The “baby bonus”, or Maternity Benefit, is a government payment for each child born to an Australian Citizen or Permanent Resident in Australia.
Information at May 2013:
- baby bonus is a non-taxable, income tested payment of $5,000 per eligible child paid in 13 fortnightly instalments.
- baby bonus is payable if your family’s estimated combined adjusted taxable income is $75,000 or less in the six months after your child is born or enters your care.
- It is NOT payable if you have received Parental Leave Pay for the child.
The first baby bonus in Australia was introduced in 1912, under the Labor government led by Andrew Fisher. This was paid under the Maternity Allowance Act 1912, at a rate of £5 per birth. This was not means tested.
The average weekly wage at the time was £2.50, and the benefit was therefore about twice the average weekly wage.
The 2014 proposed rate is $2,000, again about twice the average wage.
- The current “baby bonus” will be abolished from 1 March 2014.
- It will be replaced with an extra $2,000 following the birth of their first child and $1,000 for subsequent children, if they’re not using the government’s paid parental leave scheme.
- The income thresholds that are used to determine eligibility will not be increased until 1 July 2017.
The intention to Scrap the baby bonus
In 2003, the Shadow Treasurer, Bob McMullan confirmed that under a Labor Government the baby bonus would go.
- “Ever since the baby bonus was introduced, we made it clear we thought it was appalling policy, poorly targeted and inefficient.”
- “We will get rid of the baby bonus and we will, when we are ready, announce the alternative places where will spend that money to provide assistance to families.”
- “I can make it unequivocally clear that when we propose to abolish that, as we will, we will allocate every dollar to programmes to assist families and families with children and targeted at the time in which the children are born. Part of our package in response to that is paid maternity leave.”
The history of the baby bonus:
Since 1912, consecutive Australian governments from all parties, had opted for welfare payments as opposed to legislating a paid maternity leave.
- Baby Bonus created under Maternity Allowance Act
The Maternity Allowance Act 1912 was passed on 10 October, granting a Baby Bonus of five pounds to the mother of every white child born in Australia. The decision of the Fisher Government in 1912 to introduce the Maternity Allowance was done so on the basis that it would lower infant mortality. There was no means testing of this payment.
“Most would be spent in the pub“
In 1931, Income testing was brought in for the first time with a threshold of £260 pa per couple. The Maternity Allowance was also reduced.
In 1943, the Maternity Allowance was increased to £5 again, only slightly higher than the basic weekly wage of £4.16s, and Income Testing was removed.
- Maternity Allowance was abolished
In the Budget speech of 1978-79 the treasurer of the time, John Howard, stated that ‘the Maternity Allowance had become superseded by health care and family allowances‘.
- Maternity Allowance reintroduced by Paul Keating.
In 1996 the Keating Government reintroduced the Maternity Allowance as part of the Social Security Legislation Amendment (Family Measures) Act 1995. The allowance was initially $840.60, and was income and asset tested.
- The FCTR “baby bonus” was introduced (Max $500 per year for 5 years)
The First Child Tax Refund (FCTR) was introduced by the Howard Federal Government, with a five year tax offset payment not exceeding $2,500 in total, (one-fifth of the tax paid from the mother’s year of work preceding the birth). This payment became known as the baby bonus.
The Maternity Allowance of $840 continued as a separate payment per birth.
- Maternity Allowance Abolished
- The First Child Tax Refund “baby bonus” Phased out
- $3,000 Maternity Payment Created
The Maternity Payment was not income tested and was paid as a lump sum.
The cost of the new payment will be partially offset by abolishing the Maternity Allowance, saving $770 million over four years, and phasing out the baby bonus, saving $290 million over four years.
- Maternity Payment renamed as the Baby Bonus
- Labor won the Australian Federal Election
- The Baby Bonus increased to $5,000
- The Baby Bonus was means tested
This was paid as a lump sum for mothers over 18, but as 13 fortnightly payments to mothers under the age of 18.
In 2009 the payment system changed from a lump sum payment to 13 fortnightly payments, and an income threshold was re-introduced, based on the combined income for the 6 months following the birth of the child. The 2009 threshold was $75,000. www.fahcsia.gov.au
The introduction of Paid Parental Leave, on 1 January 2011, will reduce the number of families receiving Baby Bonus, as those recipients are not eligible for the Baby Bonus.
The Rate in September 2012 was a first instalment of $846.20 followed by 12 fortnightly instalments of $346.15. A total of $5,000.
Information sources include: epress.lib.uts.edu.au
April 2004: A Baby Care Payment of a lump-sum, means-tested $3,000, set to commence 1 July 2005 and increase in stages to $5,380 by 2010, was mooted by the Opposition Australian Labor Party (ALP) preceding the 2004-05 Federal Budget and the October 2004 Federal Election.
1 July 2004: The Maternity Payment, dubbed the Baby Bonus (capitalised) from its commencement, and then officially named as such from 1 July 2007, paid to the family (usually the mother) was introduced by the Howard Liberal Government as a non means-tested, lump sum of $3,000 for the birth replacing the FCTR (except for those still eligible pre-July 2004) and the Maternity Allowance.