What are we to make of welfare and Working For Families reform now?

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Last week in the house, Ricardo Menendez March asked some very pertinent questions in the Estimates Debate – Social Development. Amongst these questions was this:

I also want to get an understanding about whether Working for Families changes are still a priority for this Government. … As we know, there was a failed Budget bid that didn’t make it through and we think a Working for Families overhaul is a priority, and I just want to get an understanding of what work she intends to do this year to improve access to the full Working for Families package, particularly for people who are receiving main benefits. …”

The Minister’s reply to Ricardo’s question reveals actual reform is now in the never-never.

“The Working for Families review is ongoing and we continue to seek advice in respect of that. There was nothing in the Budget, as the member cited, but that doesn’t mean that all of that work has been cast away or parked for ever. The intention is certainly to continue doing that work and then to make changes in the future.”

Thomas Coughlan had previously outlined in the NZ Herald how serious thought had been given pre-budget to fixing flaws in the WFF design. In March 2023 he wrote optimistically “‘Fundamental’ changes to tax credit system could lift incomes of 350,000 families in Working for Families review – NZ Herald

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The papers received by the Herald showed sector groups recommended broadening the number of families who receive the in-work tax credit, a payment of $72.50 a week for families with one to three children (and $15 a week for every fourth and following child).

Officials reported back to ministers that anti-poverty groups said this tax credit “should be paid to all families and not just those who are off a benefit and in paid work”.

“These stakeholders argued that the payment was discriminatory or unfair, particularly given children were unable to choose whether their parents were working. They also emphasised the need to value other contributions people make, such as caring for children or voluntary work,” the review said.

But hopes were dashed on budget day. Thomas Coughlan, also pointed out the other major flaw in Working for Families for low income families in full-time paid work 

“If the household has a sole earner, they will pay 30 per cent tax on each dollar earned above $48,000, as well as a 27 per cent abatement on their Working for Families tax credit.

This means for some of this person’s income, they will face an effective marginal tax rate of 57 per cent on income earned above $48,000.

They may also have a student loan, paid back at 12 cents on every dollar, and an accommodation supplement, abating at 25 cents in the dollar.

An Official Information Act response showed that in a Budget 2020 bid, ministers proposed lifting the threshold to $48,000. It was estimated to cost $220 million then and would benefit about 183,000 families to the tune of $23 a week on average.

So much for Working for Families being about incentivising work. The outrageous clawbacks remain, reinforcing a flood of families in low paid work to foodbanks and charities to survive as they can’t earn their way out of poverty.

Numerous other consultations on social policy that have involved a huge contribution of unpaid time from NGOs have also been ignored or sidelined. 

For example, all the consultation  diligently undertaken over the Purposes and Principles of the Social Security Act, 5 years ago, have come to naught.  There has never been any feedback to the NGO sector on this or on other consultations. Ricardo must feel deeply troubled by the Minister’s obfuscation in reply to his question on this fundamental aspect of welfare reform:

Then, finally, the other question was put to me around the purpose and principles of the Act and when we are going to do that. That is certainly something that we would like to get on to in the next year, as well. Some people thought that we should have started there with the overhaul, but one of the reasons why we didn’t start with that at the beginning was because, unfortunately, given the nature of some of the policies in the legislation and throughout the welfare system, potentially any revised purpose and principles could have ended up being completely unaligned with the practice and what is happening in the welfare system. So we’ve been doing what we can to overhaul the whole system whilst in the back of our minds knowing we want to get to the point where we can change the purpose and principles in a way where everything aligns. 

Highly paid bureaucrats have spun out these reviews, ticked the boxes of so-called consultations, leaving the poorest families to suffer and all who care in despair that there will ever be the necessary systemic change. 

 

 



26 COMMENTS

    • Ada. Ok. Then I’ll blame Carmel Sepuloni, Minister of Social Welfare, and Kelvin Davis, theoretical Minister for Children. This pair should have to spend eternity together, along with Ruth Richardson. Trouble is, they’d probably all enjoy each other’s company, and have a rollicking good time. Toss them out now.

      • They deserve to be tossed out they are not doing the job.Where else could you remain employed if you didn’t do your job?

        • Some govt departments, say the right thing, barely do your job or eff up everything you touch and get a pay rise. Sad but true in some cases.

  1. The universal Family Benefit must be reinstated, and it should be expanded to promote large families amidst the coming demographic crisis.

    However, the Basic Wage, the Full Employment Policy, universal trade union membership and the Award System must all be reinstated also. Taxation changes cannot solve this deliberate collapse of real wages, which ultimately must be remedied by reversing the post-1980s slide into economic backwardness (i.e. globalist trade policy and ‘structural adjustment’ must be abandoned).

