National tax lure aimed at families

National promises to outspend Labour on early childcare subsidies by $100 million a year, reaching out to families with the first of its tax policies.

National leader Don Brash said yesterday that the party would give tax rebates of up to $1650 to working parents for each child at preschool.

It estimates 140,000 children would benefit from the change, which would come into effect next April at an annual cost of $160 million.

National would remove the existing childcare rebate of a maximum of $310 a year, now costing about $10 million.

It would also axe the Government's plan to introduce 20 free hours' attendance for all children aged 3 and 4 at community-based early education centres from 2007.

It has budgeted $52 million a year for that policy.

The Government was taken aback by yesterday's announcement and believes it is aimed at burying criticism that National was continuing to misrepresent its nuclear weapons stance.

In fact it had been planned, but kept a tight secret by National strategists in the increasingly tense lead-up to the official election campaign.

The battle has focused on promises of tax cuts by National - and accusations from Labour that it is failing to offer policy details.

Labour claims it is family-friendly in contrast to National, which it says would slash social spending.

National will hope to counter that impression by making the childcare rebates the first "tax" policy.

It is also keen to highlight education, one of its five key campaign planks.

Labour retaliated, with Social Development and Employment Minister Steve Maharey describing the policy as a "spending cut that will disadvantage 86,000 children" - the children he said would miss out on the 20 free hours a week policy.

"This policy sets the scene for what has been widely predicted as National Party tax cuts, leading to cuts in spending to pay policy."

But National education spokesman Bill English pledged that, aside from the free 20 hours a week, none of the Government's budgeted childcare or early childhood education policies, including those not yet introduced, would be dismantled.

"The childcare subsidy stays exactly how the Government has programmed it. The sessional subsidy (for early childhood centres) stays exactly how the Government has programmed it. They expanded entitlement to the childcare subsidy and there's been quite a few people who will benefit from that. This is on top of that. It's another layer."

National produced three case studies on how the funding would benefit parents, and Labour countered by asserting in each case they would be better off with its 20 free hours policy.

But both sides' examples lacked necessary detail.

Essentially, Labour's policy offers more free early childhood education to parents of most children aged 3 and 4, including unemployed parents.

National only offers help to working parents and the money is more thinly spread - but it covers all preschoolers and has fewer restrictions on what the rebate can be paid for.

The rebate can be used for home-based paid childcare and for any childcare centre, whereas Labour's is only for non-private childcare centres which have approved child-staff ratios and staff with education qualifications.

Labour and United Future accused National of confusing childcare with the educational needs of preschoolers.

National finance spokesman John Key conceded the $160 million estimate "could be on the high side", but believed it was valid.

There were 280,000 children under 5, of which about 100,000 would not be eligible for rebates because their parents were on benefits.

Of the remaining 180,000, he believed about 40,000 more might not need childcare or access the benefit.

Parents were taking up the existing rebate for about 56,000 children, but the greater money available under National would be an incentive for others to access it, he said.

Mr Key refused to say where the money to fund tax cuts would come from.