Simon Collins

Simon Collins is the Herald’s social issues reporter.

Aussie's baby bonus a NZ drawcard

Three-year-old Cane Bradley's parents would be better off financially if they moved to Australia. Photo / Greg Bowker
Three-year-old Cane Bradley's parents would be better off financially if they moved to Australia. Photo / Greg Bowker

Carla and Craig Bradley would get about $100 a week more from the Government in the six months after having a baby - if they moved to Australia.

The Papakura couple had their third child, son Alex, in November.

Even though Craig works up to seven days a week in three jobs when work is available, the couple sometimes go without food for up to two days so they can feed their children.

Craig earns $800 a week in his main weekday job delivering office furniture, and estimates he earns an average of about $100 a week through the year from his two casual weekend jobs for local farmers.

That means his total income of about $900 a week is 88.85 per cent of New Zealanders' average weekly earnings of $1013.

If he moved to Australia, he might expect to earn about A$1222 a week, which is the same proportion of Australian average weekly earnings of A$1376. That A$1222 would be worth NZ$1572 if he brought it back to New Zealand, but this ignores the exchange rate because if they lived in Australia they would have to pay Australian prices.

Rob Salmond's book, The New NZ Tax System, shows that New Zealanders pay less tax than Australians on incomes above 57 per cent of average weekly earnings.

The Bradley case bears this out. They pay only $157 a week in tax and ACC levies here, or 17.4 per cent of their pre-tax income. In Australia they would pay A$262 a week, or 21.5 per cent of their income, on tax and Medicare.

In dollar terms they qualify for almost exactly the same income top-ups in family tax credits and accommodation supplement here ($311) as they would in Australia (A$305). Australia's "family tax benefit A" is a per-child payment similar to New Zealand's Working for Families tax credits. The Bradleys would also get Australia's "family tax benefit B", which is paid to single-income couple families, effectively a payment for one parent to stay home with the children. But their income would be too high to get the housing subsidy which they qualify for here - although in practice they don't get the accommodation supplement here either because they were told incorrectly that they earned too much.

Overall, the New Zealand tax and welfare system is more generous on an ongoing basis than Australia's system.

If they received all their entitlements, they would end up with $1054 in the hand, or $154 (17.1 per cent) more than the $900 that they started with. In Australia they would end up with A$1266. That's only A$43 (3.5 per cent) above their pre-tax income.

However, Australia has one other benefit which would make them much better off - a "baby bonus". It pays A$5437, in 13 fortnightly payments averaging out at A$209 a week, for the six months after a baby is born.

New Zealand's nearest equivalent is paid parental leave, which pays up to $459 a week for 14 weeks before tax, or $379 a week after tax for most women - a similar total of up to $5300 after tax. But it is only for women who worked at least 10 hours a week for the same employer for at least six months up to having a baby, and Carla Bradley was not in paid work because she was caring for two other under-3s.

When you include the baby bonus, the Australian Government would be topping up the Bradleys' income to A$1475 a week - A$252 a week (20.6 per cent) above their assumed pre-tax income - for the first six months after having a baby.

- NZ Herald

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