John Armstrong: Fishhooks in the fine print for baby producers expecting a windfall

Labour Leader David Cunliffe needed to make a splash with his State of the Nation address yesterday, says John Armstrong. Photo / Brett Phibbs

A baby bribe or a baby bonus? Well hardly, even though Labour's opponents will try to paint the party's new Best Start assistance package for families with children under the age of 3 in those terms.

Anyone thinking of procreating on the basis of Labour's promise to pay $60 a week to households with a baby in its first year of life and an income of up to $150,000 seriously needs to think again.

The scale of the payment and eligible income thresholds fall markedly for 1- and 2-year-olds. That begs a question. If the policy is really designed to help struggling families, why include households which patently do not need hand-outs from the state to raise children?

The answer is that the money could have been better targeted. But doing that would have meant that David Cunliffe would not have made the splash with his address yesterday that he needed to do.

The policy will delight those on the left and was immediately welcomed by the Greens. But the target audience for the speech was also the wide band of middle-income earners who are feeling financially stretched.

National refused to play ball yesterday even on the wisdom of handouts to $150,000-income households. The ruling party instead focused on the policy's cost in the belief that Labour is very vulnerable to charges that at the first sign of real economic recovery, the party is already spending the proceeds.

As it is, when it comes to remedying income inequality, the problem with Labour's initial election-year offering is the relatively sharp abatement which, for example, sees the Best Start payment fall from $60 a week in the first year to just $10 in the second year for a household with an income of $75,000.

On top of that, families will not get Best Start payments until the household is no longer receiving income assistance under the paid parental leave scheme which Labour intends extending to a lengthy 26 weeks.

Furthermore, should Labour win this year's election, the package will be implemented progressively, the first stage not commencing until April 2016. It pays to read the fine print.