Budget 2014: $500m to extend paid parental leave

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Parents of new and young children are the biggest winners in the 2014 Budget, which delivers a $500 million package to extend paid parental leave by four weeks, extend free GP visits to under 13s, and increase parental tax credits for lower income families.

But the boost to parents are not available straight away - they will not kick in until the middle of next year, after the election, and National's package is about one third of what is on offer to parents from Labour.

Paid parental leave will increase from 14 weeks to 16 weeks and then up to 18 weeks in 2016. The criteria for eligibility will also change so many permanent guardians, casual and seasonal workers and those who have recently changed jobs also qualify for it. That change is expected to mean about 1,400 more parents qualify for it. On average, about 26,000 parents are on paid parental leave each year.

The cost of the increases and changes to eligibility was $172 million over four years. The rules would also be made more flexible to allow parents on leave to take part in employer training and planning days, or work occasionally without losing their entitlements.

Finance Minister Bill English said the $500 million package put young parents "at the heart" of the Budget. He denied it was simply a bid to try to capture middle income votes, saying compared to Labour's package, his Budget pledges were sustainable, more targeted and affordable.

"We know financial pressure is the man reason parents return to work earlier than they would like after having a baby. Extending paid parental leave in a responsible and affordable way makes it easier for parents to take more time off work, if they choose to."

About 15,000 parents on modest incomes who do not qualify for paid parental leave will also benefit in an increase to the Parental Tax Credit from $150 a week to $220 a week. The period for which it is paid will also increase from 8 to 10 weeks after the birth of a child. It is the first lift to the credit since it was introduced in 1999.

Social Development Minister Paula Bennett said the changes would mean about 1,200 more low income families would better off taking the credit rather than paid parental leave because it would be worth more.

However, the Government has also significantly raised the abatement rate for the payment, so about 400 families on higher incomes would no longer qualify. There was no extra payment for beneficiary parents, but the Government's package included $33.2 million next year to work with vulnerable children, including setting up children's teams to identify at risk children, work with their families, screen those who worked with children and support children in care. There was also an extra $156 million over four years for early childhood centres. The Budget will also see an extra $30 million a year go toward extending free GP visits and free prescriptions to all children under 13, if their GP opts in. It currently only applies to those aged under 6 and the change is expected to benefit about 400,000 more children.

The Government's $500 million package is a counter to Labour's $1.5 billion 'Best Start' package which lifts paid parental leave to 26 weeks and introduces a new $60 a week payment for parents who are not on paid parental leave. That applies for the first year of a baby's life where the parents earn less than $150,000, and continues for two more years for low income parents. Labour's package also increased early childhood education subsidies and maternal and newborn health checks.

PARENTS:

• Paid parental leave:
- lifts from 14 weeks to 16 weeks in 2015 and 18 weeks in 2016. Cost: $141 million over four years. Affects: 26,000 new parents each year.
- expanded to include many casual and seasonal workers, those who change jobs just before having a baby and permanent guardians. Cost: $31 million over four years. Affects: 1,200 parents each year.
- Will be more flexible to allow new parents to attend training or planning days, or work an occasional day.

• Parental Tax Credits:
- increase from $150 a week to $220 a week but abate more quickly
- paid for 10 weeks (up from 8 weeks) after a baby's birth
Affects: about 15,000 parents on mid-low incomes who don't get paid parental leave.

• Free GP visits for under 13s from July 1, 2015. Affects: 400,000 children. Cost: $90 million
• Early Childhood Education: $156 million to meet cost pressures in early childhood centres.
• $33 million next year for 'childrens' teams' to work with vulnerable children, and screen people who work with children.