“This is not an equity argument” said Tony Abbott on this morning’s Chat n’ Chew with Fran. “Its’ a watershed social reform, it’s an idea whose time has come?” This was in answer to the first ever half-serious line of questioning on his justification the Coalition’s controversial and iniquitous paid parental leave scheme, because to date the questions have all been focussed only on the funding arrangements.
Fran was attempting (unsuccessfully I might add) to get to the bottom of the story. Why, Mr. Abbott, are highly paid career women to be given more to get up-the-duff than lowly paid scullery maids?
Mr. Abbott’s response sounds so reasonable. “Why shouldn’t everyone get paid at his or her wage?” Indeed Mr. Abbott – Why shouldn’t they? Also while you’re answering that one – What about this one. Why should they? ‘Cause the thing that Mr. Abbott has failed to explain is the reasoning behind this inequity. If this is really about helping Mums – then why isn’t it targeted at the Mum’s who need most help? – Oh but I forgot. “This is not an equity argument”.
Perhaps then it’s a bit of assisted social Darwinism. An incentive designed to get the upper-middle to breed more. Whilst not actually outlawing pregnancy amongst the hoi-polloi – a massive breeding incentive scheme aimed at outbreeding them might do the trick.
Maybe Mr. Abbott’s justification is that the career woman has been contributing more in tax than the scullery maid – and therefore she deserves a bigger kickback? Maybe we’ll see this theory extended to other forms of government service in the future – better Policing for the well-to-do for example, or legal aid subsidies proportional to income, or more government support for well-to-do school kids. Oh no – that’s right – we already have this.
Maybe it’s all just a misunderstanding. Maybe it’s just Mr. Abbott showing that he really does like women and this is the proof.
Whatever the justification – the message to the scullery maid couldn’t be clearer. The sooner you get that Marketing degree and join the smart set the sooner your little fetus gets an even break.
Well, the original idea of paid maternity leave was to ensure that women who bore children were not disadvantaged relative to men, and to women who didn’t bear children, by loss of employment and income. The idea underlying the principle of leave with full income replacement is that they be not disadvantaged by loss or reduction of income. The palaver about women earning $150,000 a year getting more than other women distracts from the predicament of the much more numerous category of low to middle income women earning less than this, but more than the minimum wage, for whom the difference between the minimum wage and their current wage whilst on leave would not trivial for themselves and their families, in circumstances where one wouldn’t need to be greedy to appreciate getting (or, more accurately, not losing) the extra money.
I write this as someone who will be voting Greens and preferencing Labor and who has no desire whatsoever to give aid and comfort to Mr. Rabbit.
Yep, so what we currently have, and are going to get even more of, is a set of payments (FTB) that are joint means tested so giving a strong incentive for lower income mums to stay at home, a set of means-tested childcare subsidies that give lower income mums a set of incentives to go to work (but not too much) and a set of payments that are reverse means tested (the more you have the more you are paid) that give high income mums, but not low income ones, an incentive to work.
Net result: something with an overall payment pattern approaching a universal (non-means-tested) unconditional payment for children. Except it’s far more complex, hence at high risk of major unintended anomalies and perverse incentives. Plus needing many more public servants and lots and lots more form-filling by the mums, their employers and their child carers.
Now if you believe that children yield a benefit to society over and above any benefit to their mums (ie there’s a large positive externality that exists for both rich and poor children) you may support a big universal child benefit (deliverable either as a cash payment or a refundable tax credit according to taste). Mr Abbott is right on that, though – its ultimately an efficiency, not equity, argument. I’m agnostic on it myself.
Its also true that the universal benefit may need a tightly means-tested supplement (with consequent complexity and adverse incentives for poor families) to reduce child poverty. If you don’t want that then you need to make the universal benefit bigger so you can make the supplement smaller. Adding offsetting conditional instruments (childcare subsidies, parental leave, etc) instead as we have done just adds complexity while not achieving anything that a bigger universal benefit couldn’t..
The point that I keep coming back to in these discussions is that, as things are and have been, children yield a significant disbenefit to their mums in terms of career interruption, employment discrimination, loss of income, reduced retirement income, loss of autonomy, visibility and status in various ways during pregnancy and afterwards, etc. This is what things like parental leave, childcare, etc., are intended to help redress.
“and a set of payments that are reverse means tested (the more you have the more you are paid) that give high income mums, but not low income ones, an incentive to work.”..”except it’s far more complex, hence at high risk of major unintended anomalies and perverse incentives”
I don’t see how paying high income people money is an incentive to work — surely it’s the opposite. Even as a male, if you give me lots of money to stay at home, I’ll do it!
Also, I’d like to know the size of the effect a lot of these payments are having in terms of female workforce participation or number of children had. It seems to me that the most important one in terms of work is childcare, since for some people it really isn’t be worth working because of the expensive of this (obviously excluding non-monetary gain). That being said, if you look at things cross-culturally, there are probably other equally as important factors that no-one is going to do anything about (e.g., cost of housing), or are unlikely to do something about (e.g., school hours).
Given this, if the effect of policies the government might implement is likely to be small, then it really does boil down to a moral argument of the type Paul suggests above.
Paul N, since when has it been the government’s role to redress all ‘disbenefit’ occurring in society? (Particularly when the disbenefit is due to voluntary individual choice.)
As dd says, if there’s a large positive externality from kids, there may be an argument for subsiding them — assuming that we can’t find other, cheaper solutions (migration?).
But otherwise, if you don’t want the disbenefit, don’t have the kids. Simple as that.
The thing that upsets me the most is that the payments will be partly funded by reducing the assets that self funded retires have managed to accumulate to fund their retirement. These funds cannot be ‘topped’ up as we have retired. Perhaps having 80 year old’s working in McDonald’s is considered a suitable solution. The ‘women of calibre’ who receive this largeness will have payments to their super made and when their little darlings are 6 months old can return to work, continuing to make money and put more in their super. Now that’s fair. When we had our babies no body paid us. Now our super will be taken away to pay others?!
“since when has it been the government’s role to redress all ‘disbenefit’ occurring in society?”
When didn’t it do this to some extent?
Also, it may well be cheaper to have good childcare than not to have it, since it increases workforce participation of females and hence workplace productivity. Other subsidies might also make it cheaper in the long term because kids growing up in poverty have a higher chance of becoming unproductive adults.
You might want to look at long term trends also. In France, where essentially everything is subsidized, they have a birth rate around the replacement level. In similar countries that haven’t thought too hard about this and are historically far more family unfriendly than Aus (Italy, Japan, German, Hong Kong, ..) because they do things like give kids a day off mid-week from school, have cultural attitudes that frown on working mothers, only have expensive unsubsidized childcare etc. ., you have birth rates only slightly higher than 1 per female.
It’s not clear to me (or anyone really) what happens in the long term to these countries, especially now there is strong competition for middle-class immigrants with higher skills and, in many of these countries, they won’t allow high immigration anyway.
This comes from someone that doesn’t think the effect of some these subsidies on birth rates is very big. That being said, if you look at German social commentators, which I might believe, some think there is a long-term social trend where the more childless females you get, the more it becomes “acceptable” to be childless, in which case trying to increase the birth rate is even harder since they are even less responsive to initiatives to try and get them to have children.