    • agreed kristoff….but the LAST thing the planet needs (or nz infrastructure for that matter) is more mouths to feed….your kids are killing the planet….sorry but true

      • The poor and benefit-dependent will continue to have kids (often lots of them as other people pay for them and they are often ‘better off’ the more kids they have) + the (very) wealthy will also continue to have kids (because the cost is of no consequence) but it is the couples in ‘the middle’ who will or are stopping having kids due to the cost and having to pay for their kids themselves.
        So where does that leave us in the future . . kids getting the age where they should enter the workforce (i.e our tradies / nurses / teachers / police etc) who either refuse to work because they have been raised by benefit-dependent parents or they are ‘above working’ and instead living on the largesse of their very wealthy parents?

        • Natural resources are being squandered due to the wastefulness and anarchy of the capitalist system, not the absolute population level. Meanwhile, there are not enough labourers in the domestic economy to quickly rebuild and diversify advanced industry, or to rapidly reconstruct the infrastructure.

          The socialist solution has always been planned development. Scientific and economic advancement leads to the discovery of new resources and techniques, thereby enabling more efficient production, and hence higher output — but this regulated expansion requires growth in the first place, not a Malthusian death spiral like Japan or 1990’s Russia.

      • Trevor without you we could carry on quite well. Why not lead the way towards your brave new world.

  2. Working for families is an inefficient poverty trap with savage repayments often trapping people.
    It needs to be fully overhauled or replaced.

    • Bingo.

      You’re onto it.

      Imagine a futuire where our education system leads the world and we have a morivated educated workforce adaptable to the needs of the world capable of earning enough income to raise a family, build a home and futire for their families without intervention required by the state.

      Oh wait, that was our past wasn’t it and we don’t want to go back there do we???? Do we?

    • Start working with the beneficiary who could work if helped and find out what needs to be done and make sure that there is some lasting benefit to that person, not whip away all state help as soon as the first penny comes out of the slot. Your comment shows lack of understanding and is not problem-solving.

  3. The complacent are bringing us quickly towards the end times for sure. Recently a young chap who has done well at something, maybe got over some disability, was outlining his achievements to encourage others. He said that next in his bucket list was to visit Antarctica. Despite all the information, the stats, the report of the world’s fragility which is on the other hand, likely to loose immense strength and forces onto us. Going to Antarctica should be the last thing that any responsible, aware, intelligent person should do!

    But no everything forward-looking must be done by others, with no sacrifices to be made regretfully by the self-entitled. The world and its people is something to be sampled and goggled at by the middle-class and the aspiring. There is less of NZ/AO to goggle at and admire every day what with pollution and imported problems that settle on us like locusts. Many are escaping difficult situations at home, and come here because they have heard that we are exemplars of something. And remain as they can see our great potential. But living precariously has become the order of the day, and those who can’t afford to goggle are the ones most unsteady.

    If we don’t want NZ/AO to fall over and people to be pushed out of society in slower, different ways to that of the Jews and gypsies in Europe, then get caught up in the poignant expression in this song written by Rodgers and Hammerstein, both Jewish by the way. Now is the time for all good men, women and twerps to come to the aid of our society. What can you do for NZ/AO and our society or can’t you remember if you care?

    https://www.azlyrics.com/lyrics/charlottechurch/ifilovedyou.html
    If I loved you, time and again I would try to say
    All I’d want you to know
    If I loved you, words wouldn’t come in an easy way
    Round in circles I’d go
    Longing to tell you, but afraid and shy
    I’d let my golden chances pass me by
    Soon you’d leave me, off you would go in the mist of day
    Never, never to know, how I loved you, if I loved you

    Jo Stafford https://www.youtube.com/watch?v=ly1HkWRqtW8
    Mario Lanza https://www.youtube.com/watch?v=gHRj_nKwcJ0

  4. I think there needs to be much more understanding of the issues amongst middle NZers.

    For example, in Ireland, something like 52% of the people pay 4% of the tax. Why? Well they do have every kind of tax imaginable and rebates up the wazoo, perhaps even designed to be complex but the one thing they have that we dont is the understanding that there are a lot of poor people out there who need support and their kids need good education and healthcare to achieve a healthy vibrant Ireland with a future. So an understanding of and acceptance of the social cost of sweeping it all under the rug which we still dont have here.

    But in fairness to any Govt, breaking down generational welfare is a major challenge especially if you raise payments and it seems to be the jam in the sandwich we have got stuck in. Kind of a chicken and egg thing.

    • ” For example, in Ireland, something like 52% of the people pay 4% of the tax. Why? ”
      UNREGULATED CAPATLISIM Fantail The Irish are just as extreme as the we are in their enforcement of pure Market economics.

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