Lindsay Mitchell looks at Social Welfare Reform
in New Zealand and Overseas
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Extending Paid Parental Leave Should be Rejected

10 April 2012

At a time when the government is struggling to get the country's borrowing under control New Zealand cannot afford to spend more on extending Paid Parental Leave (PPL).

Welfare commentator Lindsay Mitchell said today that Labour MP Sue Moroney's private member's bill to extend PPL from 14 weeks to 6 months should be rejected by National and its support parties.

"Since PPL was introduced in 2002 the uptake has exceeded predictions.
Like any welfare benefit, once introduced, they become difficult to control. Spending on PPL increased 175 percent between 2003 and 2010 yet the number of babies born increased by only 14 percent. (In the past five years the figures have been respectively 60 percent and 7.9 percent.)"

"In economic defence of her bill, Moroney argues that it will create employment as 'employers engage staff to replace those on PPL.' On that basis it would be equally valid to claim the bill will reduce employment when employers shed staff as those on PPL return to the workforce. In reality PPL is a hiatus from the workforce paid for by the taxpayer. It is a cost to the economy."

"If this bill is passed it will cost a minimum of $300 million by 2014, double what it is now. However, it is likely to be significantly more based on experience to date."

Lindsay Mitchell
Welfare Commentator
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