Kevin Andrews (Menzies, Liberal Party, Shadow Minister for Families, Housing and Human Services) Share this | Hansard source

What the government is effectively doing is reducing the baby bonus from $5,000 to $2,000 for a first child and to $1,000 for second and subsequent children. Technically, the government is abolishing the baby bonus but then introducing a payment under the family tax benefits regime. Effectively, the net result is a reduction from $5,000 to $2,000 for the first child, and from $5,000 to $1,000 for second and subsequent children. In addition to that, the threshold at which the baby bonus cuts out is being reduced under this legislation. This is part of what has been a long-term attack on the baby bonus by the Labor government. In the MYEFO statement on the bill now being amended, the baby bonus was being reduced from $5,000 to $3,000. Before that, we had measures taken by this government to cut the indexation of the baby bonus. This is consistent with the attitude of the government towards the baby bonus.

Why in the space of a month or so has the government decided to reduce it not just to $3,000 but to $2,000 for the first child and to $1,000 for second and subsequent children? The reality is this is about saving money for the government. The savings under this measure add up to about $1.3 billion over the forward estimates. In other words, this government is taking $1.3 billion from Australian families who would otherwise have qualified for the baby bonus. This should more fairly be called the 'Labor debt baby bonus reduction bill'.

I go back to why the coalition introduced the baby bonus in the first place. There is a lot of talk these days about middle-class welfare. The reality is that this measure was introduced as a result of the first Intergenerational Report which said that this country needed to do three things in order to ensure its future prosperity: the country needed to ensure that the population continued to grow; we needed to ensure that participation in the Australian economy was there for as many people as possible; and we needed to increase productivity. Population, participation and productivity were the three key levers for economic prosperity as identified in the Intergenerational Report when it was first released by former Treasurer Mr Costello.

Why is population important? For a couple of reasons. One is that at that stage the fertility rate, the birth rate, in Australia had fallen to 1.7 children per woman on average. The replacement rate is about 2.1. Analysis and research around the world show that when a country's population rate falls to about 1.5 or less it becomes virtually impossible to lift it again. Why is that important? It is not important just for any social private good that comes from having children; it is good for future economic prosperity of a nation. About a quarter of economic growth, not just in Australia but historically across the world, has been shown to come from population growth itself. A country like Australia, which allows its population not to grow and its fertility rate to drop, is therefore in danger, by that measure alone, of reducing its economic growth.

So this is not just a measure, as it is sometimes portrayed, about welfare. This is a measure put in place to ensure that the fertility rate increased and, as a result of this measure, according to experts such as Peter McDonald, the demographer at the Australian National University, this was the main reason the population birth rate jumped from 1.7 to 1.9. It had a positive impact, and that is what this government, in its short-termism of now having to deal with the debt, is putting in jeopardy. It is putting in jeopardy aspects of economic growth in Australia.

This measure is going to most impact upon single-income families. For those families where a partner is in the workforce the parental leave scheme was introduced. Those people who qualify for the parental leave scheme do not qualify for the baby bonus. Some of the funding that was originally there for the baby bonus now goes towards the parental leave scheme. But those on a single income, those with stay-at-home mums, for example, are going to be the ones who cop the brunt of this $1.3 billion decrease in funding to families over the forward estimates.

This is not a measure that the coalition would have taken. The coalition put in place the baby bonus for the very real economic and other reasons which I have briefly outlined in my contribution this evening. We would not have taken this measure, yet we now find ourselves in a very difficult situation. Since this legislation was introduced we find that we have yet another major deficit from the government. We have yet more increase in the Commonwealth debt and, therefore, we have to take a responsible position in relation to these matters. That is why we reluctantly accept these measures. That is why we are not opposing them; not because this is what we would have done had we been in government and had better control over the management of the finances of the Commonwealth of Australia, but because of the very difficult economic situation that this government leaves this country in at this time. For those reasons, we will not oppose these measures.

Question agreed to.

Bill, as amended, agreed to.

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