8 Nov 2011

Doubt cast on affordability of Labour's children's policy

9:52 am on 8 November 2011

Critics are raising doubts about the Labour Party's ability to fund its $2.6 billion children's policy.

Labour wants to extend Working for Families entitlements to beneficiaries and double the amount of paid parental leave to 26 weeks.

The party says its policy would help lift 150,000 families out of poverty.

Labour resisted including beneficiaries in Working for Families entitlements when it was in government and the Child Poverty Action Group says the change of stance is gratifying.

The charity's director, Janfrie Wakim, says beneficiaries need the tax credit more than anyone.

"The vast majority of people are on benefits for a short period of time. That's when they need the help most and when their children are young of course (there is) the greatest need."

The Council of Trade Unions also supports the policy, saying it will ease pressure on women to go back to work too soon.

However, Business New Zealand is casting doubt on the affordability of the plan.

Chief executive Phil O'Reilly says it seems like an enormously complex way to give beneficiaries more money.

He says while extra paid parental leave would be supported by some employers, it would increase costs for businesses.

Mr O'Reilly says much could happen to the global economy before any changes took place.

United Future and the National Party have also questioned how Labour intends to fund the changes, which would be introduced over seven years.

"Trust me, I've been looking for three years and there's no hidden buckets of money that we can spend in this area," said National's social welfare spokesperson Paula Bennett.

United Future leader Peter Dunne also says extending Working For Families to beneficiaries would remove the incentive for beneficiaries to get into work.

Labour deputy leader Annette King says the party has done its sums and would be able to make the changes.