Editorial: Labour's $60 promise to high earners inexplicable

People earning up to $150k still face issues on deciding who stays at home and who works, says Labour.

Cunliffe needs to go back to drawing board on family aid

David Cunliffe delivered one indisputably accurate comment during his State of the Nation address this week. "We need," he said, "to put our resources where they will do the most good." The Labour Party leader was referring to the requirement of any government to focus on children, but his comment was appropriate for any spending of taxpayer money. Why, then, does he propose paying families earning up to $150,000 a sum of $60 a week for each newborn baby until the child's first birthday? Clearly, most people earning anywhere near the top of that range and many middle-income earners have no need for such money. Government resources would, therefore, be being put where they do the least good.

Mr Cunliffe's explanation for this further example of his party's penchant for universal welfare was that having a child was extremely expensive for every family and every parent. "Families on up to $150,000 are very much in the zone where they are making choices about who stays at home, who works," he said. That view will not resonate widely. Money provides a freedom of action in this area no less than in most spheres of life. People earning $150,000 and, indeed, much less simply do not need a baby bonus.

This point was reinforced by Eileen Reid, a Beachlands mother of two, who told the Herald that although her family's income fell well below $150,000, she and her husband had enough money to raise their children. Mrs Reid went on to say the money could be better spent on those who needed it through more astute targeting. She is absolutely right. But Labour's ill-judged approach to welfare spending means the largesse extended to middle-income earners that undermines the Working for Families scheme would be replicated in its Best Start package.

Another of Labour's standard themes was apparent in Mr Cunliffe "unashamedly" asking the wealthiest few per cent of income-earners to provide the tax that will fund this initiative. He has yet to say how much higher the taxes of those in the top bracket will be. What is clear, however, is that high progressive tax, perhaps incorporating a return to a top personal rate of 39c, remains the first port of call.

That is unfortunate because far more judicious paths are available. At the top of Labour's list should be closing avenues of tax avoidance. Tackling that would demonstrate a fiscal resolve that would help to defuse questions raised about the cost of its policies, a point seized upon by Steven Joyce, the Economic Development Minister.

Labour would, especially, be in a stronger position to advance more well-merited measures to help parents struggling to raise children. One is the plan announced by Mr Cunliffe to extend the period of paid parental leave from 14 to 26 weeks. Most comparable countries have longer periods of leave than New Zealand. That reflects the undoubted benefit of young babies and families spending as much time together as possible. Until now, an extension has been rejected by a Government seeking to reduce its deficit. But with the lifting of economic clouds, its time is drawing near. This was indicated by the Prime Minister's hint, following Mr Cunliffe's speech, that the National Party is working on an extension, albeit for a shorter period.

Labour can take some of the plaudits for this advance. Sue Moroney's private member's bill, the basis for the proposed leave extension, was coherent and pragmatic in the way it phased in the change over three years. The same cannot be said for a baby bonus that would go to all but 5 per cent of parents. Mr Cunliffe needs to go back to the drawing board.

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