Cunliffe announces half-billion dollar baby bonus; keeps a billion up his sleeve

Labour leader David Cunliffe has opened his party's election year appeal to voters with a half billion dollar package of measures aimed at babies and infants, with a $60 weekly payment for all but the wealthiest households (the annual family income cut-off is $150,000).

The announcements leave Cunliffe with around $1 billion to spare for policy initiatives yet to be announced after his confirmation last week that Labour will drop its plans to exempt fresh produce from GST and not to tax the first $5000 of every earner's income.

The Best Start payments will be available for the first year of a baby's life, extended until their third birthday for infants in low and middle income households.

"Sixty dollars will make a real difference to the lives of struggling parents," said Cunliffe, who expressed disbelief that local charities had begun seeking sponsorship for New Zealand children in need, just as they did for children in poverty overseas. "For example, it will pay for a weekly supply of nappies and baby food."

The measure would not kick in until April 2016, some 18 months after the general election, while a further element of the plan, to extend free early childhood education from 20 to 25 hours a week is not scheduled until the 2017/18 fiscal year, when the election after next is scheduled.

Building to an annual estimated cost of $273 million a year by 2020, the policy will replace the current parental tax credit, at a cost of $15 million a year.

Some 59,000 households would become eligible for the first year payments, while around 63,000 would receive the one and two year old payments.

The package also confirms Labour's intention to extend paid parental leave entitlements from 14 weeks at present to 26 weeks, as proposed in a private members' bill before Parliament, but which the government will not support. The fiscal impact of that decision is calculated at $125 million a year by 2020.

The plan also sees highly vulnerable children entering early childhood education earlier than age three from next year, building from $5 million initially to an annual cost of around $70 million by 2020.

The policy also includes plans to expand the availability of early childhood centres, offer free antenatal classes for expectant parents, and boost the availability of visiting services, such as Plunket, for parents needing support.

"We want to send a message that we value the early years," Mr Cunliffe told a packed secondary school hall in Kelston, West Auckland. "We know the start a child has in life affects all of us in the long run, and the more support we can give parents during those critical years, the better off they will be."

In a reference to Prime Minister John Key's announcement last week of bonus payments for the country's best teachers to keep them in the profession and spreading their knowledge, Cunliffe said: "If a kid starts without the basics in place, just paying bonuses to a few of their teachers isn't going to turn it round."

He dismissed current economic conditions as "a slight uptick in growth" that would be praised by "a few vested interests with rock star lifestyles."

Rising interest rates would put additional pressure on families, Mr Cunliffe said. People paying $500 a week now on a mortgage at 5.75 percent annual interest would see that payment rise by $136 a week if interest rates rose to 8 percent.

"The rich are getting much richer, the middle is struggling and the poor are going backward."

Cunliffe's State of the Nation speech completes a trifecta of election year throat-clearing statements from the three largest political parties. National hung its hat on a plan to spend $359 million over four years to incentivise top teachers and spread their influence more widely through the public education system.

The Green Party announced education policy over the weekend to create health and social service clusters around schools in low income areas.

(BusinessDesk)