An early inducement

According to today’s Sun Herald and Sunday Age, obstetricians are calling on Health Minister Tony Abbott to bring forward the Baby Bonus announcement from July 1 (next Saturday) to June 26 (tomorrow). As the Sun Herald put it:

A leading obstetrician has called on the Federal Government to bring forward the date of the rise in the baby bonus to reduce the risk of women delaying birth to secure the extra money.

The director of Women’s and Children’s Health Services at the Royal Prince Alfred Hospital, Dr Andrew Child, has approached the Government with his concerns.

The Royal Australian and New Zealand College of Obstetricians and Gynaecologists has also approached the Government, expressing its concern that mothers and babies could be put at risk by delaying births to cash in on the bonus.

The baby bonus is due to increase from $3166 to $4000 next Saturday.

Dr Child, a past president of the college, calculated it would cost the Government about $5 million to bring the date forward to tomorrow based on figures showing that about 5000 babies were born nationally each week.

“If I were [federal Health Minister] Tony Abbott, I would think very seriously about that,” Dr Child said.

He said $5 million was not much compared with the potential health risks of delaying births.

“One suggestion is bringing it back to June 26. It’s one solution to a potential risk of people waiting too long and putting themselves or their baby at risk.”

The call comes after a study estimated that more than 1000 births were “moved” in 2004 so the parents would not miss out on the baby bonus.

A college of obstetricians spokeswoman said the college told the Government, in a letter, that it was concerned for the health of mothers and babies.

The letter said that delays in birth might “jeopardise the provision of optimal care and put at risk the wellbeing of the mother and baby”.

I think this is a sensible call, and moreover that the obstetricians are being too modest about how much it would cost. If you think $4000 for babies born on July 1 is a policy for which benefits outweigh costs (as presumably the government must, or it wouldn’t have implemented the policy in the first place), then the same has to be true of a policy that gives $4000 to babies born on June 30.

Even if you’re a cynic, and you think the Baby Bonus doesn’t affect behaviour, then the deadweight cost is still much smaller than the budgetary cost, since the payment is merely a transfer from government to taxpayers. So the only economic cost is the excess burden of raising another $5 million in taxes – say 20%, or $1 million.

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