NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / New Zealand

Labour's baby bonus may produce less work, more babies: economists

By Simon Collins
NZ Herald·
28 Jan, 2014 08:53 PM5 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

Labour's scheme would pay $60 a week to the parents of all newborn babies for their first year. Photo / APN

Labour's scheme would pay $60 a week to the parents of all newborn babies for their first year. Photo / APN

Clawbacks hit family earnings but economist says Labour's scheme could raise fertility

Labour's $60-a-week child payment scheme may produce less work and more babies, economists say.

The scheme, announced on Monday, may put some average wage-earners off working more hours because they will lose two-thirds of every extra dollar they earn through a combination of reduced child payments, tax, ACC and KiwiSaver payments.

But Canterbury University economist Dr Eric Crampton said it would also raise New Zealand's fertility rate.

"Some people will be thinking, can we afford to have another kid, and just deciding at the margin, no we can't," he said. "This extra bit could be enough to do it."

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.

He said economists calculated that a similar "baby bonus" in Quebec cost about $15,000 for every extra child born.

"Is that value-for-money?" he asked. "Depends what you think a child is worth.

"I think life is worth at least that much to each of the children who wouldn't otherwise be born, and that New Zealand is so far below optimal population size that it would be a bargain, if results here were similar."

Labour's scheme would pay $60 a week to the parents of all newborn babies for their first year.

Advertisement
Advertise with NZME.

The only exceptions would be the 5 per cent of parents still earning over $150,000 a year after the baby is born, and the 40 per cent of parents who get paid parental leave - they would get paid leave for six months and $60 a week for the second six months.

The scheme would keep paying $60 a week for toddlers aged 1 and 2, but at those ages the payment would be clawed back at the rate of 30c for every dollar of extra income above $50,000 a year. The payment would stop at age 3, when Labour would make children eligible for 25 hours a week of free preschool education.

Single-income families earning around the average wage of $1,050 a week ($54,600 a year) already lose more than half of every extra dollar earned as existing family tax credits are abated at 21.25¢ in the dollar on top of income tax of 30¢, the ACC levy of 1.7¢ and a KiwiSaver contribution of 3¢ for many workers - a total of 55.95¢ in the dollar.

That total clawback rate would rise under Labour to 64.7¢ in the dollar on incomes of $50,000 to $70,000 and 67.7¢ above $70,000, where the tax rate goes up to 33¢.

Discover more

New Zealand|politics

Labour targets new parents

27 Jan 02:45 AM
Opinion

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

27 Jan 04:30 PM
New Zealand|politics

Baby bonus aims to cut child poverty

27 Jan 05:40 PM
New Zealand|politics

National's paid parental leave plans

27 Jan 11:21 PM

Although the tax rate would be lower for mothers returning to work on lower part-time incomes, Dr Crampton said the combination of a high clawback rate and extra money would encourage some mothers to stay out of the paid workforce for longer.

He said more time out of the workforce reduced the chances of women coming back on salaries as high as they earned before having a baby, and so reduced the family's lifetime total income.

However Auckland University economist Dr Susan St John said it might be better for the children to have a parent at home with them for longer.

"This whole business of having to incentivise work - it's not the only thing in life."

Ron and Eran James, with son Xavier, found the loss of income stressful.
Ron and Eran James, with son Xavier, found the loss of income stressful.

Paid parental leave extension on radar

The Government will "have a look" at extending paid parental leave to beyond 14 weeks as early as the middle of this year, Prime Minister John Key said yesterday.

National has been in discussions with the Opposition over Labour MP Sue Moroney's members bill to extend paid parental leave to 26 weeks.

Advertisement
Advertise with NZME.

But Mr Key strongly signalled his Government would come out with legislation of its own to extend paid parental leave, but not as far as Labour wanted.

"It's likely there will be a change but not to 26 weeks," he said.

Ms Moroney's bill if passed would make extended paid parental leave available from July this year. Mr Key said his Government would "have a look" at a policy of its own that would take effect by that date.

Finance Minister Bill English said National had always been interested in extending paid parental leave when there was enough money to do so, but it would balance that up with other urgent needs for the most vulnerable children such as lifting immunisation 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. 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 her bill.

Last year Mr English said the Government could use its financial veto to block the bill if it passed and yesterday repeated that warning.

Advertisement
Advertise with NZME.

Christchurch mother Eran James said an extension to paid parental leave - preferably 26 weeks - could not come soon enough.

Mrs James had her first child, Xavier, at the end of 2012.

She was on paid parental leave for 3 months then went a month with no income, before finally being forced back to work 25 hours per week.

She and her husband Ron were buying a house and could not cope with the loss in income.

Mrs James said the current level of paid parental leave was not good enough for young mothers.

Helen Connors, Plunket manager of service development, said the proposed extension of paid parental leave would ease the pressure on mothers to return to work.

Advertisement
Advertise with NZME.

- Additional reporting: Ben Irwin

Save

    Share this article

Latest from New Zealand

New Zealand

Storm leaves 13,000 without power in Tasman

11 Jul 08:18 AM
New Zealand|crime

'S*** happens': Injured motorcyclist's gracious response to being hit by car

11 Jul 08:00 AM
Politics

Peeni Henare likely favourite to stand for Labour in Tāmaki Makaurau byelection

11 Jul 07:20 AM

From early mornings to easy living

sponsored
Advertisement
Advertise with NZME.

Latest from New Zealand

Storm leaves 13,000 without power in Tasman

Storm leaves 13,000 without power in Tasman

11 Jul 08:18 AM

High winds are ramping up.

'S*** happens': Injured motorcyclist's gracious response to being hit by car

'S*** happens': Injured motorcyclist's gracious response to being hit by car

11 Jul 08:00 AM
Peeni Henare likely favourite to stand for Labour in Tāmaki Makaurau byelection

Peeni Henare likely favourite to stand for Labour in Tāmaki Makaurau byelection

11 Jul 07:20 AM
Watch: 'My raging backyard river' - North Shore homeowner fears stormwater torrent

Watch: 'My raging backyard river' - North Shore homeowner fears stormwater torrent

11 Jul 06:00 AM
Solar bat monitors uncover secrets of Auckland’s night sky
sponsored

Solar bat monitors uncover secrets of Auckland’s night sky

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP