Friday, 2 May 2008

Birth rate and paying people to have babies

I don't often talk about controversial topics and then when I do I take down my posts, concerned I'm offending people or that I'm somehow contributing to blogger being blocked in China.. meh...

Well my mother was in town for a few days and on Wednesday night we took her to our favorite massage place. As usual we got chatting to our masseurs, masseuses? massage people and the topic of babies came up again. I've had the exact same conversation with them before.. about.. how funny it is that in China you have to pay a fine to have more than one child, and in Australia, the government is paying people to have babies.

Well now it seems that both these rules are being revised.

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China has about 1.3 billion people, 20% of the world's total.

The phrase 'one-child policy' is commonly used in English to refer to the population control policy (or Planned Birth policy) of the People's Republic of China (PRC).

China imposed the one-child policy in 1979 to curb population growth that had rocketed out of control since Mao Zedong's instruction to the nation in the 1960s to bury the United States in a human wave.

After Mao's death a network of rules was imposed on families – more complex than the simple instruction not to have more than one baby – although parents who comply with this rule still receive a certificate and a lump sum on retirement.

The one-child policy promotes couples having one child in rural and urban areas. It should really be called the "one birth policy" because parents are allowed to keep twins, triplets, etc. Two babies were permitted in many areas in the countryside, or if the first child was a female, since Chinese tradition strongly favours sons.

Fines were imposed for rule-breakers, and state officials who have more than one child automatically lose their jobs.

The one child policy does not apply equally to all families. The wealthy elite, party bureaucrats and emerging urban middle class have no difficulty in paying what for them are relatively small fines to have extra children. For the urban and rural poor, a second pregnancy carries the prospect of financially crippling penalties.

The average number of children that would be born to a woman over her lifetime has decreased to 1.8 in China today, from 5.8 in the 1970s, and below the replacement rate of 2.1.

The preference for a boy rather than a girl, especially in rural areas, has also led to a serious gender imbalance in China. According to official statistics, 119 boys are born for 100 girls. By 2020, it is estimated that about 40 million Chinese males may have to live as bachelors.

The policy is controversial both within and outside China because of the issues it raises; because of the manner in which the policy has been implemented; and because of concerns about negative economic and social consequences. However, there are still many citizens that continue to have more than one child, despite this policy.

China’s fertility rate is now extremely low, and the population is rapidly aging, especially in urban areas. Experts have warned that China is steadily moving toward a demographic crisis with too many old people in need of expensive services and too few young workers paying taxes to meet those bills. China is often regarded as having a limitless pool of young, cheap labor, but the country’s biggest manufacturing centers are already facing labor shortages.

In February 2008 Chinese Government official Wu Jianmin said that the one-child policy would be reconsidered during the Chinese People's Political Consultative Conference in March 2008, but at that time a representative of China's National Population and Family Planning Commission said that the policy would remain in place for at least another decade.

So that's China. Australia on the other hand...

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The Baby Bonus is a scheme by the Federal Government of Australia aimed at offsetting the expenses associated with rearing a child. The scheme was also introduced as a means of increasing Australia's fertility rate and to mitigate the effects of Australia's ageing population.

In 2004, Treasurer Peter Costello urged Australian couples to have ‘one (baby) for your husband and one for your wife and one for the country’. To encourage this, the Budget that year put in place the ‘Baby Bonus’, a lump sum payment to the parents on the birth of each child. It has risen from $3,000 on commencement on 1 July 2004 to its current level of $4,000 and is set to rise to $5,000 on 1 July 2008. With 259,800 registered births in Australia in 2005, that amounted to eligible payments of around $780 million.

You may get Baby Bonus if:

* you have a newborn child or have care of a newborn child within 13 weeks of the child's birth and are likely to continue to have care for no less than 13 weeks, or
* a child has been entrusted to your care for adoption before two years of age and in the case of international adoptions, has entered Australia before two years of age, or
* you have a stillborn child or a child who dies shortly after being born, and
* you were eligible for Family Tax Benefit Part A (excluding the income test) within 13 weeks of the child's birth or of the child being entrusted to your care, and
* where you are the natural parent, you have notified the Family Assistance Office within 26 weeks of the birth that you have registered, the newborn with the state/territory registry of births. (This requirement does not apply to children born overseas, stillbirths or neo-natal deaths.)
* From 20 March 2008 the payment is $4258.00
* This payment is not subject to an income test.
* This payment is not subject to an assets test.
* Note: For multiple births, Baby Bonus is paid for each child. For example, twins attract two payments of Baby Bonus ($8516).

International empirical evidence suggests that public policies generally do boost fertility, although part of the measured effect may be a timing effect where mothers bring forward childbirth in their lifecycle rather than increasing the number of births over their lifetimes (their so-called completed fertility).

For Australia, the birth rate has edged has edged up to 1.81 in 2005 from 1.75 in 2003 before the revised Baby Bonus was introduced. However we can’t read much into this because the birth rate does jump around a bit—it was 1.82 in 1995 and dropped to 1.73 in 2001. There is some evidence of an announcement effect of the Baby Bonus in Australia—Joshua Gans and Andrew Leigh estimate that over 1,000 births were delayed, by rescheduling of inducement and cesarean procedures, to ensure that the birth occurred after 1 July 2004 in order that the parents were entitled to the Baby Bonus. Although this is evidence that parents respond to incentives in making family planning decisions, it is not evidence that completed fertility rates will respond to the Baby Bonus.

Some say that with more women having their first babies in their 30s, and richer women having more children, the baby bonus is increasingly ending up in the hands of wealthier families, the scheme could be means-tested in the future.

Contrary to this, Shadow treasurer Malcolm Turnbull estimated about 300,000 babies would be born in Australia this year and only a "tiny percentage" would come from wealthy families.

Economist Professor Gregory said the baby bonus remained an inefficient means of improving fertility and the Government should consider treating all family welfare measures as "a whole".

Economist Peter Saunders, from the Centre for Independent Studies, said the Rudd Government must clearly identify what it wanted family welfare programs to achieve after a decade of ad hoc and often contradictory policy.

"It's a mishmash. Is it supposed to deliver stronger families, female workplace participation, equity between families with children and those without? The Rudd Government shouldn't mess around and instead (should) have a serious look at family policy," Professor Saunders said.


This is obviously a huge huge issue with no right or wrong answers. Personally, I think both these 'policies' were flawed from inception. People shouldn't be told how many kids they can have, and people shouldn't be paid (bribed?) to have more kids IMHO. It's like they had this great idea but as time goes on it's getting more and more out of hand with ramifications they never thought of and now they are thinking, "What do we do now?"

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