The cost of parenthood

By Andrew Laxon

The Government says we can't afford to introduce six months' paid parental leave. Child advocates and some parents claim we can't afford not to. Andrew Laxon reports
Nicole Snook had to return to work soon after having son Lachlan (left) and dreads having to do the same with baby Ashton. Photo / Brett Phibbs
Nicole Snook had to return to work soon after having son Lachlan (left) and dreads having to do the same with baby Ashton. Photo / Brett Phibbs

The crunch for Nicole and David Snook came at Christmas - a month after Nicole took a year's unpaid maternity leave for her first baby.

Unexpected bills flooded in and they realised they'd never make it through the whole 12 months.

Nicole, a legal executive at city law firm Minter Ellison, went back to part-time secretarial work at the firm when Lachlan was about 6 months old.

Sometimes she would work a double shift from 8.30am to midnight, come home, sleep for an hour, do a 2am feed and feel like a "walking zombie" the next day.

The 26-year-old West Auckland mother is now back at home with her second baby, 8-week-old Ashton. She says the stress with Lachlan was worth it to juggle the conflicting demands of motherhood and paying the bills.

But she dreads facing the same early return to work in a few weeks, as the family can't rely on the uneven cashflow from her husband's car supplies business.

This week's much-debated proposal for six months' paid parental leave - killed off by the Government as it appeared opposition parties might have the numbers to pass it in Parliament - would have made life so much easier.

"If we had paid parental leave for six months I wouldn't have had to go back to work so soon," she says, cuddling a sleeping Ashton on the couch at her Henderson Heights home.

"I probably would have been able to last nine or 10 months, because we would have had savings.

"And definitely this time round with Ashton, it would be fantastic if they had it. To know that you've got that amount from the Government coming in each fortnight would mean so much less pressure and stress. I could easily sit down and say 'I'm going to be at home with you for six months', whereas now it's 'right, I'm definitely going to be at home with you for three months. After that, I don't know'.

"And that's scary because he's just gone two months, so I only know I'm going to be here for [another] four weeks. After that, it's touch and go."

Labour MP Sue Moroney's bill would have increased paid leave by four weeks each year from the current 14 weeks to 26 weeks by 2015. It looked likely to pass with the support of all parties except National and Act until Finance Minister Bill English confirmed on Wednesday that the Government would use financial veto powers to block it.

English said the increase, which would cost about $150 million a year, would seriously affect the Government's budget, especially when the country was trying to pay back $10 billion of debt.

Moroney claimed the true annual cost with reduced childcare subsidies was closer to $80 million. She hinted that she would have been prepared to modify the bill to get any increase in paid parental leave, which would have particularly helped people on low incomes.

"They are the very ones who will go back to work early because of financial pressure and yet all the evidence tells us they're the families who need the most support - because their children can quite easily end up being disadvantaged all the way through their lives if they don't get that good start."

Paid parental leave is relatively new in New Zealand and lags behind far more generous provisions in most other OECD countries. Labour was originally pushed by its junior partner, the Alliance Party, into introducing 12 weeks in 2002. This was later increased to 14 - the minimum recommended by the International Labour Organisation - and extended to self-employed parents. The payment is based on a parent's weekly wage but capped at a maximum of $458.82 a week before tax.

New Zealand still ranks near the bottom of the OECD - ahead only of the United States, which offers no paid parental leave. Our system is less generous than that of Australia, which introduced an 18-week payment last year, and nowhere near the 39 weeks offered in Britain or 16 months in Sweden.

Jan Pryor, director of Victoria University's Roy McKenzie Centre for the study of families, says gradually increasing the amount of paid parental leave would give children and families a much better start.

"Fourteen weeks is very, very low ... It makes it very hard to breastfeed."

She notes that the World Health Organisation and Ministry of Health recommend exclusive breastfeeding for all babies for the first six months. Although there are exceptions to this rule - some underweight or overweight babies may need more iron than they get from breastmilk alone - it has proven health benefits, such as increased immunity to infectious diseases and lower rates of asthma.

Pryor is involved in the Growing Up in New Zealand survey, which tracks the families of 6846 babies born in Auckland and Waikato in 2009-10. Last month it reported that only 6 per cent were breastfed for six months, partly because many mothers had to return to work before then. Pryor says many of the women interviewed during their pregnancies had planned to breastfeed for six months and still go back to work - which she describes as wonderful idealism but not realistic.

The former Families Commissioner says parents also need time at home to form healthy, loving attachments with their babies, which haven't even started by 14 weeks, and to maintain their own relationship, which is the single best predictor of how a child will turn out later in life.

"The challenges of having a new baby, in particular a first baby, are incredible. All the research shows that relationships take a bit of a dive at that point and that's not going to help if everybody has to go straight back to work."

