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www.mccully.co.nz -8 July 2005


8 July 2005

(#212) A Weekly Report from the Keyboard of Murray McCully MP for East Coast Bays

The Childcare Debate

The announcement by Don Brash that the National Party would introduce a form of tax deductibility for childcare costs opened a whole new political debate this week. The initiative left the Sisterhood scrambling for responses, the Ninth Floor Beehive flunkies inventing straight out untruths, and the two major political parties set to debate two very different courses ahead in terms of childcare policy.

There are 280,000 New Zealand children under the age of five, 180,000 of whom attend some form of childcare centre. For many mothers, working is an economic necessity. And childcare is a necessity to be able to work. Yet the cost of childcare is high. For many working mothers, there is precious little left from their salaries once tax and childcare costs are met. For single mothers, the numbers are especially tough.

But what we hear you ask, about the families who choose to have one parent stay home to look after the kids? A fair point. And one to be dealt with through mainstream tax reductions.

Australia has recently gone down the path of providing a tax rebate for childcare costs (indeed, at $4,000 per child, a very generous one). And if we want to retain our brightest and best skilled workers, childcare costs, like tax rates, are simply one more area in which New Zealand must get competitive. Otherwise, on current trends, that 600 New Zealanders who shift to Australia every week, will be over 700 a week within a year.

The Policy

The policy announced by Dr Brash is simple: if you are a working couple or sole parent and spend money on childcare costs, then keep your receipts and you can claim 33% of up to $5, 000 worth of those costs (ie: $1,650) as a tax refund. Why assume a rate of 33% rather than using the top rate of tax actually paid? To avoid a whole bunch of people who don’t currently need to file a tax return having to do so to claim their refund. In effect, the National Party plans to recognise that the cost of childcare for families where two parents work, and for sole parents, is an actual cost of going to work.

The scheme will cover childcare centres as well as informal childcare arrangements like nannies (provided they are paying tax on their earnings). And it will operate on top of the existing childcare subsidies for parents and sessional allowances for childcare centres. So there will be no losers.

The cost has been budgeted at $160 million a year. But there is no reliable data on the numbers of nannies who are being paid under the counter in after-tax dollars. A scheme which provides some incentive to declare those payments (because the tax deduction can only be claimed if tax is being paid by the carer) could have an interesting effect.

More interesting is the political effect. Because the Sisterhood has already laid out its own Stalinist plan for childcare in the years ahead. And this week’s announcement will give parents two very different policies to choose from.

The Stalinist Sisterhood Plan

The Sisterhood has unveiled its own plan for childcare: 20 hours of free attendance for 3 and 4 year olds at community-based centres that are teacher-led (not that we have any problem with such centres, but why shouldn’t parents have a choice?). All of the above to be delivered by 2007. But there’s a catch. Well, there are several catches actually.

First, the 170,000 children aged under three are not eligible. For their parents, the cost of childcare will continue to be a major drain on their after-tax income.

Second, 20 hours of kindergarten just won’t dovetail with their hours of work, for many parents. So for those parents, Mr Mallard’s solution just isn’t viable.

Third, only the childcare centres which meet Mr Mallard’s prescription (and, of course, the prescription of the teacher unions) will qualify. Essentially, that means not for profit kindergartens or other “teacher-led” not for profit centres. So the 45,000 children currently enrolled in private childcare centres will only be funded if they move to a kindergarten-type centre. In most cases, to a centre that does not exist.

Oh, says Mr Mallard. Well, I will go and build one. Seriously. Mr Mallard’s policy is to build enough kindergartens/not for profits in order to put all of the private childcare centres out of business. All of this by 2007. Now, doesn’t that make sense?

The Sisterhood Knows Best

Mr Mallard’s loopy early childhood policy should be no surprise. Because it is based upon the same bunch of prejudices which drive his whole education policy. A bunch of prejudices he shares with the teacher unions who are his regular partners in educational crime.

Mr Mallard introduced zoning because he believes parents are too stupid and irresponsible to be able to choose which school to send their children to. Mr Mallard has put a clamp on the numbers who attend integrated Christian schools because he hopes to eventually put them out of business. Mr Mallard really really hates private schools and is intent on starving them of resources. And Mr Mallard even stoops so low as to use the availability of school bus services as a means of enforcing his Stalinist views.

Mr Mallard and the teacher unions think education is all about them. Dr Brash, Mr English and the National Party think it’s all about parents being able to choose the best education for their children. What a good thing it is that New Zealanders have such clear choices in the upcoming elections.

Another Mallard Blooper Perhaps the stress is starting to show on poor old Trev. Get a load of this press release last Tuesday announcing a second round of the Discretionary Grant Scheme:

“I am pleased that more centres will be supported through the second round of funding announced today. This is on top of the funding already granted in the first round, which I will be announcing soon.”

Hmmm. The second round comes before the first round. This from the Minister in charge of literacy and numeracy skills in our schools.

DomPost Sisterhood Connection

The announcement of National’s childcare policy made front page lead in most of the nation’s newspapers. In addition, the NZ Herald devoted half of page three to analysis of winners and losers as well as comment from interested players.

The exception, of course, was the DomPost, which relegated the story to page eight, where the coverage was minimalist, grudging and practically non-existent.

Readers of the DomPost (who will be rapidly dwindling in number on the strength of this performance) should therefore be aware that the DomPost story was written by a recent refugee from the Sisterhood: one Deborah Diaz –until recently Press Secretary to former Attorney-General Margaret Wilson. How very very interesting.

Letters from St Helen

Had a letter from St Helen in the past few days? One extolling the virtues of the Labour Party and selling a case for their re-election? Don’t worry. You’re not special. Tens of thousands of letters have been sent targeting small and medium sized businesses, as well as voters aged over 60 (and after this week, here’s guessing parents of pre-schoolers will be next).

Dozens of the offending letters have been forwarded to the worldwide headquarters of mccully.co from offended recipients. Funded through the Parliamentary Service Commission, the letters appear to breach the Service rules with their blatantly political tone. So, in the first instance the matter has been raised with Madam Speaker.

Tens of thousands of dollars of taxpayers’ cash have been poured into the latest mail out. But that’s a drop in the bucket by comparison with the millions of dollars of taxpayers’ money the Sisterhood are spending on their re-election.

Labour Ad Firm Grabbing TVNZ Business

The worldwide headquarters vast legion of spies is keeping the activities of Labour Party advertising agency Assignment, under close supervision. Assignment recently picked up the TV One account. And now, the Bow Tie and Ballet Tights Brigade has put the whole TVNZ advertising account up for grabs.

The word we hear is that the Assignment pitch is favoured by TVNZ key players. The Sisterhood would see the prospect of their very own agency being appointed to work with the state broadcaster on the eve of an election as just too good to be true. So let’s just see whether TVNZ have completely taken leave of their senses.


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