Over 50s parents will well remember the concept of the ‘baby bonus’ – a federal government initiative implemented in 2002 to help with the cost of raising children. That support exists to this day, although in a modified and reduced form.
Now, one state government is proposing to supplement that with a new ‘future fund’ payment, featuring yearly payments to families with young children. And grandparents are being invited to contribute.
Announcing the proposal, NSW Premier Dominic Perrottet described it as “the most significant financial security investment in our state’s history”.
The proposal, dubbed the kids’ future fund by the NSW Liberal Party, will see parents of children under the age of 10 receive an initial payment of $400 per child, followed by a matching contribution of up to $400 each year for any family payment made to the account. Families will remain eligible to receive that matching contribution until the child turns 18.
Unlike the baby bonus, though, parents will not be able to spend the money at their discretion, as the funds will be held in an account until the child’s 18th birthday.
In making his announcement on Sunday, Mr Perrottet revealed that parents could contribute up to $1000 a year to each child’s fund, with the government matching contributions up to $400 per child per year.
In a follow-up announcement, Mr Perrottet revealed that grandparents could contribute to the fund, although the total family contribution cap per child would remain at $1000 per year.
Spruiking the new policy, which forms a key part of the Liberal Party’s campaign to retain government at the upcoming NSW election, Mr Perrottet said: “I know that every mum and dad are aspirational for their children, and that’s exactly what these accounts will achieve. This policy is all about family.”
As a father of seven, Mr Perrottet can certainly lay claims to knowing what children need, but NSW Labor leader Chris Minns says the scheme will penalise those unable to afford contributions, and that the estimated $850 million cost of the scheme could be better spent.
“I think a lot of families that may have three children would be thinking to themselves this morning, ‘I don’t have a spare $3000 to invest in a fund that can be accessed in 20 years. I need help today’,” Mr Minns said.
Mr Minns said the financial focus of most families was making sure the mortgage and energy bills were being paid. “We need to make sure that public policy reflects the situation that those families are encountering today,” he said.
NSW Council of Social Service chief executive Joanna Quilty expressed similar reservations: “My concern is that this policy risks further increasing the poverty divide – where wealthy families can take advantage of this initiative to bolster their child’s financial future, while poorer families are left behind.”
For those who can afford to make the maximum contribution each year – and do so – the reward will be significant. Figures provided by the NSW government estimate that a return of 7 per cent per annum would result in funds totalling $49,000 when the child turns 18.
The government has pledged a minimum return of 4 per cent for the plan.
Families in NSW will make a judgement on this and other Liberal and Labor policies on 25 March when they cast their vote in the state election.
Do you think Mr Perrottet’s kids’ future fund is a good idea? Or does it leave poorer families in the lurch? Would you be able to contribute? Why not share your thoughts in the comments section below?
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