'Baby Bonus' disrupts births

A new study by the University of Melbourne and the Australian National University has found that, once again, expectant mothers are shifting or delaying the birth date of their unborn child to qualify for the Federal Government’s ‘Baby Bonus’.

University of Melbourne Professor of Economics Joshua Gans and Dr Andrew Leigh from ANU found that over 600 births were moved from June 2006 to July 2006 to qualify for an increased Baby Bonus payment.

The original ‘Baby Bonus’ was $3000 for children born after July 1, 2004. In Gans and Leigh’s study of that event (released last June), they showed that this caused over 1000 births to be moved from June 2004 to July 2004.

This payment was increased by $834 for children born after July 1, 2006, despite warnings from the researchers to the government that more birth disruptions were likely.

Professor Gans says that the change was economic mismanagement. “This has nothing to do with whether the baby bonus is a good idea in general and whether it has boosted fertility. That evidence is yet to be found. All this says is that good governments need to implement policies carefully so as to not put mothers and babies at risk. The government should not create incentives to shift births for non-medical reasons.”

With the bonus due to be increased again in July, 2008, the researchers have called on the Government and the Opposition to commit to phasing in the increase.

“Rather than suddenly increasing the bonus on July 1, 2008, it would be more sensible to phase in the rise over a few weeks. Such a reform would be relatively inexpensive, and would avoid a repeat of the disruption we saw in 2004 and 2006,” Dr Leigh said.

Editor's Note: Original news release can be found here.