National may extend paid parental leave

Prime Minister John Key has signalled an extension to paid parental leave may be on the table, but it won't be as big as that promised by Labour.

Labour leader David Cunliffe yesterday reconfirmed his commitment to extending paid parental leave from 14 weeks to 26.

Key said today 26 weeks was unaffordable, but signalled National was looking at a more modest extension.

Labour has support for a private members bill extending paid parental leave to 26 weeks and the Government has threatened to use its financial veto.

Key said today that the Government was in talks over a compromise on that bill but could still use its financial veto if one could not be found.

"I dont think so, not in the current settings we have," he said of an extension to 26 weeks.

"It's a large financial cost and it's got to be seen against a whole range of other priorities. I'm not saying its not important and I'm not saying there couldn't be some modest expansion.

"But do we want that at the expense of more money going into cancer drugs, potentially more police officers, more money spent on improving our education system?"

While he ruled out extending paid parental leave to six months, Key said the Government was working on its own policies..

"But not to the level of largesse that we saw announced yesterday from Labour."

Cunliffe yesterday announced a $60-a-week payment for new parents on income up to $150,000 for the first year of their baby's life, and up to the first three years for those on low and middle income earners.

The Labour leader also announced an extension of early childhood education from 20 free hours a week to 26 and a suite of other measures targeting new parents.

Key said Labour's plan was not affordable at a cost of about $500 million a year once it was fully up and running.

And while it might have appealed to some New Zealanders initially there was not a lot in it for most of them.

"The bit that David Cunliffe is not telling them is taxes are going up to pay for this," Key said.

"So for a lot of higher-income earners they'll get something from the baby bonus but they will pay a lot more in higher tax, and they will pay higher taxes for ever. So for a lot of people it could be a bit of fool's gold there."

Finance Minister Bill English said the Government had already said it was interested in the extension of parental leave when there was room to do so.

"But we would be balancing that up with the other quite urgent needs for the most-vulnerable children," English said, adding National's focus was "on the real hard-end need for the most vulnerable".

Labour's Sue Moroney, who is sponsoring the bill to extend paid parental leave, said it had majority support. It was due to be reported back to Parliament at the end of next month and she was still planning to push it through.

She said National had told her that if it had any proposals they would be put through her bill.

"I took them on their word on that," she said.

"I think if they are wanting to do the right thing by the New Zealand public that's in fact what they would continue to do."

She was prepared to compromise by reducing the number of weeks in her Bill.

"I will talk turkey with the Government any time to make progress," she said, adding 26 weeks was the OECD average.

Her bill would take affect on July 1.

Cunliffe said he was disappointed with Key's stance.

"We want to do something positive for our children and it's a shame that National is playing politics with it."

He said Labour had costed the policy and was committed to running fiscal surpluses.

"We've got a fully costed and fiscally balanced fiscal strategy," he said.

"We freed up a billion and a half of former commitments . . . per annum and we're investing much, much less than that - a third of that - in this package."

He said that for every dollar invested in making sure children got the best start there was an $11 payback.

He refused to elaborate on what tax changes Labour would impose to fund the spending, outside of their pledge to implement a capital gains tax that would exclude the family home, and to raise taxes for higher-income earners.

Cunliffe also clarified Labour's position on the baby bonus policy, saying parents would not receive it while they were on paid parental leave.

The finer details of the policy, including how the payment would be policed, were yet to be worked out, he said.

"We don't want to be subsidising millionaires . . . but we do want this to reach the vast majority of New Zealand families."