Sunday, September 23, 2007

Baby Plan a Gamble - Check the Bonus Numbers

C.D. Howe Institute researcher, Kevin Milligan, who analyzed Quebec's baby bonus program, says that while incentives like the $1000 per baby, can increase family size, the "effective cost per desired result may be very high." Milligan says, that between 1989-96 the birth rate in Quebec increased by 14.5%. Here's a quote from Milligan's assessment:

"A percentage increase of 14.5 implies that the program “created” only 14.5 of each 114.5 children born — the other 100 would have been born even in the absence of the program. In other words, the subsidy was “wasted” on the families who would have had children had there been no program." (p.7)

Quebec had initially started their "Allowance for Newborn Children" program with a $500 per child incentive, and it was later raised to $1000, and later, a third child would be rewarded with a series of monthly payments amounting to $8000. From 1989-96 this costs $15,000 per child.

"Is $15,000 per child a lot or a little? Because no one can quantify the total benefit brought by having extra children, this question is difficult to answer." - Milligan

In 2004, Newfoundland and Labrador had 4488 births. So if you were to round that to 4500 and for arguments sake, multiply by 15%, the birth rate would be increased by 675 per year, for a total of 5175 births. But it would be 5175 x $1000 which is $5,175,000 per year for births alone (excluding parent subsidy). Another way to look at it is that $4,500,000 will be paid out for babies born anyway, without the incentive.

Certainly, any expectant parent would hardly turn down a $1000 cheque for a new baby.

Part of the rationale for a birth incentive program is to increase future sources of taxes (people) to continue social programs. Quebec's birth rate did increase for a while but slipped back down again to pre-incentive times.

In years to come, even if the birth rate had increased by 30% for a few years, who can say that that population increase will stay in the province by adulthood.

Bonus numbers are worth reconsidering. What is also worth considering are other ways to keep people in the province now, and for in-migration to begin. It is the task of government to promote the province, encourage and help facilitate business development. It is ultimately the employers, business and public service, who should step up to the plate to, at least, not look at individuals as disposable expenses, but as provincial assets, contributers, and what makes society and the province more valuable, and most importantly, human beings who can be happier workers, and more interested in their jobs.

If machines could do more of business's tasks, and cost less than keeping a person on payroll, often the attitude is to let the person go, even if profits are still good. If a business thinks that two or three employee tasks can be squeezed into one employee, that becomes an option, and often a reality. It is not however, always beneficial to the individual who has to doubly, multi-task. Maybe from a business perspective, good business sense. From an individual's point of view, no sense.

Employers should recognize that the better the employees are treated, in terms of work load, and salary, everyone can be winners, including the province, which is faced with high unemployment and out-migration, the consequences of hiring too few people, low opportunities, and people dissatisfied with their salaries here.

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