Labour targets young families
Labour has started to splash the cash to its core low- and middle-income heartland, promising a $60 a week payment for each newborn child and a boost to free early childhood education.
It follows Prime Minister John Key's opening salvo promising to lift the pay for more than 6500 teachers by at least $10,000 a year as well as create new super-principals to help struggling schools.
In his state of the nation speech to about 500 supporters in West Auckland yesterday, Labour leader David Cunliffe said the Best Start package would focus on the first five years of a child's life and help families meet the cost of living.
It would give all families earning less than $150,000 with a newborn $60 a week until the baby's first birthday.
It would apply to 59,000 families or about 95 per cent of children under 1 year old.
''That investment will continue for parents on modest and middle incomes until their child turns 3,'' Cunliffe said.
About 63,000 families, or 56 per cent of all 1 and 2-year-olds, would qualify for the extended payment.
Cunliffe said he would not rule out in the future allowing families to capitalise the benefit, to help with downpayments on a house.
Labour would not tell parents how to spend the money, or provide it as a voucher, because it did not like ''the nanny state''.
''I don't think the Government can dictate to people how they make life choices.''
The child payment would be phased in from 2016 and would cost $151 million in 2016-17, rising to $273m in 2020.
The extra cash would help cover the cost of a week's supply of nappies and baby food, he said.
Meanwhile, Labour has dropped its 2011 plan to extend the current in-work family tax credit to beneficiaries.
Cunliffe said as part of the new policy Labour would give free antenatal classes to all first-time mothers as well as early home visits.
Free early childhood education for 3- to 5-year-olds would be expanded from 20 hours a week to 25 hours and paid parental leave from 14 to 26 weeks.
There would also be more help for expectant parents, ensuring 80 per cent of pregnant mothers were booked in for antenatal checks by 10 weeks.
Children identified as especially vulnerable would get free childhood education until they turned 3.
The overall package would cost $271m in 2016-17, rising to $566m a year by 2020 compared to about $150m a year for National's policy plan last week.
He said Labour was committed to a responsible fiscal approach with spending matched by tax flows.
Labour last week dumped plans to exempt fresh fruit and vegetables from GST and for a tax-free band on the first $5000 of income, saving it $1.5 billion a year. Cunliffe said the early childhood package was a first step in his reform plans which would include education, health, housing and economic development.
He said there was a widening gap between the "haves and have-nots", with the wealthiest few doing well, while people in the middle stayed there and those at the bottom went backwards.
Under Labour there would be more jobs and a full day's work would cover the cost of the basics.
He reaffirmed Labour's commitment to a capital gains tax and reform of the Reserve Bank Act.
Economic Development Minister Steven Joyce said Cunliffe was misleading the country by claiming the programme was affordable because it had dumped $1.5b of spending.
"The reality . . . is there's no free money around the place that's just lying around that Cunliffe can magically bring to bear."
Cunliffe either had to lift taxes more or blow the fiscal surplus.
PAY-BACK PROMISES PILING UP
The Government books are not even back in the black yet and the spending promises are already piling up.
Labour's baby bonus is a return to the hip pocket elections of old - $60-a-week to the parents of newborns for the first year of their baby's life, or up to three years for those on the lowest incomes, including beneficiaries. For the sake of fiscal prudence it does not kick in till 2018, but it comes with a hefty price tag.
Coupled with other policies announced yesterday including expanding free early childhood education from 20 hours a week to 25, an increase in paid parental leave, and other parenting initiatives, it would add up to $500 million a year once fully implemented.
Labour made the mistake in 2011 of misjudging the electorate's mood for big spending promises - exempting the first $5000 of income from tax and scrapping GST on fresh fruit and veges failed to resonate at a time when voters were more worried about the size of the Government's debt. Likewise former Labour leader Phil Goff's last-minute pitch to the grassroots with a promise to extend the in-work tax credit to beneficiary families, a promise that sunk like a lead balloon.
Yesterday's announcement appears to be a case of more than one way to skin the same cat. By extending the baby bonus out to families earning $150,000-a-year, Labour is banking on it being politically far more palatable.
But it is also banking that the mood has turned since 2011, when we were still coming out of the global financial crisis. The recovery is here and everyone wants a share in the dividends.
National has also kicked off the year by seeking to be a bit looser with the purse strings - and no- one is discounting the possibility that tax cuts could be back on the agenda in a third term.
Already, austerity is starting to look so 2011.