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Q+A: David Seymour - Paid parental leave concessions costs

Q+A: David Seymour - Paid parental leave concessions will cost $5-$10 million

Q + A

Episode 827

SUE MORONEY, DAVID SEYMOUR

Interviewed by CORIN DANN

CORIN Well, Sue Moroney’s bill to extend paid parental leave to 26 weeks will be back in the house in a couple of weeks’ time. And this time, the Labour MP could just have the numbers. It, of course, all hinges on Peter Dunne. Now, one MP who is not supporting her is ACT leader David Seymour, who is seeking his own changes in government-backed legislation. Sue Moroney and David Seymour join me now. Good morning to you both.

SUE Good morning, Corin.

DAVID Good morning, Corin.

CORIN Sue Moroney, if you get this bill through and the government doesn’t veto it, they could be looking at having to spend, what, it’s debatable, but $140-odd million extra a year. What would go out of next year’s budget to accommodate that?

SUE Well, the numbers are highly debatable. I think last time we had this bill before the house, the minister of finance had inflated the figures, doubled them.

CORIN So let’s say your figure, which was, what, $240 million over three years, something like that. Okay, let’s go with that. What would go, because you’ve got huge demands on wages, all sorts of things at the moment. What would be replaced?

SUE Well, what we’ve got a bill that’s cheaper than it ever was, actually, it’s only eight weeks more. And every time the government is forced into increasing paid parental leave, my bill gets cheaper. Now, we had parliamentary support from even at the time their revenue minister. At the time we were at the height of the global financial crisis, so now we’re actually in a time of albeit small economic growth.

CORIN What would you sacrifice, because it is a priority thing.

SUE Well, we’re in a time of economic growth, albeit small, and that’s an opportunity to actually do the right thing and make this very, very smart investment in our future.

CORIN So have you looked into anything that could be replaced? Or would you borrow for it, for example?

SUE Well, I think it’s a better priority than a flag referendum, for example. And there are many other examples of things that the government’s doing that is quite wasteful, and it would be better spent on supporting families for the future of New Zealand.

CORIN Right, David Seymour, do you accept the premise of paid parental leave benefits children, benefits families, benefits our society?

DAVID Oh, absolutely. I mean, there’s no question that parents being at home with their children is a positive thing. However, there’s actually a lot of positive things that the government does, and as you’ve alluded to, there are trade-offs. I mean, you take, for instance, the idea of the flag referendum, $26 million, that’s enough to pay for paid parental leave for 26,000 parents for one week. Now, just a second - if you look at the number of parents that actually take it up, 26,000 parents a year take it up, 60,000 babies born every year, so this is actually not even something that affects all parents. What does affect all parents is two things in our generation. One is the price of housing – I think Labour should be doing more on that or offering to do more on that – another is tax. And if you want to make some trade-offs, we could raise the age of super by two months, just from 65 to 65 years and two months to get superannuation.

CORIN Okay, but the basic premise is you support the idea of 26; you seem to be saying, again, it’s about trade-offs.

DAVID Well, look, I think wherever you make it, I think one thing that Sue is absolutely right about is that it should be proportional to negative.

CORIN Well, is 26 too much or not for you?

DAVID I think you could actually make the argument either way, but the fact is, it has to be fiscally responsible. When Labour introduced this in 2002 in an election year, we were in surplus. When Sue Moroney introduced her latest bill in 2012, the government had a $9 billion deficit.

CORIN I just want to get this clear, though. So you agree that it has huge benefits for families, for mothers, for the breastfeeding – all those sorts of things. Isn’t that arguably one of the most important things for any country to get right? This is the building blocks of our country, so what’s the problem if you cede that 26 has some merit?

DAVID I think it’s been overblown. First of all, is it fiscally responsible? And I’m not so sure that Labour are thinking about this in a fiscally responsible way. But second of wall, bringing up kids now is a 20-year proposition. So an extra four weeks, while nice, is not addressing the overall issue. For my generation, it is housing, it is tax, it is the liabilities to older generations through things like super. Those are the things that are making it hard to bring up kids in New Zealand. I think that an extra four weeks additional dependency, additional tax - classic Labour playbook, but it’s not actually solving the real problems that young New Zealanders have at the moment.

SUE Well, it’s better than nice, though. Because what we know is it’s economically smart as well. Because if we actually invest in the time when that baby’s brain development is really growing and we get the bonding and attachment right between parent and baby, what we know is we can save a lot of taxpayer money on healthcare, on remedial education, on even building more prisons. This is what the international evidence tells us, and it’s why most of the OECD countries invest much more heavily in this area than what New Zealand does.

CORIN David, do you agree with that? Because I have heard you this week arguing that that’s not the case.

DAVID Well, you could make the argument either way. I mean, people make the argument that you should be going all the way up to one year. So, look, you can pick a number of different points and say this is the critical point in development; the reality is that bringing up kids is a 20-year proposition. The government cannot solve all problems. What you really need is parents that are in a position to earn enough money to buy a home and to be able to support their kids over a long period of time.

CORIN I heard you say that this week as well. I mean, it’s not realistic to expect people to wait. They’ve got student loans. They’re desperately trying to get into houses anyway. Children come along – that’s life. Why should they have to wait?

DAVID Well, if you think that giving people an extra four weeks paid parental leave is going to make it okay to bring up kids over 20 years, then you’ve got a whole lot more surprises coming, so we actually do need to look at a wider range of issues.

