Coalition supports end of the baby bonus

The Coalition has confirmed that it will support Labor's scrapping of the baby bonus.
The Coalition has confirmed that it will support Labor's scrapping of the baby bonus. Photo: Jessica Shapiro

Opposition Leader Tony Abbott has confirmed that the Coalition will support the abolition of the baby bonus, and one of two government amendments to the private health insurance rebate.

Mr Abbott told a meeting of Coalition MPs in Canberra on Tuesday that the opposition would ''reluctantly'' allow Labor's legislation to scrap the bonus to go through.

It is understood the legislation will come before the House of Representatives later this week.

Labor announced in the budget that from March 1 next year, the baby bonus would be replaced by increase in Family Tax Benefit Part A.

Labor wants to reduce those payments to $2000 for the first child and $1000 for each subsequent child and it has also changed the eligibility.

In the meeting, the Coalition also agreed to back Labor amendments on how the private health insurance rebate is indexed.

Mr Abbott said ''we don't like this'' but said it was necessary in the context of the ''budget emergency''.

The Coalition won't oppose a change which would cap increases in the rebate to either the rate of general inflation, or the actual increase in premiums, whichever is less. The measure will take effect from April 1, 2014 and will save $700 million over four years.

But the Coalition will vote against another change which will remove the rebate from the Lifetime Health Cover loading component of private health insurance premiums.


The Lifetime Health Cover loading is an additional charge of two per cent added to a person's premium for every year elapsed after their 31st birthday before they take out private cover. The measure is set to start on July 1 this year and is expected to save the budget $386 million over four years.

In supporting the axing of the baby bonus, Mr Abbott also defended his paid parental leave scheme, telling the MPs it was a ''pro-family Conservative policy''.

He explained that the ''vast majority'' of modern women were in some form of paid work.

Mr Abbott did not comment specifically on the Coalition's position on the increase to Family Tax Benefit Part A. He said it was not clear yet what the substitute payment would be.

Last week, shadow treasurer Joe Hockey told ABC Radio that the Coalition would ''not support new spending measures from the Labor government other than those we specifically identify, and [Family Tax Benefit Part A] is not on the list''.

It is understood that Coalition MPs in the room accepted the decision to support the scrapping of the baby bonus, first introduced by the Howard government.