Latham Announces Baby Care Payment Policy

This is the text of a statement released by the Leader of the Opposition, Mark Latham, the Deputy Opposition Leader, Jenny Macklin, and the Shadow Minister for Family and Community Services, Wayne Swan.

ALP policy statement on baby care payment.

Easing the Pressure on Families

There is no more important job than that fulfilled by families.

Families are the building blocks of our suburbs and communities. They provide each of us with a sense of support and fulfil the important task of nurturing our next generation.

Labor has been listening to Australian families.

We know parents work hard to pay the monthly bills. They worry about how to get by, and how to give their children the best start in life.

Families today are under unprecedented pressure – they are squeezed for time and money.

Many parents are struggling to balance work and family commitments and many young couples are delaying having children because the pressures are so great.

Labor believes it is simply not good enough to stand back and expect families to cope on their own – not when a happy, secure, caring family environment is so important to the life chances of future generations of Australians.

Labor will help ease the pressures on families.

Families want access to quality child care at an affordable price, as an essential piece of the work and family equation Labor will be making child care announcements at a later time.

Families want to have a flexible family payment system that provides timely assistance without the risk of overpayments and debts.

Families want family friendly workplaces that can better accommodate caring responsibilities.

Families want a tax and benefit system that fairly rewards them for their hard work rather than doing endless overtime for next to no reward.

Families want to have extra financial support when a new baby arrives so they can devote all their attention to the baby at this crucial time.

Labor will deliver a new deal for families.

In the first of a series of work and family policies Labor is announcing a new Baby Care Payment for new mothers.

LABOR’S BABY CARE PAYMENT

Labor will introduce a new Baby Care Payment which will provide extra income to new mothers.

Following the birth of a baby, Labor will give eligible mothers a Baby Care Payment paid in fortnightly instalments for a minimum period of 14 weeks. This payment will be $3,000 in 2005. By 2010, this payment will be $5,380.

This simple and easy to understand payment will relieve the financial pressure on families at the time a baby is born, allowing mothers to recover from childbirth and care for their new born baby.

Who is eligible for the Baby Care Payment?

Labor’s Baby Care Payment delivers on Labor’s commitment to introduce 14 weeks paid maternity leave.

All eligible mothers, in and out of the workforce, will receive the payment. This means that working mothers will have the financial support to take time off work, and mothers who are at home will receive additional financial support when the family budget is under increased pressure.

The Baby Care Payment will be means-tested to ensure assistance goes to families that need it most.

All women whose family income is below the Family Tax Benefit Part A cut-out (the current cut-out is $85,702 plus approximately $7,000 for each additional child under 18) will be eligible for the new payment. For each additional dollar above the cut-out, the Baby Care Payment will be reduced by 30 cents.

The family’s income will be assessed at the time of the child’s birth.

The Baby Care Payment will not be affected by the unfair rules applying to the Family Tax Benefit that can result in payments being clawed back.

How will the Baby Care Payment work?

The payment will be easy to apply for, tax free and will assist parents trying to plan financially for the first year of their child’s life.

Mothers will apply for and receive their Baby Care Payments through Centrelink or the Family Assistance Office.

The payment will be paid fortnightly over a minimum 14 week period. However, mothers may choose to receive the payment in smaller instalments over a period up to 12 months from the baby’s birth. The payment may not be taken as a lump sum.

How much and when?

The Baby Care Payment will commence on 1 July 2005 and will be phased in over a five year period, delivering the equivalent of 14 weeks of pay for people on the Federal Minimum Wage (after tax) by 2010. This is the most financially responsible way to implement this important policy.

From 1 July 2005 eligible mothers will receive $429 a fortnight for 14 weeks ($3,000 tax free).

From 20 September 2006 the payment will increase to $480 a fortnight for 14 weeks ($3,366 tax free).

From 20 September 2007 the payment will increase to $571 a fortnight for 14 weeks ($4,000 tax free).

The Following Table Outlines The Tax Free Amounts Mothers Will Receive:

Year
2005/06
2006/07
2007/08
2008/09
2009/10
Baby Care Payment (tax free amount)
$3,000
$3,366
$4,000
$4,664
$5,380



To make sure the Baby Care Payment keeps its value it will be indexed by increases in the Federal Minimum Wage (less tax) from 2009-10.

What are the benefits of the Baby Care Payment?

The Baby Care Payment is paid to eligible mothers at the time of the birth and for each subsequent birth.

Unlike the current Baby Bonus, the Baby Care Payment is not affected by how far into the financial year the baby is born.

Mothers will not be penalised when they decide to return to work and the payment is not affected by subsequent earnings.

The Baby Care Payment will reduce current effective marginal tax rates of mothers returning to work, because unlike the Baby Bonus, earning more income when the mother returns to work won’t affect the entitlement.

What happens to existing benefits?

The Howard Government’s Baby Bonus is a flop and will be replaced from 1 July 2005 by Labor’s fairer, simpler and easier-to-access Baby Care Payment.

After this date Baby Bonus claimants will have their payments capped at a maximum rate of $500 per annum. Baby Bonus recipients who have another baby and qualify for the Baby Care Payment will no longer receive the Baby Bonus.

The Baby Care Payment will replace the Maternity Allowance but the Maternity Immunisation Allowance will continue in its current form.

Who will pay for the Baby Care Payment?

Labor’s Baby Care Payment will be funded by the Commonwealth Government thereby placing no financial costs on businesses.

The Baby Care Payment is not a substitute for employer-funded paid maternity leave which should continue to be negotiated between employers and employees.

This is an economically responsible policy that is fully costed and funded (details are attached).

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