Paying mothers to have children must stop

The policy objective itself is also interesting. It is not like the world needs more people. And it is not like Australia has problems finding people - skilled or unskilled - to come to this country.

And what we do know from over four decades of research is that welfare programs that encourage single parent households to have more children are destructive and counterproductive in the short and long run, especially for the children and mothers.

Earlier this year, the outer Sydney suburb of Macquarie Fields was in riot. The cause is often sheeted home to the slow police response. Most social scientists would sooner conclude that the causes of this riot happened over several decades. A combination of poor housing development, a lack of social infrastructure, a welfare state that perpetuated problems it was meant to fix, and a general lack of investment in human capital.

How payments for simply having children helps resolve problems like Macquarie Fields is a mystery. It has created a situation in which households that are least able to afford children in terms of time and financial burden have more children.

Finally, there are the tax consequences of running social policy through the tax system. As The Australian reported (30/11/05) growth in deductions have far outstripped growth in salaries:

Wages and salaries declared to the tax office have risen by just 5.6 per cent a year … Capital gains have soared by almost five times that amount, at 27.3 per cent.

Rental deductions (8.9 per cent a year) have been growing faster than rental income (7.9 per cent) and work-related expenses (8.5 per cent) are out-pacing wages and salaries (5.6 per cent) - despite repeated crackdowns from the tax office to curb claims.

Using the tax system to promote social outcomes only encourages this sort of perversion, where the rich pay less and the poor and middle classes keep paying more.

Payments tied to the production of children, and not tied to other outcomes, promotes social outcomes that are perverse and harmful, environmental outcomes that are an anathema to our survival, and only serve to hurt the people they are meant to help through a tax system that increasingly resembles a piece of Emmentaler cheese. Such payments should be scrapped before they do any more harm.