CORIN But doesn’t that allow – and let’s be honest here – doesn’t it really allow a woman who is in the workforce to know that she can take that time off and go back to work? That’s the crux of it, isn’t it?

SUE Well, that’s the real benefit, is that a lot of employers came before the select committee and they said they now support paid parental leave because what they’ve seen is they put a big investment into their staff, and they want to retain them, and paid parental leave does exactly that – it means that women are much more likely to come back to the workforce and actually use the skills that the employer’s already invested in.

CORIN Why should a lawyer or a doctor get paid parental leave? Why don’t you means test it?

SUE Well, actually, when you start means testing things, sometimes it costs more to do that and administer it than you save in the original scheme.

CORIN It’s the principle, isn’t it? I mean, if they can afford to pay for it and they have the means to do that, why not use that money for people at the lower end who really need it more?

SUE Well, as I say, sometimes it’s actually a false economy when you think that sort of scheme actually can end up costing more.

CORIN Have you done any work on it? How much does it cost?

SUE Oh, look, we know that when we’ve done that in the past, when we’ve gone from a universal entitlement to a means-testing entitlement, that often, the administration of that scheme costs more than you save.

DAVID Sue’s actually correct about this, I believe. Means testing, in principle, always sounds great, but when it comes to the actual administration, the main people who benefit from more complicated benefits schemes are usually tax accountants.

CORIN But aren’t you proposing something similar? I mean, you want to break out the paid parental leave scheme into separate categories and have higher needs.

DAVID No, the reason I’m so supportive of Sue’s initiative and I continue to pursue this and try and push the National Government to do this is that if you have twins, that’s pretty obvious. There’s not a lot of room for cheating on whether or not you have twins.

CORIN What’s the administrative costs if you break that out? What’s the difference?

DAVID Oh, very simple. You just have to say, ‘I’ve got twins. I’ve got two birth certificates.’ Very different from trying to prove how much somebody’s income is in a particular year. And we know this from all tax-compliance issues. I’ve had a baby prematurely – also a very very easy thing to measure. Babies with special needs – also a very easy thing to measure. So I believe in those cases, there actually should be something extra, because I think if we’re going to have government benefits, they should be targeted and proportional to need wherever possible, and that always means that you have to take into account the administration costs.

CORIN Would you accept that as a compromise move if the government was to veto your bill?

SUE Oh, look, it was a proposal I took to parliament in February this year – exactly that proposal. And the National Party voted against it. And so did David in the end. And here’s the great shame about it, is that if David had voted for my bill then, then those families would be getting that entitlement right now, from the 1st of July. So that’s 1700 families that are going to miss out on this because of the politics that the National Party paid over this.

CORIN David, your response to that? You could have voted for it then.

DAVID Oh, I could well have. I didn’t because generally, I’ve been elected to support the current government. However, I do believe that Sue’s policy was a good one, and so I’m doing everything I can to ensure that the National Party has concessions for people in those categories. I don’t know if I’ll get all of them, but I know I’ll get at least one of them, possibly two.

CORIN Why can’t you get all of them?

DAVID Well, their argument is that in the case of babies born with special needs and twins and triplets, there are already some benefits available. We’re having that argument. Where we land, I’m not exactly sure yet, but certainly, the principle of targeted and proportional benefits is something that I’m pushing very hard on.

SUE And if politics hadn’t been played over that and David had been allowed by his coalition partner to vote for that bill, those families would have it right now, all of them.

CORIN We’re getting there, though, aren’t we? We are getting there. So it’s possible. I just want to know, what is it going to cost? Because the government’s saying it’s going to veto Sue’s bill. What would your concessions cost?

DAVID Oh, in the $5 million to $10 million area, so compared to hundreds of millions, very small.

CORIN Aren’t you giving National the classic out here, where they can turn around, veto Sue’s bill, say, ‘Oh, look, but we are doing something’?

DAVID Well, I actually believe it’s a good policy. I believe the reason that we pay tax is for people who have unexpected needs, and if you have more babies than you expected, you have a baby earlier than expected, those are unexpected needs. And I believe that the welfare state should actually support that. What I’m opposed to is an endless tax and transfer and continual expansion. Because I believe that one of the real challenges that people of my generation trying to save up, prepare and have kids is actually the amount of tax they are paying.

CORIN Okay.

SUE And the way that people can afford to have children these days is to have two parents working. That is the situation. That’s why all families actually should have that entitlement.

CORIN Regardless of what happens with this bill, will you push for it to go to one year? Would you come back for another go?

SUE It is Labour’s policy, actually, to have 12 months paid parental leave, but we don’t believe that’s affordable right now. And so we’ve been very financially responsible about promoting 26 weeks, which actually is based on the World Health Organisation’s goal for exclusive breastfeeding. And that’s going to have enormous health benefits for our country.

CORIN Will it still be affordable, 26 weeks, if we enter into a recession, if the economy was to head into a downturn? These are the things you have to think about, don’t you?

SUE Well, can we afford not to? Because if we don’t do this, then we start spending more money on bad outcomes like bad healthcare, like remedial education, and like building more prisons. The government put more money into youth mental health the week that my original bill was drawn. Now, that’s good, but actually, what about investing early, so that children don’t even get to that stage?

CORIN All right, we have to leave it there, but thank you very much, Sue Moroney, David Seymour.

DAVID Thank you.

CORIN I appreciate your time on Q+A.

SUE Thank you.


ENDS

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