I am a huge fan of Jane Clifton in the Listener. She is insightful, pithy and witty and takes no prisoners in pricking bubbles of self-importance. I well remember a brilliant mocking piece on Third Way politics that was better than any learned treatise on the topic. Her articles with the accompanying cartoons by Chris Slane are the highlight of my weekly read.
Trouble is, sometimes she is dangerously wrong. When she repeats a myth as if it is true, it further cements the myth into the culture- with a lot more credence than if it came from other less talented writers. And so it was with this throw-away line in the Listener August 25th 2018.
Her uncritical belief that Working for Families (WFF) is some kind of subsidy to employers, i.e. ‘credibly cited as a cause of persistently low wages’, shows the power of the recent myths perpetrated by Bryce Edwards, Matthew Hooton, and Eric Crampton and others. For Hooton WFF is some great communist plot! While I have tried to counter their story- here and here and here clearly, such efforts have been completely ineffective.
Blaming WFF for low wages is a bit like pointing to our high rate of suicide and blaming it on the existence of the mental health services. The true cause of low wages is found in casualised hours, precarious employment, automation, globalised labour markets and falling wage share of output due to loss of union power.
A generous system of WFF for children is as necessary as a generous state pension for the old. Its purpose is to protect the interests of children regardless of what parents earn. No wage system in the 21st century can be credibly based on family circumstance but that appears to be what Clifton and others hanker after so unrealistically.
It is not fair to say the left and the right are putting government under pressure to “rethink working for Families”. The CTU for example is fully supportive of well-designed and generous WFF tax credits as the proper way to reflect the lower ability to pay tax when there are dependent children in the family. Some of the other unions may have parroted the Clifton line but even the living wage movement see how vital well supported tax credits are—without them the living wage rate would have to be much higher, and those without adequate hours, or no hours of paid work would face devastating child poverty. When CPAG says they want WFF rethought they mean that it ought to be more inclusive and more generous not less.
It is a myth too that Working for Families arrived fully formed with Labour: “a Labour-instituted policy’. Commentators forget that all their mothers had the family benefit and many also had additional Family Support tax credits. Following Ruth Richardson’s mother of all budgets, Family Support was eroded and neglected, and child poverty soared. In 2005, WFF built on Family Support with the primary intent to reduce child poverty and was a long overdue catch-up. If Clifton’s myth is correct WFF should not have been necessary (as employers should have been be paying higher wages and somehow that would have meant no child poverty).
It is also completely wrong to say that National found it ‘too popular to wind back’. Over the last decade National deliberately cut WFF and failed to index it. This meant the package was $700m per annum lower by 2018, child poverty was at unacceptable levels and a lot of catch-up was due as even National acknowledged, albeit only in election year.
Finally, there is no substance at all in the claim that WFF is “more of a top up for employers than a safety net for families”. WFF may have a few design faults but it spreads the costs of bringing up children for all but the top income families, among society at large. We don’t say NZ Super allows employers to pay wages that are too low for people to save for their own retirement. We don’t expect employers to pay for childcare subsidies, or childhood education or healthcare or even paid parental leave, so we should not expect them to pay for the weekly costs of bringing up children in low income families. Indeed, how could they take on this role given that the most need is in families that don’t work full time and that the cost of children varies with family size not hours of work.
Let’s change the name to reflect what WFF is really for. What about KiwiKids’s Tax Credits (KKTC)? Other ideas?