Paid parental leave veto confirmed

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Finance Minister Bill English confirmed this afternoon that National will veto a bill to extend paid parental leave from 14 weeks to six months.

He said the Government would have to borrow more money to fund it just at a time when it was trying to reduce its deficit.

"We have maintained paid parental leave and we currently spend about $150 million [a year] on it," he told reporters at Parliament.

"But we are still two or three years from getting out of the woods on the deficit so we think it is a bit soon to be trying to expand entitlements when our big challenge has been to maintain them as they are."

Mr English said Labour specialised in trying to get political benefit without showing the real cost by saying it would take 10 years to implement.

"That's just misleading the public. The fact is doubling it will cost another $150 million a year. You'd have to borrow half a billion over the next three or four years. We're simply not willing to do that."

Expanding entitlements at this stage would be ''getting a bit ahead of ourselves when we are still $10 billion away from clearing our overdraft."

"We've got to get on with that and be fair to everybody in achieving surplus and people can have those choices once we get there."

Under Parliament's rules, the Government can veto a bill if is deemed to have more than a minor impact on Government finances.

It is required to do so at the third reading stage and so the bill, sponsored by Labour MP Sue Moroney, will get plenty of debating time including select committee hearings.

It has been drawn from the bill and has not yet passed its first reading but with the support of United Future leader Peter Dunne and other opposition parties, it is expected to progress.

Labour frequently used the veto on bills in its last nine years in Government.

Earlier this afternoon, Ms Moroney said the Government was putting forward a worst-case scenario to support its claim that more paid leave for parents is "simply unaffordable".

Labour Minister Kate Wilkinson last week described the extension as "simply unaffordable".

Ms Moroney said today she had looked into the cost of the change, and the cumulative amount was about $80 million over a three-year period.

"The Government is using an inflated figure of $150m ... they've been rather disingenuous about it," she said.

"They're putting the worst-case scenario forward in order to argue that it's unaffordable when it's not."

Ms Moroney said she did not believe the Government had factored in the tax that got paid back from parental leave payments, or the savings it would make by not having to pay out as much for childcare subsidies.

The bill is structured so the period would be extended by four weeks a year for three years.

Ms Moroney said she did not know the number of babies who would not use the childcare subsidy as a result of extended leave, but had made a "very conservative assumption" that about half the families that go back to work would use paid childcare.

"On that basis, it would bring the cost for each four weekly tranche down to about $25-$28 million," she said.

"Not only is it affordable, but actually I believe that the cost benefit ratio would be very, very positive. For investing amounts of about $25-$28 million for 26,000 families for four weeks more paid parental leave the benefits far outweigh the costs."

Ms Moroney said the main intention was to make progress on paid parental leave, and she would be willing to look at changes such as a shorter extension.

"I'm open to how we might proceed with that, but I've carefully structured my bill so that it is affordable ."

Although it was difficult to compare other countries' paid parental provisions, Ms Moroney said it was not hard to see that New Zealand was lagging behind.

"Australia has longer paid parental leave and they also have a higher payment per week ... The UK has 42 weeks paid parental leave, so you can make a fairly good assessment that theirs is superior."