Labor lines up advance on baby bonus

Ari Sharp, Cairns

August 5, 2010

Baby Bonus advance

Parents are to be offered advances on their baby bonus and family tax benefits. Announcing the policy in Cairns yesterday, Prime Minister Julia Gillard said it was designed to help families cope with unexpected costs that could put a strain on household budgets.

''The washing machine breaks down, the car breaks down, your son or your daughter gets selected for the tennis team and they need a new racquet. Families know what it is like to have these costs come into the family budget unexpectedly,'' she said.

Under the policy, baby bonus recipients could get an initial $500, with the balance of the $5294 payment per child paid in 13 fortnightly instalments.

The present arrangement, in which the entire amount is paid in the fortnightly instalments, was to ensure the bonus was spent on the newborn and not lifestyle items.

Ms Gillard said that the smaller initial amount meant there was limited potential for the problem to return.

''It is there to help people with the set-up cost that people have; getting the pram, getting the clothes, getting ready for a new baby,'' she said. ''I believe that the periodic payment is the right way to deal with it.''

In a sign of the sensitivity of cost-of-living issues, the proposal won the support of the opposition. Mr Abbott said the baby bonus was introduced by the Coalition government and he appreciated there were significant costs from the time of birth.

''I am pretty well disposed towards the announcement the Prime Minister has made,'' he said.

Labor's plan would also allow recipients of the Family Tax Benefit to get an advance on their payments of up to $1000 depending on their circumstances, replacing rules that allow a maximum advance of $324.

The new rules will allow the advance at any time of the year; at present it is allowed only on January 1 and July 1. However, approval from Centrelink is still required.

Although neither change will increase any recipient's overall entitlement, the changes will cost $54.4 million over the next four years, because of payments that would have been beyond that period now within the forward estimates.

Labor has proposed that the changes start on July 1 next year.

In her campaign to hold the Cairns-based seat of Leichhardt, which Jim Turnour holds by 4.1 per cent, Ms Gillard yesterday committed $3.5 million towards the local junior rugby league club.

She also announced three initiatives already funded in the budget: a $14.4 million investment in 16 new sub-acute beds at Cairns Base Hospital, $9.4 million for a Daintree Rainforest observatory, and $500,000 for a small-business advice centre.