Raise incentives for couples having second child

The Government recently announced it is increasing funding support for couples who need help conceiving. It is also removing the age limit for those seeking assisted reproductive treatment. 

These are timely moves, given that Singapore’s total fertility rate is only 1.14, and the number of babies born here last year fell to its lowest in eight years.

Over the years, to encourage Singaporeans to have more babies, the Government has come up with schemes and incentives, the most significant being the Baby Bonus scheme.

I would like to suggest a tweak in this policy, which will go a long way towards incentivising Singaporeans to have kids.

The Baby Bonus consists of a cash gift and Child Development Account (CDA) benefits, in the form of a grant and dollar-for-dollar matching when parents save in the account.

There are two tiers for the cash gifts and three for CDA benefits, as shown in this chart from the website of the Social and Family Development Ministry.

Source: Ministry of Social and Family Development

To put it starkly, giving the same incentives for the first and second child signals that the state does not value the birth of a second child more than the first.

A couple with one child could look at it and believe that the Government is encouraging them to have three or more children. While that could well be the case, how many young Singaporeans would like to have large families today? 

Hence, the Government should have a separate tier of incentives for couples having their second child. 

This should be slightly more generous than that for their firstborn — perhaps a S$9,000 cash gift and a S$6,000 dollar-for-dollar matching cap for the CDA. This would bring the total bonus for the second baby up to a maximum of S$18,000, compared with the current S$14,000.

The extra S$4,000 will send a signal to couples that the state wants to incentivise them to have a second child.

This could go some way in nudging Singaporeans to take the fertility rate closer to two.

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