National leader Christopher Luxon has labelled the Government’s substantial $189 million boost to the country’s childcare subsidies scheme as “Band-Aid economics”.
Prime Minister Jacinda Ardern announced changes this afternoon that will see more than half of families qualify for subsidies on their children’s pre and after-school care.
The policy was outlined by Ardern in her speech to the Labour Party conference today as a way to ease the cost-of-living pressure on families on low to middle incomes.
Ardern also announced what the increases to Working for Families tax credits will be from April next year, after they are adjusted for inflation - increases expected to cost about $26 million.
Speaking to media from the Shore Road Reserve in Auckland’s Remuera, Luxon said the move was “Band-Aid economics”.
“We support it, it’s fine as it is, the real issue is that the Government needs to get to the core of what is driving inflation,” he said.
Luxon says a “proper economic plan” is required, removing immigration bottlenecks and disciplined spending.
He said Labour “is deflecting and distracting from their own economic inadequacy”.
Ardern earlier said the new subsidies was better than National’s proposed tax cuts as they wouldn’t add to soaring inflation.
In response, Luxon said he found it “interesting” that the Labour Party would not adjust tax thresholds but will adjust income thresholds.
“The core issue is there is no economic plan to address the issue of inflation,” Luxon said.
Asked if Labour was nervous about next year’s election, Luxon said he “can’t see a Government with a plan to help New Zealanders get ahead”.
“I think next year’s election will be a very close one,” he added.
Luxon also touched on the controversial RNZ/TVNZ merger and claimed to have seen leaked documents regarding its cost, sharing his disapproval for the $211m a year for the next 30 years price tag for taxpayers.
“I just think that’s a terrible waste of money for a pet ideological project that makes no sense for the Government to the pursuing at this time.”
He highlighted housing, health and crime as major pitfalls of the Labour Government.
“The outcomes are poor, the economy, for housing, for health, for education and for crime, and New Zealanders deserve much, much better than that.”
In reaction to National being called “inexperienced and out of touch”, Luxon questioned why we’re “going back on every outcome”.
“If (outcomes) had been so successful with this Government, why are we going backwards on the economy? Every single health outcome has gotten worse, our education attendance and attainment is the lowest it’s ever been, and the housing crisis hasn’t been solved, so I take my record against their record any day of the week.”
Luxon said it was “flattering” that Labour was “fixated on him” but thought their fixations should lie elsewhere.
“I would really encourage them, as a Government, to fixate 100 per cent on the New Zealand people, and right now the New Zealand people are doing it incredibly tough,” Luxon said.
Deputy PM Grant Robertson over the weekend criticised National’s proposed tax cuts, taking aim at “Liz Luxon” - a reference to former British Prime Minister Liz Truss who resigned after only 45 days in office, following her failed tax-cut plan.
Ardern on Sunday defended Robertson’s comment.
Luxon suggested Labour was taking shots at him to “deflect and distract from their own economic inadequacy and mismanagement” and claimed that this is the cause of the current inflation crisis.
“New Zealand is going through a tough time, it’s getting worse every quarter, I don’t see a Government with a strong economic plan to deliver world-public service and ultimately help New Zealanders get ahead,” Luxon said.
Luxon said he would not cut the new policy, but did maintain that it is a “very small package that makes a terrible situation just slightly better for a few more people”.
“All it is is inflation adjusting income thresholds which is not a dissimilar thought from what we have been saying as a principal of inflation adjusting tax thresholds, so it doesn’t address the underlying causes of inflation,” Luxon said.
The childcare subsidy changes will boost the income thresholds for eligibility for childcare subsidies, worth more than $200 a week for some families.
It starts in April next year and cost an extra $189.391 million over four years.
It will mean about 10,000 more children are eligible and the subsidies will increase for many of those who already qualify. More than half of all families with children will be eligible for the subsidies which cover childcare, and before and after-school care.
The Working for Families family tax credit will increase from April next year – it is pegged to inflation and high inflation has meant a bigger increase than usual. That increase will benefit about 60 per cent of families who get it. The Best Start payment for those with new babies will also lift by $4 a week.