© 2004 KJ Elizabeth

Recommended Reading: ‘The End of Equality’ by Anne Summers