Victor Orban announced seven policies to incentivize families to have more children.
On Feb. 10, during his state-of-the-nation speech, Hungarian Prime Minister Viktor Orban announced a seven-point Family Protection Action Plan to boost the country’s fertility rate.
Orban said that Hungary would boost its population by encouraging families to have more children rather than through immigration, which the Prime Minister labelled “surrender.” Hungary is expected to lose about a third of its population by 2080 due to a combination of low fertility rates, ageing, and emigration. Last year, 94,600 live births were registered in Hungary while 131,900 deaths were registered, for a net decline of more than 37,000 people.
Hungary’s fertility rate of 1.53 is below the European Union average of 1.6 and well below the natural replacement rate of 2.1 children per woman. The fertility rate is the number of children a woman is expected to have during her child-bearing years.
The Family Protection Action Plan includes subsidizing home mortgages and car purchases, preferential loans for newly married couples, more spending for childcare, and exempting women who have multiple children from income tax. The estimated annual cost of the measure is 150 billion forints ($700 million). According to the Organization of Economic Cooperation and Development, Hungary was, prior to the announcement, one of the largest spenders on family benefits in Europe, but the measures did not help reverse falling fertility rates.
The pro-family preferential loan program provides an interest-free, any-purpose loan to a maximum of 10 million forints (about $48,000) that must be obtained between July 1, 2019 and December 31, 2022. If the family has a child within three years, the loan will remain interest-free and repayments will be suspended for three years. When a second child is born, 30 per cent of the remaining principal will be cancelled and repayment will again be suspended for three years. On the birth of the third child, all remaining debt will be cancelled. But if the family does not have any children after obtaining the loan within the three-year period, it will be transferred to a standard loan repayable at market rates. A version of this loan will also be made available to existing families with children.
The family home purchase scheme extends an existing program, which provided grants to repay mortgages upon the birth of a third or subsequent child. Now the program will take effect on the birth of a first child. Families will be given grants of one million forints (about $4700) to repay mortgage loans for the first and second child, four million forints ($18,800) for the third child, and one million forints for each additional child after the third. (Average house prices in Hungary are under $50,000 and the average annual income in the country is $22,000.) The program of non-repayable grants can also be used to extend an existing home, with grants becoming larger depending on the size of the family.
Families who have at least three children will be given 2.5 million forints (about $11800) toward the purchase of a new car seating at least seven people. Orban also announced that the criteria for current pro-family tax benefits and social assistance programs will be relaxed so families can take advantage of more than one benefit; currently families must choose the benefit that helps them most.
The government will also create 21,000 daycare spots over the next three years, to a total of 70,000 spaces for pre-school children; grandparents who care for their grandchildren in their parents’ stead will become eligible for government childcare fees.
In its most ambitious plan, the government will exempt women who have at least four children from ever having to pay income tax. The plan applies only to income and not dividends.
Orban explained the government’s preference to boosting Hungarian birth rates over immigration to grow the country’s population. “There are fewer and fewer children born in Europe,” he said. “For the West, the answer is immigration. For every missing child there should be one coming in and then the numbers will be fine,” he declared. “But we do not need numbers. We need Hungarian children … this is Hungary’s answer rather than immigration.”
Orban’s Fidesz party won a third consecutive majority last year on a pro-family, anti-immigration platform. He is a member of the Calvinist Hungarian Reform Church and his wife and five adult children are Roman Catholics.
Parliament must still pass legislation extending and creating the pro-family policies, but considering Fidesz has 133 of the 199 seats in Parliament, the proposal is expected to be enacted before the summer.
