The Kela report found that paying a standard allowance to all children under the age of 17 would save the government as much as planned cuts to the programme. The government announced last week that it was looking to save 110 million euros by trimming child allowance payments.
Kela said that paying the same basic allowance would have the same effect as government’s plan to shave eight euros off each child’s monthly allowance. Currently the younger the family’s child, the higher the allowance paid out.
“If we use the level of what is paid to the first child, in other words if we paid all children the same 104.19 euros, then we would save around 100 million euros. On the other hand income support spending would grow slightly by some ten million euros and child poverty would increase by just under one percent,” said Kela researcher Professor Olli Kangas.
Child benefit rooted in ideological background
When the child allowance system was first introduced in 1948, the payment was the same for all children although many families were larger than they are today. Kangas pointed out that the first subsidies were paid to government officials from the 1920s.
In the 1940’s the government dangled the support payment as an incentive to workers to give up their demands for wage increases, but the Agrarian League also wanted the benefit for farmers’ families. In 1948 the child allowance formally became a benefit paid to all families with children.
Kangas called for the child allowance to revert to its original model, in which an equal amount was paid out for all children.
Throughout Finnish history different political parties have seen the child benefit through different lenses tinted by ideologies related to poverty, population and even military policy. This has made the benefit a political hot potato.
“The view from above was that the child benefit impacted on the birth rate. During the 1940s we were always conscious of the fact that we have a large and powerful neighbor and we are so small,” Kangas explained, adding that the same kind of comparison existed between France and Germany.
“So that the background to the child benefit was population policy and perhaps also social policies. In addition to population policy we wanted to lift the large rural families out of poverty,” he added.
On the other hand, decision makers were concerned that the allowance might undermine the population by encouraging the less intellectual classes to reproduce.
More kids, lower costs
Finland is currently home to more than one million children under the age of 17. There are fewer than 10,000 families with five or more children and altogether they have close to 60,000 youngsters.
For these families the first child is the most expensive and costs decline with each successive child. However when the head count rises above four children, that principle no longer holds.
“You’ll need a bigger car or even two cars and mom may have to leave her job. This also throws up conflicting views. Can we ask what is the responsibility of large families and what is society’s responsibility? Should the public purse compensate for the needs of large families?” Kangas asked.
Child benefit, children and families are holy cows
For decades governments have treated the child allowance as a sacred cow that cannot be touched. Kangas quoted Pekka Kuusta, the master of 1960s social policy.
“Kuusta said that the child benefit came down like manna from heaven, where there was a shortage of everything but children. The child allowance system became a sacred benefit that no government official dared touch,”
The professor said that child allowances are politically difficult to change because interference gives rise to strong emotions.
“We think that children and the weak should be defended and that we should care for children. That’s why we can’t cut the benefit,” the researcher concluded.