Auckland University economist and Child Poverty Action group member Susan St John says New Zealand has repeatedly put the needs of the workforce ahead of children, even though medical evidence shows the first three years of a child's life is crucial in determining their future.

She supports longer paid parental leave although she argues that this alone is not necessarily the best way to help families most in need.

She would like to see New Zealand follow Australia's new system, which pays parents up to $720 a week for 18 weeks. It also includes many more mothers than the New Zealand scheme, which is available only to women who have worked at least 10 hours a week for the same employer for the previous six months.

Australian mothers who miss out on paid parental leave are still eligible for a baby bonus of A$5437 ($6817), which is much higher and more widely available than New Zealand's $1200 parental tax credit for working families.

The call for a more generous scheme dates back to a strongly worded 2007 report It's About Time by Families Commissioner Rajen Prasad, now a Labour MP, which urged the Government to provide a full year's paid parental leave. It found paid parental leave (as opposed to unpaid leave) was crucial in allowing mothers to avoid an early return to work because of financial pressure.

The report quoted a 2006 Department of Labour survey, in which only a quarter of mothers interviewed said 14 weeks' paid parental leave was enough. On average they returned to work after six months but would have preferred to take a whole year. Of the women who took paid parental leave and returned to work within a year, 61 per cent said financial pressure was the main reason they did not use their full entitlement to 52 weeks' unpaid leave.

In those final heady days of government surpluses, Labour promised quick action and even National said it was sympathetic to an increase. Judith Collins, then the party's family affairs spokeswoman, said: "I'm generally not against it. As a working woman myself, I could have seriously done with paid parental leave when I had a little child."

The commission followed up with a progress report in 2010, which acknowledged the impact of the recession but said it was even more important to spend the extra money in tough times.

"Paid parental leave will pay for itself over the course of a woman's working lifetime because the extra tax revenue associated with the higher workforce participation of these women is estimated to be significantly more than the cost of their parental leave payments."

From a labour market perspective it said the ideal period seemed to be between four to six months, as longer periods away from work damaged a woman's employment and earnings prospect. However, this had to be balanced against other aims, such as enabling parents to have long periods away from paid work to create strong attachments with their children.

Times have changed. The current Families Commissioner, Carl Davidson, appointed in 2010 by Social Development Minister Paula Bennett, describes the commission's 2007 recommendations as "the gold standard", which must now be revised in light of the country's economic circumstances.

He says there are many economic benefits of paid parental leave, including savings for employers who don't have to replace a fully trained worker, but there are also limits to the level of support parents could expect from other taxpayers.

"Wouldn't it be great if none of us had to go to work and we could just stay at home and raise our kids and get paid for it? That's not realistic and there's a whole lot of people in work who have to juggle the demands of work and the demands of parenting."

Davidson rejects the arguments, previously advanced by his staff 18 months ago, that our system is less generous than other developed countries and that young families are more likely to settle in Australia. "We know for a fact that northern European economies have very generous parental leave but I don't see a huge outflow of New Zealand migrants to Scandinavia."

Ultimately, he says, the decision is about cost-benefit analysis. "If the downstream economic effects are worse than the benefits of the bill, what's the point? If the Government needs to make cuts to other social services to fund paid parental leave, then you may find families are not better off. What will we have to give up to afford this?"

Business New Zealand employment relations manager Paul Mackay has a similar reaction. He describes the Labour bill as a bit "shotgun-ish" because it virtually doubles the amount of leave on offer without any international evidence that this would produce the best result for families or the economy.

Overseas comparisons can be misleading, he says, because European countries offering up to a year's paid leave also limit the number of hours people can work.

Many parents already use unpaid leave to take more than 14 weeks off, so he's not concerned about a huge increase in workers disappearing for longer. "The question is the additional cost on the public purse."

Sue Moroney disputes the $150 million cost estimate - which National has since pointed out comes from Labour's own election policy- saying this does not allow for savings in reduced childcare subsidies. She estimates the true cost could be closer to $80 million, based on a "very conservative assumption" that about half the parents now going back to work use paid childcare.

Nicole Snook says she's very conscious of the cost. She understands that many social services are being cut and that single people and older parents may question why they should subsidise younger mums to stay home longer with their children.

But in her other voluntary role as president of the West Auckland Parents Centre, she feels strongly that more paid parental leave would give mothers more chance to breastfeed longer and connect emotionally with their children.

She knows from experience financial and time pressure can lead to sleepless nights, grumpy parents and "toe-rag" babies and toddlers who react to the negative atmosphere.

"If it was extended, which I'm all for, it would mean I could spend more time at home with the kids and not stress. And that stress does weigh on you. Whatever your feelings are, it does come off on the kids."

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