MP: Parental leave costs overstated

Ms Moroney's Paid Parental Leave Bill would extend leave from 14 to 26 weeks by four weeks a year over three years. Photo / Thinkstock

Labour MP Sue Moroney says Finance Minister Bill English has deliberately overestimated the costs of extending paid parental leave to six months to justify his decision to veto any increase.

Ms Moroney's Paid Parental Leave Bill would extend leave from 14 to 26 weeks by four weeks a year over three years. It is expected to have its first reading in Parliament tonight and has enough support to pass with the backing of all parties but National and Act.

In April, Mr English said the Government would veto the bill because it would require an extra $500 million in borrowing over the next three to four years.

But Ms Moroney obtained Department of Labour advice to Mr English in April which showed the estimated cost was $285.6 million over the three years.

The costings showed that in three years, the full 26 weeks' parental leave would cost $315.6 million a year.

That was $145.7 million more than the forecast $170 million cost of keeping it at 14 weeks.

Ms Moroney said: "The Government should keep an open mind about the financial veto. They haven't got all the financial information they need to make that decision."

The Department of Labour figures did not take into account the tax paid on parental leave payments and savings to the Government by not having to pay as much in early childhood subsidies.

But Mr English was adamant yesterday that the Government would use its financial veto because that level of extra spending was unaffordable.

"We don't have the cash to extend paid parental leave dramatically."

He also rejected suggestions of a lesser increase to the leave provisions.

The Government cannot use its veto until the final reading of a bill - after it has been considered by a select committee and the public have made submissions.

United Future leader Peter Dunne will support the bill and said he believed Mr English's decision to veto it was premature.

The Department of Labour advice to the Government also said that New Zealand was ranked 24th out of 25 countries in the OECD for its paid parental leave scheme - ahead of only the United States, which had no paid parental leave.

Australia moved to 18 weeks last year.

THE FIGURES

Costs to increase paid parental leave:

2012/13
Existing scheme (14 weeks): $160.2 million
18 weeks: $205.9 million
Extra cost: $45.7 million

2013/14
Existing scheme (14 weeks): $165 million
22 weeks: $259.2 million
Extra cost: $94.2 million

2014/15
Existing scheme (14 weeks): $169.9 million
26 weeks: $315.6 million
Extra cost: $145.7 million
Source: Department of Labour advice to Government in April.