Prime Minister John Key this morning hinted that National is working on its own legislation to extend paid parental leave but for a shorter period than the 26 weeks Labour is pushing for.
Late last year Finance Minister Bill English indicated National was reconsidering its position on Labour MP Sue Moroney's members bill to extend paid parental leave to 26 weeks.
Previously he had said the Government would use its financial veto to stymie the bill which looked like it had the numbers to pass.
This morning however, while Mr Key said an extension to 26 weeks was more than National was willing to support, he said his party may extend beyond the current 14 weeks.
"We're working on our own policies... but not to the level of largesse we saw announced yesterday by Labour. That is half a billion dollars to try and get people to vote Labour using taxpayers own money."
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Mr English said National had always said it was interested in extending paid parental leave when there was room to do so but it would balance that up with other "quite urgent needs for the most vulnerable children" such as lifting immunization rates, lifting educational achievement and protecting the most vulnerable children from violence.
He said National expected to continue discussions with Labour over Ms Moroney's bill when it was reported back from the select committee next month.
The bill was held back by the select committee after National asked them to consider it further.
Mr English said National asked the committee to do that, because it was "interested in finding some path forward that may be agreeable".
"Now that doesn't mean we're committed to getting agreement it just means we'll look at the issues."
Labour MP Sue Moroney, who has a bill to increase paid parental leave to 26 weeks before a select committee, said she had not heard from the National Party since late last year when it asked her to delay the bill while it considered its position.
The bill has majority support in Parliament, but National originally said it would veto it.
Ms Moroney said National had assured her that if it did come up with a proposal to extend paid parental leave, it would be done through Moroney's bill.
"I took them at their word on that. They indicated before Christmas they wanted to reconsider their position on it, and I really hoped they'd do the right thing."
However, Finance Minister Bill English said he had not given Labour any particular assurances other than that it was interested in the matter.
"The discussions amounted to the Government saying it was interested in finding some way forward that might be agreeable. That doesn't mean we are committed to getting agreement, it just means we will look at the issues because we've got an interest in paid parental leave."
Mr English said there was a still a possibility it would veto the bill, and National did not support the full 26 weeks, but was considering some extension.
She was still hoping to push the bill through Parliament and was happy to work with the Government on any extension even if it fell short of the 26 weeks.
She said even if National vetoed her bill and put up its own policy instead to take the political glory, the public would know Labour had driven the agenda. "If the Government feel they now have to perform some type of smoke and mirrors trick to deliver to New Zealand families, then my job is done."
Labour leader David Cunliffe said National was now simply politicking over the bill.