Child allowances – No means no

Centre Party leader Maud Olofsson ruffled feathers across the political spectrum this week by suggesting that Sweden’s child allowance payments be subject to means testing.

The current system was created in 1948 and has long been a cornerstone of Sweden’s general social welfare system. Under the program, all families with children living in Sweden, regardless of their income, receive a stipend of approximately 1000 kronor ($165) per child per month from the time the child is born until it reaches the age of 16.

In an interview with the Svenska Dagbladet (SvD) newspaper, Olofsson suggested that the payments ought to restricted to families earning less than 240,000 kronor a year.

As the local reported on Tuesday, Olofsson’s proposal was rejected by both the center-right Moderate Party, as well as the center-left Social Democratic Party.

And the proposal didn’t meet with the approval of Sweden’s major papers either.

SvD has problems with the proposal on its political merits, claiming that it won’t win the Centre Party any support with voters. While the paper finds it “praiseworthy” that the party is trying to identify issues that matter a great deal to voters, it concludes that “means testing for child allowance payments is not the answer.”

“It can seem like a poke in the eye that low wage earners pay taxes that benefit the children millionaires,” the paper admits, but suggests that a proper tax deduction is a better way to keep people from feeling like “someone else is responsible for their child’s welfare.”

The Sydsvenskan newspaper echoes SvD’s concerns about the proposal’s political viability and urges other party leaders in the Alliance government to “help Olofsson and her Centre Party understand logic and politics.”

The paper is baffled by how Olofsson went from calling for a doubling of child allowance payments in the run up to the 2006 election, to now suggesting benefits should be cut in half.

Moreover, the paper is concerned that the proposal “contributes to people making tactical choices to work less,” something diametrically opposed to the government’s pro-work policies.

Columnist Ragnar Roos of Dagens Nyheter (DN) also expressed concerns about how means testing for child allowance benefits could create diminishing returns for working more.

“For low wage earners it can become unprofitable to increase working hours. Higher income after tax may not end up compensating for the lost child allowance payments. They risk falling into a sort of poverty trap,” writes Roos.

Roos also points out that that means testing may create divisions within society, harming the solidarity that comes with a one-size-fits-all system.

“The advantage of a general welfare policy is that it creates a sort of legitimacy for the system. Even people with high and middle incomes participate, strengthening their willingness to contribute their tax money,” he writes.

But means testing, write Roos, brings “more ‘us’ and ‘them’ and the willingness among high wage earners to contribute may decrease. Means testing for child allowance payments may end up creating exactly those consequences–separating out ‘poor children’ who receive payments from the ‘rich children’ who don’t need the benefits. Giving the benefits to all children avoids such a scenario.”

Roos thinks parents should be free to spend of save the allowance as they see fit.

“Excessive social engineering should be avoided, both in the area of taxes and benefits,” he concludes.

Aftonbladet has similar concerns about the stability of the welfare system if certain aspects become subject to means testing. It accuses Olofsson of misunderstanding the reasons for having a social welfare system in the first place.

“It benefits those who are worst off in society for the simple reason that the generally applicability of the system also benefits the middle class. Even those who earn a little more get something out of the welfare system and are therefore more willing to contribute to it,” writes Aftonbladet.

And Expressen columnist Ann-Charlotte Marteus is no less critical, wondering if Olofsson’s proposal is some sort of April Fool’s joke that came a few days early.

Marteus takes time to review the rationale for introducing means testing used by Olofsson and her Centre Party colleague Annika Qarlsson.

According to their argument, restricting child allowance payments to people earning 20,000 kronor a month or less would ensure money goes to those most in need, and that the majority of recipients would be low-paid women.

However, Marteus takes issue with how the Centre Party defines “high wage earner” pointing out that many middle class professionals such as school teaches and nurses wouldn’t qualify for child allowance payments under the Center Party’s proposed limit.

Nor does she buy the argument that wealthy parents don’t need child allowance payments because they can save money for their children anyway.

If the Centre Party thinks it’s offensive that the wealthy simply drop their child allowance payments into savings accounts, Marteus urges them to “introduce a special ‘don’t-spoil-our-kids’ tax for the rich. A brat-tax.”

Where the main newspapers stand:

Dagens Nyheter, “independently liberal”, Stockholm-based, owned by the Bonnier family.

Svenska Dagbladet, “independently liberal-conservative”,

Stockholm-based, owned by Norwegian media company Schibsted.

Göteborgs-Posten, “independently liberal”,

Gothenburg-based, owned by the Stampen media group.

Sydsvenska Dagbladet (Sydsvenskan), “independently liberal”, Malmö-based, owned by the Bonnier family.

Aftonbladet, “independently Social Democrat”, Stockholm-based, owned by trade union federation LO and Norwegian media company Schibsted.

Expressen, “independently liberal”, Stockholm-based, owned by the Bonnier family.