One For The Country

Anybody who remembers that photograph of Peter Costello gleefully surrounded by newborn infants knows one thing: it isn’t only aspiring parents who can go a bit baby crazy. Few areas are as familiar with poorly designed government policy as childhood and parenthood.

So when the Federal Government this week announced an inquiry into the possibility of paid parental leave, it was tough to remain optimistic. You need only to look at the baby bonus to see that the black hole of bad policy is deep. Costly, blunt and poorly designed policy instruments have just as many unintended negative consequences as benefits.

The exact details of Labor’s parental leave scheme won’t be known until after the inquiry reports back next year, but most proposals for paid parental leave would require the Government to pay a nominated parent roughly the minimum wage for a dozen or so weeks.

Certainly, this is far better than simply requiring businesses to pay the cost of the leave out of their own pockets. The biggest risk that government-mandated workplace entitlements pose is that they make it more costly to hire workers – and the unintended consequence is that employers are reluctant to hire in the first place.

Nevertheless, for a government that proclaims itself eager to cut spending, the addition of what will probably be at least a half-billion dollar expenditure into the federal budget is not going to help the Labor Party nurture a small government image.

Paid parental leave could also break a fundamental principle of good welfare policy – the most effective policies are means-tested policies. There is no good reason for taxpayers to give the $5000 baby bonus to a family that is already comfortable enough to look after its newborn. At least the issue of parental leave has been referred to the Productivity Commission – the government’s independent research department that can claim much of the credit for advancing the cause of economic reform since its inception. This contrasts with the worrying reluctance of Labor to trust the commission with anything else important.

Inquiries into climate change, car manufacturing and international trade have all been established separately – Kevin Rudd may not trust the government’s experts to give him the answers he wants.

But the biggest problem with a paid parental leave scheme is how it encourages the redefinition of our relationship with government. The baby bonus has already established in the mind of Australians that having children is more than just a personal decision – it is part of a long-running negotiation between parents, the Federal Government and the tax office. The former Liberal government shamelessly encouraged this idea, but if what appears to be the instinct of Kevin Rudd and Julia Gillard is followed through, soon no one will start a family without lengthy consultations with the Australian Taxation Office and Prime Minister’s Department.

Of course, from the Government’s perspective, this is a perfectly rational approach. All those newborns that surrounded Peter Costello are future taxpayers. And business lobbyists keep urging the government to do something about the skills shortage and ageing workforce. So the government wants us to breed.

But the people whose decision could be influenced if they are given a few grand by the government may not actually be the best parents.

And the problems of ageing populations and skills shortages don’t have to be resolved by funnelling subsidies to young families. It would instead be better for children if individuals were allowed to come to their own decisions about parenthood uninfluenced by politicians desperate to pay their way out of the latest political crisis.

Perhaps if the government really thinks that we have a population problem, it could be looking carefully at increasing immigration – skilled and non-skilled – and relaxing the high costs of work visas.

Nevertheless, introducing subsidies to new parents conveniently supports Rudd’s working families narrative. It’s politically savvy to pay off your supporters.

The fundamental question that the Labor Government’s proposal for parental leave raises is whether parents should have children for themselves, or for society. But that answer is fairly clear. After all, what parent spends time thinking about how starting a family could help Australia’s OECD rankings? Hopefully none.