Media Release: Parental Tax Credit Discriminatory

MIL OSI – Source: Child Poverty Action Group –

Headline: Media Release: Parental Tax Credit Discriminatory

14 July 2014

Child Poverty Action Group says the government should disentangle support for children from work incentives for parents, and support all low income children equally.

CPAG welcomed recent concern about the highly discriminatory Parental Tax Credit for new-borns, which Metiria Turei called, “one of the most astonishing examples of Government punishing children simply for being poor that I’ve ever seen”. 

This discriminatory policy is not new, it was introduced in New Zealand in 1996, when the parental tax credit first appeared.   National is increasing this payment for those who don’t get paid parental leave, from $1200 to a more generous $2400 but will continue to exclude the poorest new-borns, whose parents are judged not to be doing enough paid work.

CPAG says punishing children for simply being poor is a much bigger problem than just the Parental Tax Credit. Co-convenor Janfrie Wakim said, “The truth is a very large part of New Zealand’s tax-funded payments to relieve child poverty are not available to the very poorest children whose parents are reliant on welfare support benefits. 

“National says families must be kept very poor and denied support for their children to give them an incentive to get off the benefit system and into full time work.  This flawed and judgemental thinking is not part of the family tax credit system in Australia, where all low income children are treated the same, with much better outcomes for children.”  

New Zealand has poor policies to support struggling families. The children most at risk and in need of additional support are denied extra help from the Parental Tax Credit when they are new-born.  Based on the same flawed thinking, their families and many thousands of other families with older children also miss out on at least $60 a week of the In Work Tax Credit. 

Despite the name, the In Work Tax Credit is just part of the weekly payment to the caregiver to help with the needs of children.  It is a major problem that families have this taken away if they lose work in personal or natural disaster or in a recession, or they are unable to leave the benefit system for enough hours of paid work. The needs of low income children do not change when parental circumstances change.

So while the poorest families currently miss out on about $16m of the Parental Tax Credit they are also denied about $450m of the more significant In Work Tax Credit. 

“There must be a total rethink of Working For Families as it does not work for the poorest children,” said Janfrie Wakim.

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