Baby Bonus Replaced

About 28,000 families who have a baby next year will miss out on any taxpayer benefits – and families face even higher costs for childcare.

Women who fall pregnant this week will be the last to benefit from the $5000 Baby Bonus, which will be abolished in nine months time.

From March 1, the Baby Bonus will be replaced with a lower payment of $2000 for first-born babies and $1000 for subsequent children.

The new payment will be made through the Family Tax Benefit A (FTB-A) – meaning the full amount will only be paid to families earning up to $101,000 if they have one child, or $112,000 for larger families.

Middle-class families earning slightly more will get only part of the new payment – which will cut out completely for parents earning $107,000 with one child, or $118,000 for more children.
All babies born before June 30 this year will qualify for the $5000 payment if their parents earn up to $150,000 a year – but the benefit will be cut to $3000 for siblings born on or after July 1.

The federal government estimates 48,000 families who would have expected the Baby Bonus next year will miss out.

Of those, 20,000 families will qualify for paid parental leave instead, as a result of budget changes to make it easier for women to have a second baby without first going back to work, and still get paid leave.

But 28,000 mothers will miss out on both payments – because their income is too high for FTB-A, or they were not working before they had their baby.

Treasurer Wayne Swan said the Baby Bonus was “not sustainable”.

“We understand there’ll be some people unhappy about this decision,” he said.

“But at the end of the day decisions had to be made about who needs the payment.

“The payment had been increasing dramatically and is not sustainable in its current form.”

The change will save taxpayers $1.1bn over five years.

Families Minister Jenny Macklin said the lower payment “more closely reflects the essential up-front costs of having a baby”.

Her office provided estimates that a pram would cost $218, a cot $399, a change table $148 and clothes $216.

Single-income families stand to lose the most – $3000 a year for those earning $90,000, with one child, or $2000 a year for those earning $105,000, with two children.

The Treasurer has also managed to save $1.2bn by freezing the upper income limit for Family Tax Payments to $150,000, meaning the threshhold will not be raised each year in line with inflation.

Parents will also be left out of pocket as the Government freezes the maximum rebate for childcare fees to $7500 for four more years, robbing working families of $717 that they might have received through indexation.

The budget also lights the fuse for a likely blowout in childcare fees in two years’ time.

The Government will pay childcare centres $300m to give workers a $3 per hour pay rise – but only until 2014/15.

After that, childcare centres will have to pay the entire wage bill themselves – and are likely to charge parents more, to cover the expense.

The budget papers indicate a 20 per cent surge in the cost to taxpayers of childcare subsidies for working parents, from $5bn this financial year to $6b in 2016/17.

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