ACT on paid parental leave

ACT’s newsletter comments:

Paid Parental Leave
David Seymour debated Sue Moroney on Q + A this weekend.  Moroney favours extending paid parental leave to 26 weeks, then 52 weeks, then…. who knows?  It is classic Labour playbook, more tax and dependency.  Seymour is negotiating with the National Party for premature babies, multiple births, and babies with special needs.

Social Insurance
Prem, multiple, and special needs babies are perfect candidates for the taxpayer to give something extra to.  Why?  There’s no moral hazard, unlike many state benefits (think claims to ACC for a ‘bad back’)  there is no way to deliberately take advantage of the scheme.  It is easy to tell if the event has happened (count the weeks, count the babies, diagnose the condition).  The event is unexpected so difficult to plan for.

Vote Buying
The opposite of social insurance is showering an ever increasing amount of money on a particular cause or group.  Labour introduced PPL in 2002 (an election year) then extended it in 2004 when National’s polling recovered.  Jacinda Ardern claims it was fiscally responsible to do so because the Government of the day was in surplus, but Sue Moroney introduced her bill for 26 weeks PPL when the government was $9 billion in deficit.  There is no fiscal responsibility or principle behind Labour’s demands, but they know that it’s a feel good measure that will win votes.

Greatly Exaggerated Importance
60,000 children are born in New Zealand every year but only 26,000 parents take paid parental leave so it is not even close to universal. Even if it was, having kids is now a 20 year proposition and an extra four weeks of $500 payments does not address the main challenges faced by would-be parents. 

I thought that last piece was worth highlighting. I think it is an extra eight weeks being proposed, but the argument is the same.

The impact on a family of 26 weeks PPL instead of 18 weeks is quite minor. It is expensive to the taxpayer but minor in terms of the long-term cost of affording children. Politicians like to do stuff such as extend PPL because it is taking money away from some people to give to others, so they look caring.

But other stuff has a far far bigger impact on families, and their ability to afford children – the level of interest rates, the cost of living, the level of jobs available, what wages are etc.

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