Home > Social policy, Welfare > Thought bubble: “parental help vouchers”

Thought bubble: “parental help vouchers”

November 26, 2010

Child subsidies are a vexing issue for me. Especially concerning is the idea of subsidising mothers and parents to have children when those mothers and parents are unable to even look after themselves. It seems to me undesirable to give child subsidies to long-term unemployed people, but at the same time concern for the child means that there will be popular support for some sort of welfare.

So this is my “thought bubble” for the day: Instead of providing long-term unemployed parents with a baby bonus and family payments, offer a voucher for the same amount which must be spent on “outside parental help”. Businesses and non-profit organisations could enter the market to provide “parental help” to mothers and parents who are clearly in need of some outside assistance. The parental help providers would come around regularly and provide baskets of necessary goods such as clothes, diapers, baby food, doctors appointments & other necessities.

There are three benefits that I can see:

(1) Given that the mother/parents are unable to look after themselves, it seems unrealistic to simply assume they are capable of responsible money management… and so this will make it more likely that the “child welfare” is actually being spent in the best interests of the child;

(2) Given that the mother/parents are unable to look after themselves, it seems unrealistic to simply assume they are capable of looking after another person… and so this will ensure that a 3rd party is also keeping an eye on the child to ensure they are being properly cared for and provide them with some employed role-models; and

(3) If parents want to get full control over how the “child subsidy” money is spent, at least one of them must have a job or a regular source of non-government income. This provides an incentive to get a job so that the children aren’t growing up without a working parent.

The downsides of this that I can see straight away are that (a) it doesn’t address the mess that is child subsidies in general; (b) it requires a bureaucracy to register & monitor “parental help” providers; and (c) poor-quality mothers/parents may not put in enough effort to ensure they find a high-quality “parental help” provider. But as it could improve the welfare of the children and would marginally improve the incentives of the parents, I think it may be worth considering.

Categories: Social policy, Welfare
  1. Michael Sutcliffe
    November 26, 2010 at 3:07 pm

    Also, it’s not that politically saleable. Too many people are going to take offence to the notion “subsidising mothers and parents to have children when those mothers and parents are unable to even look after themselves,” regardless of the element of truth within it.

    On the upside, this idea would probably get media attention. On the downside, it’s probably because the media feel they could make the person putting forward this idea look really bad and give them a long-term negative brand.

    Perhaps a voucher option for elderly people – who wanted more control over how they were cared for in their old age – to access charities and the private carer market? (Of course, that has nothing to do with child subsidies.)

  2. TN
    November 26, 2010 at 4:50 pm

    As a formerly well-regarded economist once said, we do not need more babies, we need a reproduction tax.

  3. Ben
    November 27, 2010 at 6:51 am

    Well, at least you’re thinking about solutions… that’s more than I can say about some others. Sometimes selling the idea is the tricky part, to be sure.

  4. Forester
    November 28, 2010 at 11:13 am

    No more ‘unpopular’ than good old ‘regressive’ income splitting.

    Assume we have a 30% flat rate, negative below 30k. While you’ve got dependant children at school, you and your MARRIED partner (sex not necessarily considered) can combine your tax free threshold to 60k. Or some permutation of such. Replaces all other child welfare.

    If you’re not married, no meal ticket, no incentive to avoid work, those who can afford to stay home with their kids can do so, if they wish.

    I suspect the birth rate would skyrocket and child care industry would go bust.

  5. November 29, 2010 at 1:17 am

    Michael — I’m not convinced that people are generally pro-welfare. I think there are votes to be won in limiting the welfare rights of people who don’t look after themselves, as was shown with “work for the dole” and the “aboriginal intervention”. I agree that cutting off welfare entirely would be politically unpopular, but as long as a minimum standard was kept then I think the electorate would be sympathetic to “harsh” welfare policies.

    Forester — with regards to “income splitting”, the version I find more interesting is the idea that people can transfer their tax-free threshold to whoever they like (including their wife/husband). Perhaps they could even sell it. Though I note that if you had a 30% tax and a 30% negative income tax (which you seem to imply) then income splitting is a moot point. It is only relevant when there are variable effective marginal tax rates.

  6. TerjeP
    December 6, 2010 at 6:19 am

    Mutual obligation initiatives have gained traction with both major parties. This is one of the lasting positive legacies of the Howard era. Open ended welfare isn’t trendy any more.

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