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?
Also read: Albanese makes promise on family home and capital gains tax
The way I read this If your family can afford $400 we will give you another $400. If you are poor and cant afford the $400, you get bugger all
No that is not true. Every child gets the initial $400 in their account. For parents who get family assistance and cannot afford to contribute, the Government will tip in another $200 a year.
Again this is all about choices. For example, could the parents not buy just one less present at Christmas or the child’s birthday and put that money in their child’s future fund? What about putting birthday money from extended family members into the fund as well? There are options, but it is so much easier to whinge.
Not so. Families who cannot afford to contribute and claim family tax benefit will be given a further $200 a year on top of the initial $400.
Not true. If you can’t afford to contribute and you claim family tax benefit, the government will contribute a further $200 a year. This will total approx $28,000 by age 18.
Better off to invest the money into blue chip shares for the child. Teach them how, and why investments are good. Cash in a bank generally does not gain as much in interest as shares would do.
And what happens when the teenager turns 18. A car, a holiday or whatever takes their fancy. I cannot see to many at that age that would put it to good use.
Nope. The money can only be spent on education (or related education for example buying tools for an apprentice or a HECS debt) OR a house deposit – and NOT a rental bond either
That is not correct. The child can only access the money for either education purposes, e.g. buying tools for an apprenticeship or paying off HECS OR for a house deposit not rent or bond.
The kids can only access it for education purposes e.g. buying tools for an apprentice, or paying off HECS OR to use towards a home deposit and not rent or rental bond. No parties or toys or travel or anything else.
When I saw a return of 7%, I thought what planet are you on.. The 4% is more reasonable. This is going to make some pensioned grandparents feel a bit awkward when some are able to afford the money and others can’t.
It’s a thinly disguised new version of welfare for the wealthy. Typical of Liberals.
Plus if this ever actually gets off the ground, which I doubt, what happens to the money when the kid turns 18 ? Big party, new car, money all gone.
The money c an only be used for education OR a house deposit. NOT parties or toys or travel or anything else.
Except they cannot access the money for partying, toys or anything other than education or home deposit.
Not so. They will not be able to access the money for anything other than education or home deposit. So no parties, toys travel or anything else.
If Mr Perrottet knows of savings accounts where 7% tax free annually can be earned safely then maybe he could let us all know. Is this high interest rate yet another cost NSW taxpayers will bare, making up the difference?
Given that not all teenagers will use this tax payers’ money responsibly, wouldn’t it be prudent that certain uses be attached to the fund such as further education, eventual property purchase or other life enhancing purposes?
Should a Premier be able to saddle future governments over the next eighteen with the cost growing every year as more children are enrolled?
According to the current proposal ” other life enhancing purposes” are not permitted. Its education or home, nothing else.
When are we going to stop giving the kids handouts .We all worked when we were young sometimes 2 jobs to get where we wanted to be .Now is it just hand it to them As for buying houses the governments could fix that problem if they had a backbone and stopped trying to win the next election .
Question ,why do so many people want to be elected politicians and then have to fight every 2-4 years to keep the job
All I can say – is you have to be joking. I am so sick and tired of seniors being blamed for all the problems. And wanting them to financially support the younger generation. No. BIG no.