Merkel raises childcare benefit, axes health charge, a year before election

Unpopular health charge dropped as European neighbours tighten their belts

PUBLISHED : Saturday, 10 November, 2012, 12:00am
UPDATED : Saturday, 10 November, 2012, 3:00am

German lawmakers voted on Friday to increase childcare benefits and end an unpopular medical charge less than a year before a general election.

The measures' cost totals about €3 billion (HK$29.6 billion) at a time when German Chancellor Angela Merkel's government has been urging other European nations to rein in spending and reduce public debt.

Merkel's centre-right coalition pushed through a new childcare benefit program that helps parents who stay at home with their young children instead of working.

The proposal has been controversial for years within Merkel's own bloc, and was met with harsh criticism by the opposition and business leaders.

Families where one parent stays at home - in Germany most often the mother - with their preschool-aged children will receive €100 a month under the programme starting next summer, rising to €150 a month from 2014.

The centre-left opposition has criticised the programme as an attempt to promote conservative family values that will hurt children's early childhood education. They say the money should be used to create more day care centres.

The Social Democrats, the main opposition party, has vowed to overturn the law if they gain power in next September's planned election.

German business leaders have also spoken out against the programme, saying it sets the wrong incentive and pulls parents from their jobs, depriving Europe's biggest economy of valuable workforce.

The programme - referred to as the "kitchen bonus" in German media - is set to increase social spending by about an annual €500 million starting in 2014.

The second law voted by Parliament, in turn, received overwhelming cross-party support. In a rare show of agreement, lawmakers unanimously voted to scrap an unpopular €10 charge that most patients must pay in addition to their health insurance when visiting a doctor.

The cut, taking effect in January, is worth about €2 billion per year.