National to thwart parental leave bill

Bill English says National will veto the extension because it is too expensive. Photo / NZPA

National will use its veto rights to scupper a bill to extend paid parental leave to six months even if it has majority support, with critics and the bill's Labour sponsor calling the move unfair.

Finance Minister Bill English said yesterday his party would veto the bill, sponsored by Labour MP Sue Moroney, that would increase the 14 weeks of paid leave to 26.

Mr English said the Government would have to borrow more money to fund it at a time when it was trying to reduce its deficit.

"We have maintained paid parental leave and we currently spend about $150 million [a year] on it," he said. "But we are still two or three years from getting out of the woods on the deficit so we think it is a bit soon to be trying to expand entitlements when our big challenge has been to maintain them as they are."

Under Parliament's rules, the Government can veto a bill if it is deemed to have more than a minor impact on government finances.

The bill was introduced to Parliament last week and had been expected to progress with the support of United Future leader Peter Dunne and other opposition parties.

Mr English said Labour specialised in trying to get political benefit without showing the real cost by saying it would take 10 years to implement.

"That's just misleading the public. The fact is doubling it will cost another $150 million a year. You'd have to borrow half a billion over the next three or four years. We're simply not willing to do that."

Expanding entitlements at this stage would be "getting a bit ahead of ourselves when we are still $10 billion away from clearing our overdraft".

"We've got to get on with that and be fair to everybody in achieving surplus and people can have those choices once we get there," the minister added.

Ms Moroney said the Government was putting forward a worst-case scenario to support its claim that more paid leave for parents was unaffordable.

She had looked into the cost, and the cumulative amount was about $80 million over a three-year period.

"The Government is using an inflated figure of $150 million ... they've been rather disingenuous."

Ms Moroney said she did not believe the Government had factored in the tax from parental leave payments, or the savings from paying less in childcare subsidies.

The bill is structured so the period would be extended by four weeks a year for three years.

Ms Moroney did not know the number of babies who would not use the childcare subsidy as a result of extended leave, but had made a "very conservative assumption" that about half the families would use paid childcare.

"On that basis, it would bring the cost for each four-weekly tranche down to about $25 million-$28 million," she said. "Not only is it affordable, but actually I believe that the cost-benefit ratio would be very, very positive. For investing amounts of about $25 million-$28 million for 26,000 families for four weeks more paid parental leave, the benefits far outweigh the costs."

Ms Moroney said the main intention was to make progress on leave.

THE COST

* Bill would increase paid parental leave to 26 weeks.
* National says that would double cost of policy to $300 million a year.
* Labour sponsor Sue Moroney says figure is inflated.