Sweetener lined up for parents in Budget, says PM

Prime Minister John Key has indicated there will be a sweetener in Thursday's Budget for parents, although the Government is unlikely to go as far as Labour's promise to extend paid parental leave to six months.

Labour has also put a stake in the ground, pledging to get unemployment down to 4 per cent before the end of its first term in government if elected, although Key has dismissed the target.

The Government is dampening expectations ahead of the Budget and while a boost for parents of young children is expected, Key remained coy about it yesterday.

Labour has promised to extend paid parental leave to 26 weeks and while the Government is opposed to this, it has not ruled out an extension beyond the current 14 weeks - possibly to 18, as well as a loosening of the eligibility criteria.

"What the Government has said is that we understand the benefits of extending things like paid parental leave. The question has always been about how much we can afford," Key said. "On Thursday you'll have to see whether we have managed to find a little bit of extra cash in the tin."

Only about 40 per cent of people were eligible now for paid parental leave "and this is certainly an area the Government has looked at".

The Government announced an extra $132 million in funding over five years for the Inland Revenue Department to chase tax avoiders and cover losses through expected tax write-offs. The funding would see a gross increase of almost $300m in Crown revenue over that time, Key said. "The great majority of New Zealanders meet their tax obligations voluntarily. It's simply unfair when the small minority do not."

Meanwhile, Labour has set a target of 4 per cent unemployment by the end of its first term in government should it win the next election, and confirmed it would will raise the top tax rate.

The unemployment rate is currently 6 per cent, with 147,000 people out of work.

"This is our aim, this is our promise to New Zealand, that we will make unemployment a priority, we will strive to make 4 per cent by the end of our first term," leader David Cunliffe said. Cunliffe also pledged to maintain budget surpluses as it paid off debt and to renew partial contributions to the Cullen Fund once it had done so.

The jobs would be created through Labour policies such as KiwiBuild - Labour's promise to build 100,000 affordable homes in 10 years - and NZ Power, its proposed agency to be the single buyer of electricity for households.

A capital gains tax would also boost growth by shifting investment into the productive sector, he said.

"Labour is the only party that has the policies to get Kiwis back into work while ensuring the government's books are back in the black," he said.

Cunliffe said Labour was yet to work out how much it would lift the top tax rate by.

Key said the 4 per cent target was "a wish and a target and a dream", although National's own target was 4.5 per cent by 2017.

He questioned how Labour would create the growth necessary to reduce the unemployment rate further, saying it had opposed most of the Government's policies aimed at growing the economy.

The Dominion Post