Media Release

Paid Parental Leave Would Cost At Least $700 Million Annually

Wednesday, September 9, 2009

The Families Commission today called for the government to extend Paid Parental Leave from 14 weeks to 13 months. Welfare commentator Lindsay Mitchell says this move would cost New Zealand at least $672 million a year by 2013.

"Based on Treasury figures, the current scheme cost $135 million in 2008. Extending entitlement from 14 weeks to 13 months would push this cost up to $540 million. Based on Treasury's current projections, this would further increase to $672 million by 2013. Add to this the month's paid leave the Families Commission wants for fathers/partners , and the cost would rise to over $700 million."

Mitchell cautioned, however, that Treasury doesn't always get it right. "Their initial projected costings for PPL were far too conservative. In 2003 Treasury estimated PPL would cost $74 million by 2008. In fact, it climbed to almost double that figure."

The Families Commission says that most developed countries paid parental leave for at least 12 months yet according to the OECD, the average period is 18 weeks, just four more than New Zealand. "As well, many of the countries that provide longer entitlements than New Zealand do not have long-duration single parent benefits. In Sweden , for example, all parents get the same paid leave entitlement but all are expected to return to work when the entitlement ceases."

"At a time when welfare costs in other areas are rising rapidly, New Zealand simply cannot afford to follow the Families Commission recommendation."

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