This morning I announced that the next National Government will introduce a new tax deduction for pre-school childcare costs. This tax deduction is designed to ease the financial pressures on parents, particularly on second-income earners and employed sole parents.

I made it very clear early in 2004 that family tax issues were National's top priority in the area of tax. I reasserted that in a major speech in December last year. It has always been our intention to move in this area.

This policy recognises childcare costs as a legitimate work expense for second income earners and sole parents.

Our tax system is very tough on families, and especially tough on mothers. Most people simply have to get a job to get their families established, even though many would rather not work outside the home when their children are young.

It is another of the areas where New Zealand has a much harsher tax regime than does Australia, where there are now large childcare tax rebates.

By not recognising childcare costs as a legitimate work expense, we leave many second income earners (usually mothers) earning derisory amounts after tax and childcare costs. That becomes a barrier to getting back into the workforce, a barrier to staying in touch with the workforce, and a huge barrier to families getting ahead in life financially.

For sole parents it is even worse. Numerous studies have shown that many sole parents are effectively locked out of the workforce, because by working they are actually worse off.

National will recognise as deductible, for taxation purposes, the pre-school childcare costs of working parents up to $5,000 per child. Costs would be deductible at 33% of out-of-pocket childcare costs.

To put that simply, one-third of childcare costs will be able to be claimed back. That would amount to a tax refund of up to $1,650 per child.

Thus, for example, a working couple with two pre-school children, paying $10,000 or more in childcare costs per year, would be able to claim a $3,300 tax refund.

The new policy would take effect on 1 April 2006, and would cost an estimated $160 million per year.

More details and examples can be found on the National Party website.

This deduction will be available for all forms of pre-school childcare - be it that provided by registered child care centres, or informal childcare arrangements such as nannies and other home-based care.

What I announced today is just the start. In Government, we will be reviewing the whole area of family taxation, in particular the pressures on single income families which have incomes outside the range supported by Working for Families, and which have one income supporting two adults and several children. National will also be working to provide a less bureaucratic and complex system than WFF.

The next National Government will be focused on providing better incentives for parents and working people. We want people to be able to get ahead in life from their own efforts, not be dependent on welfare benefits to get by.

National Party annual conference

Ten days ago, the National Party had one of the most successful conferences in its history. Buoyed by recent polls suggesting that National and Labour are now running neck and neck, the mood was one of determination to rid New Zealand of the Labour-led Government of Helen Clark. Nobody was feeling complacent. Everybody realised that there was much hard work ahead. But we all knew also that a National win in 2005 is now very much on the cards.

For me, the best thing about the conference was the way in which it enabled us to show-case the depth of talent in our team. The average Parliamentary experience of those who gave the seven major speeches was almost 10 years. Streaming video of these speeches can be viewed at http://www.nationaltv.co.nz.

After the election, we will have no fewer than 10 members of the Caucus with previous ministerial experience, and of course a large number of others with very considerable experience outside Parliament. In 1999, when the Labour-Alliance Government was formed, they had only six people with prior ministerial experience.

Labour in a full scale panic

It is becoming almost comical to see Labour in full-scale panic mode. Helen Clark and her ministers are beating a retreat on a host of fronts, hoping nobody will notice.

When it became clear a week or so back that farmers were very angry about Jim Sutton's proposal to allow members of the public to wander across farmers' land - with Federated Farmers attracting nearly 30,000 signatures on a petition opposing such unfettered access in a matter of days - he abruptly announced that he would not proceed with this proposal before the election. But Michael Cullen's Budget in May made provision for $2 million a year to implement Jim Sutton's proposal, so there can be little doubt that Labour would continue with their proposal if they won the election.

Putting the decision off until after the election is one Labour strategy.

Another is to simply make a change, but dream up some specious reason for the sudden change.

An example of that was Michael Cullen's miraculous discovery of half a billion dollars for extra road construction. I applaud extra money being spent on road construction but it is less than six weeks since Michael Cullen said he couldn't afford more than an extra $100 million for roads and made it clear that there was no scope for tax relief for hard-working New Zealanders. Now he has "found" an extra $500 million, although it is pretty clear that this "windfall gain" is in fact tax paid by banks which is still very much in dispute. There is a real possibility that the $500 million will need to be paid back to taxpayers after the courts have decided whether it is liable to be paid at all. The reality is that they got it wrong in the Budget, and have had to come up with some excuse to spend more on infrastructure. So right answer (eventually) but wrong reason.

Apart from all this back-tracking on policy, the other leg of Labour's strategy is wild misrepresentation of National policy. Most of Labour's claims are so ludicrous and over-the-top that it is difficult for anybody to take them seriously.

We can expect plenty more of this as we near the coming election. Labour will focus on fringe issues and scare tactics.

National will focus on the issues that matter to mainstream New Zealanders: getting better education for our children, tax relief for working people, better value for money from public services, a less patronising and politically correct approach to Treaty issues, better law enforcement and tougher sentencing, and a less complacent approach to welfare dependency.

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