The New South Wales government’s cornerstone election policy, which aims to help the next generation pay for housing and education, has been criticised by social advocates who claim the scheme will further entrench inequality.
The Kids Future Fund would see all children 10 and under handed an account with $400 in it, with the government to match parents’ future contributions of up to $400 every year until the age of 18.
The premier, Dominic Perrottet, claimed individual accounts could reach $28,000 by the time a child enters adulthood if $400 was added by their parents every year. That could reach $49,000 if parents stumped up the maximum allowed contribution of $1,000 a year.
“This is a down payment to secure the future dreams of our children,” he told party faithful at the Liberal campaign launch on Sunday, two weeks out from the state election.
However, the NSW Council of Social Service chief executive, Joanna Quilty, said the impact on individuals of the $850m scheme would depend on the means of each family.
“With housing stress rife across NSW and the cost of everyday essentials sky-rocketing, low-income families – particularly those living below the poverty line – don’t have any money to spare,” she said.
“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.
“We would strongly advise the NSW Coalition to consult widely on this policy to ensure it doesn’t further entrench social inequality.”
Money from the accounts would be available for use from the age of 18 for education, including the paying down of Hecs debt or the purchase of a property.
The chief executive of the Community Housing Industry Association, Mark Degotardi, said it failed to deal with the challenges already facing young people, with at least eight years until any child would be helped.
“Much of that benefit will depend on how much your parents can afford to put into a savings fund on your behalf,” he said.
“This is a policy that is completely out of touch with what is actually happening to families in NSW right now.”
Degotardi said the government needed to help the young people who were homeless, living in care or struggling to keep up with rising rents and the cost-of-living crisis.
Grattan Institute economist Brendan Coates was concerned the policy would give “an extra leg up” to children from wealthier families.
“Poorer families – those who most need support with both education costs and housing – are the least likely to have the cash to spare to contribute,” he said.
The money would be better spent to support young people from poorer families to pursue further education once they turn 18, he said.
Coates noted the government’s plan to automatically contribute $200 a year to the child’s account if their parents are receiving the commonwealth family tax benefit was not a bad idea but the co-contribution model was problematic.
“This is exactly how co-contribution schemes in super play out: they largely benefit wealthier households with the cash to spare, whereas those with low super balances struggling to get by don’t make extra contributions,” he said.
“There’s little evidence that co-contribution schemes actually encourage more savings overall.”
Labor also took aim at the scheme it claimed was doing nothing to deal with the problems of the day including the teacher and housing shortage.
The opposition Treasury spokesperson, Daniel Mookhey, said: “It seems as though the families that need the help the most will benefit the least from this policy because they don’t have the money to put into this account.”
The policy would cover all children aged 10 and under in 2023 – almost 1 million – and would then apply to about 100,000 babies born in the state every year. The cost of the policy covers it for the next four years.
