Christopher Luxon promises childcare rebates for any family earning less than $180,000

If the public service stops hiring so many consultants, National Party leader Christopher Luxon says it could afford greater childcare subsidies.

During his State of the Nation speech on Sunday, Luxon promised he would order the public service to cut $400 million from its consultancy bill. That money, he said, would fund a new childcare policy, giving a 25% rebate to most families’ childcare bills.

The childcare rebates were expected to cost about $250m per year and would be available per household – not per child.

Luxon used his speech to accuse the Labour Government of being distracted during cost of living, crime, health and education concerns.

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National’s new childcare policy, which it calls Family Boost, would give a rebate of 25% on childcare costs up to an annual limit of $3900 for families earning under $140,000. This would mean up to $75 per week to offset childcare costs.

Families earning between $140,000 to the cap of $180,000 would be eligible for a progressively smaller rebate, but those on $180,000 or above wouldn’t get anything.

In one of her final major policy announcements as prime minister, Jacinda Ardern also focused on childcare as a response to the increased cost of living.

She announced a $190m expansion for the Ministry of Social Development’s childcare subsidies, so that half of all families would be eligible for a level of subsidy. Labour’s subsidies were only available for families earning under $109,000. The expanded subsidies were set to become available next month.

Luxon dismissed concern that giving tax rebates for early childhood fees would lead to an increase in prices, given the majority of children attend for-profit childcare centres. He said the “really competitive” ECE market would mean prices wouldn’t go up.

”I think early childhood education providers will know that they try and pump up fees, they will lose families,” deputy leader Nicola Willis said.

Luxon claimed his new policy would be paid for by slicing $400m per year off the Government’s annual bill from consultants.

“Family Boost will cost $249 million per year and will be fully funded from money saved reversing the blow-out in wasteful spending on public sector consultants overseen by Chris Hipkins as Public Services Minister,” he said.

As he accused the Government of paying more without getting better results from the public service, Luxon reiterated a decade-old claim by Hipkins.

“The culture of public servants rebranding as contractors – only to do the same job at twice the hourly rate – is chronic in Wellington,” he said.

The $400m he wanted to save on consultancy bills equated to just a quarter of the annual bill charged to taxpayers from firms such as KPMG, EY, Deloitte​ and PWC. Luxon smiled when asked about those private-sector advisors potentially losing work.

“I feel very good about that, actually. To big time big partners of consulting firms up and down New Zealand: ‘Thank you very much, but your money is going away, and we’re giving it to hardworking families who deserve it and are struggling with the cost of living’,” he said.

Early Childhood Council boss Simon Laube​ said National’s proposed rebate was important for encouraging parents to enter the workforce and get their young children into education.

He also said a tax rebate, rather than MSD-administered subsidy, wold be easier to access and come with less stigma.

National’s speech received half-hearted praise from ACT leader David Seymour, who called it a “good start” but said the policy was “too easy for Labour to steal”.

While Green Party co-leader Marama Davidson said National failed to see early childhood education as a social good, and viewed it only as “a work expense”.

She said the party should have committed to increasing fees-free early childhood education.