6 Nov 2022

National says government's childcare subsidy extension 'band-aid economics'

6:58 pm on 6 November 2022
National Party leader Christopher Luxon

Christopher Luxon says the government's latest policy is "a very small package". Photo: RNZ / Angus Dreaver

National Party leader Christopher Luxon says the government needs a proper plan to tackle inflation and rising costs and its latest policy announcement is "band-aid" economics.

The government today announced it would spend $189 million over four years on an extension of policy that eases the cost of living for families.

At Labour's annual conference party leader Jacinda Ardern said it would mean more than half of all families with children would be eligible for subsidised childcare assistance from next April.

But Luxon said the $189 million extra for childcare subsidies was a band-aid policy that did get to the root of the issue.

"We support it, it's fine as it is but what I'm saying to you, it's a very small package that makes a terrible situation just slightly better for a few more people.

"The real issue is that the government needs to have a proper plan to get to the underlying causes of what's driving inflation."

Luxon said if the government could adjust income thresholds for inflation, it should do the same for tax thresholds.

ACT leader David Seymour said Labour was looking to help 10,000 New Zealanders with the cost of living crisis when it was hitting five million New Zealanders.

The policy would also be inflationary if it did not make it easier to get more early childhood teachers and workers into New Zealand, Seymour said.

"If Ardern really wanted to help with childcare, she'd let more teachers into the country. Instead, by giving subsidies to a few, they'll push up prices for everyone else," Seymour said in a statement.

Good for families, but teachers need more, union says

The primary and early childhood teacher's union, NZEI Te Riu Roa, said the government must match childcare education subsidies with actions to improve working conditions for teachers.

Union representative Virginia Oakly said, while it was good news for parents, the government needed to do more for teachers.

Early childhood teachers needed pay parity with their primary counterparts to reduce high turnover rates, she said.

The ratio of children to teachers also needed to be improved, she said.

Increased access was great but children should be getting quality care too, she said.

The government's expansion of childcare assistance needed to happen alongside mandatory pay parity, Oakly said.

The union has been petitioning the government for early childhood teachers to get pay parity with their primary counterparts for more than 15 years.

In some cases there was a $30,000 gap in salaries between the primary and early childhood roles and the union, she said.

The Council of Trade Unions said expanding government childcare assistance would be a big help to many working families.

Council economist Craig Renney said it was a sensible response to cost-of-living pressures.

"For many families it's one of the biggest expenses that they face and we know we have cost of pressures, we know we have higher inflation and you know this will be real help for lots of middle and low income families in New Zealand, in particular it'll be a real help for single parent families."

Childcare could costs hundreds of dollars per week and was often only second to a mortgage, Renney said.

It was a better use of money than the National Party's proposed tax cuts and would allow parents to return to work or take on more hours, he said.

Get the RNZ app

for ad-free news and current affairs