A move from National is expected to avoid being outflanked by Labour.

Finance Minister Bill English has dampened down expectations of any big increase to paid parental leave in tomorrow's Budget, saying there were a number of other priorities to address as the Government enters a new era of surpluses.

The Government is expected to deliver something for parents after Labour produced its policy to raise paid parental leave to six months and pay a "baby bonus" of $60 a week to households earning less than $150,000 a year and who do not get paid parental leave.

It is now widely expected that National will also move on paid parental leave to avoid being outflanked by Labour in fertile vote-hunting turf, despite saying it would veto Labour MP Sue Moroney's bill to increase it to 26 weeks and delaying its progress until after the Budget.

Mr English has also hinted at some more targeted support for low-income parents is on the cards, after criticising Labour's baby payments for not targeting the less well off. "We will proceed in the same way as in the past and that is picking pretty carefully where we can apply more taxpayers' money to get some longer term payoff."


Yesterday Mr English said voters would have to wait until tomorrow to find out what was on offer from National, or whether any change at all was proposed. While moving back into surplus offered more choices for the Government, it would not necessarily blow it all on a single area such as paid parental leave.

"It's a good thing, and when we've got a bit more room to afford it we can look at it. But keep in mind that it's got to sit alongside a very wide range of priorities."

He warned there would be no blowout. "We're not promising to put a lot of cash into people's pockets and I don't think they'd believe us if we did. I think people know Budgets from this Government are going to be pretty careful. They're not going to be big windfalls for everybody and any decision we make is going to be sustainable. We don't do things for some short-term hit."

Child poverty experts said they would prefer any extra money for parents to be targeted at poorer families rather than extending paid parental leave.

Victoria University's Jonathan Boston, who co-chaired the 2012 Children's Commissioner's Expert Group on Child Poverty, said he did not know what National would do, but he was not overly hopeful of big change. He said if the aim was to help parents of babies and infants then extending paid parental leave was not the best approach. "Even if you extended it for another 12 weeks, that's still only another 12 weeks and a disproportionate amount of the assistance would go to better off families." Targeting those on low incomes could be done through Working for Families, through extending the Parental Tax Credit or altering the Family Tax Credit so babies and infants received the same as older children. That was one of the recommendations of the Expert Group which said it would benefit families with younger children and large families.

"I think whatever the Government does, it will be relatively modest and it wouldn't surprise me if it was staggered so that it would be implemented over several years. Even a modest amount - an extra $20 or $50 for a period of time - would be a significant help to families which are struggling."

University of Auckland senior lecturer and Child Poverty Action Group spokeswoman Susan St John said tax credits should be extended to beneficiary families and indexed to inflation.

"A lot of newborns get nothing - they get nothing from paid parental leave or tax credits. The most cost-effective way is to give all low-income children the same weekly assistance."

Budget options for parents of newborns

Increase paid parental leave:
Currently gives up to $490 a week. Likely a staggered increase, possibly from 14 to 16 weeks immediately rising to 20 over the next few years (estimated cost of 18 weeks is an extra $46 million a year). Possibly loosen the eligibility criteria of being in same job for at least 12 months. Will be less than Labour's plan to increase it to 26 weeks over three years (expected to cost an extra $138 million a year once in place.)
Who benefits: 40 per cent of working parents who meet the criteria.

Altering Working for Families tax credits:
Extend the Parental Tax Credit. Currently offers up to $150 a week for the first two months of a baby's life whose parents do not get paid parental leave. Change the Family Tax Credit so babies get a higher weekly rate, possibly offset by reducing payments for teenage children. Currently firstborn children under 16 get $92 a week, while subsequent children under 13 get $64 a week. Children over 16 get $91-101 a week. Also possibly lifting the abatement threshold from $36,350 and moving to index payments and
abatement thresholds.
Who benefits? Working families on low incomes, especially those who do not qualify for paid parental leave.

Extra allowance for beneficiaries:
Social Development Minister Paula Bennett refused to say whether beneficiary parents can expect any extra help from the Budget. The Children's Commissioner's report on
child poverty said about 60 per cent of all children in poverty were in beneficiary households, mostly sole parent. They do not qualify for paid parental leave or Working for Families credits and National and Labour have ruled out extending the scheme to
beneficiary families.
Who benefits: Lower income families on benefits.