For the last 2 decades critics have seen WFF as discriminatory, poorly designed, far too complex and woefully ineffective in addressing the worst child poverty.
In 2004, CPAG explained what was so wrong in a publication called Cut Price Kids and has been campaigning to fix WFF ever since.
After the WEAG report in 2018, the government began its widely anticipated WFF review. We participated in good faith along with many other NGOs. Our recommendations are found here.
The main part of the WFF is the per child per week Family Tax Credit that goes to all caregiver in low-income families on the same basis. This is the best tool to ensure income adequacy. The second component, confusingly named the ‘In Work Tax Credit ’ is added to the Family Tax Credit weekly payment, but only when parents are eligible on paid work criteria.
While fixed hours of work no longer have to be met, if there is any benefit or part benefit paid, then the children of those parents cannot have any of the IWTC.
As a result about 200,000 of the worst-off children in New Zealand miss out on a substantial part of WFF- at least $72.50 a week. The reasoning has been that paid work is the only way out of poverty and therefore their parents need an incentive to work.
In the review of WFF, cabinet approved as the starting point these 2 key deeply contradictory objectives:
- to make work pay by supporting families with dependent children, so that they are rewarded for their work effort
• to ensure income adequacy, with a focus on low and middle-income families with dependent children to address issues of poverty, especially child poverty
Parents are not on benefits for fun. Their children are four times more likely than other children to live in poverty — that means going without the basics … not enough money after rent to pay for school uniforms, and the power bill let alone nutritious food. Many of these families are sole parents, many have disabled children, or there is sickness in the family, few job opportunities and lack support of all kinds. Even if they manage a part-time job, their part benefit makes their children ineligible for the IWTC.
When a payment to a caregiver is designed to be enough to address child poverty but it is withheld from the worst-off families who are on benefits to create a work incentive, the result is deeper child poverty not more parents off-benefit.
Phase one of the WFF review decided to focus on the second objective and in the 2022 budget increases were announced to the Family Tax Credit. This was largely a delayed inflation catch-up implemented from 1 April 2023, and was soon eroded in the cost of living crisis. Most unfortunately, as part of the same package, low income families in paid work lost their Working for Families more quickly as the rate of clawback (or abatement) rose from 25% to 27% for each dollar earned over the very low fixed threshold of $42,700. So much for work incentives!
Thomas Coughlan had previously outlined in the NZ Herald how serious thought had been given pre-budget 2023 to fixing flaws in the WFF design. He reported that in the WFF review
“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,”
So now we have part two of the WFF review. May be this is Labour’s way of putting that tortuous review to bed. They announced yesterday (13th August) that if elected the IWTC will be increased by $25 a week from 1 April 2024 creating an even bigger gap between children in families on benefits and other low and middle income families in paid work. The threshold stays fixed at $42,700 and there are no automatic indexation provisions. However, the threshold will rise to $50,000 by 2026, just in time for the next election. The rate of abatement stays at 27%.
The worst-off 200,000 children get nothing- they remain invisible and left further behind- Cut Price Kids indeed.
Martyn – Labour is sleepwalking to a very large election defeat
Wake up! This is Labour 2023, expect nothing, get nothing, be happy. Vote for us!
@ R in a C.
But wake up to what? What should I wake up to? Labour’s opposition? Luxon and Seymour? You’re kidding, right?
Labour is still neoliberal because We, the poor bastard People, won’t/can’t do the hard work to de flea Labour of roger douglas’s parasites. We look! We See! We freak out! We do nothing… Except work harder while being lured into unpayable debts where there wouldn’t be debts if we didn’t have to keep 14 multi-billionaires, 3118 multi-millionaires and four foreign owned banks extorting $180.00 a second in nett profits out of our AO/NZ every fucking second.
AO/NZ’s being dragged down the plug hole. We need to plug that hole and we need help with that and that help won’t be found here.
Of course nobody seems to have noticed that the Key govt didn’t touch WFF while they were busy selling off everything else worth more than a tin of goat pellets… Apart from allowing those on that level to sink even further down the food chain…
Typical kiwis.. Standing there whining your arse is on fire, and the govt isn’t putting it out for you, while the most desperate, and downtrodden get pushed even deeper in the mire… This country deserves a national/act/colonial government.. Give them a decent govt that actually tries to govern democratically, and they will crap all over it because the whores in the media tell them to…
This is why you don’t have a labour party worth the ink it took to spell their name, and why you are about to consign your own country to utter irrelevance, and servitude to whoever has the money to buy the place, and is fast enough to get here before the competition arrives… Fucking pathetic, and I pray every day that i will be able to get away again before the shit truly hits the fan.. Which would be roughly 2-3 months after the election at best… All I’ve had confirmed to me since getting trapped here is “stupid is as stupid does”.. Even the Aussies are smarter than this, and that is so demoralising…
A good description of people’s attitudes, they all want to moan but are unable to provide a realistic solution for everyone. The loudest voices get publicity even though what they want is usually for their own selfish desires.
I would like to see a government that aims to give people a hand up instead of a handout (with obvious exemptions for those physically or mentally unable to survive on their own) yet they seem to delight in giving handouts to those who need it the least. The apprenticeship scheme is about the closest thing they have done to giving young people a realistic chance to succeed in life along with aiming to reduce property prices/growth yet we seem to be heading for mass immigration along with another ponzi house selling scheme just because the ticket clippers at the top prosper from it. You can’t expect endless growth in a finate world so it will crash one day & recent climate events suggest it will be sooner rather than later.
@ stefan.
“This country deserves a national/act/colonial government..”
Sounds like you’re grooming us towards a republic? Doesn’t that make you a traitor?
The causal elements of our country’s problems ARE the national government and act which was roger douglas and derek quigly’s extension of National. Roger douglas was Labour’s two term finance minister who killed off Lange and started ACT thanks to Jim bolgers introduction of MMP. Thus, National and ACT are the same thing.
Which brings me to you. What the fuck are you? Are you a Machiavellian confederate ? A liar and a distracting influence? A confederate who comes here to twist the narrative? Is it good money? I could do your job. But in reverse.
Yes woefully ineffective pretty much sums it up.More children in poverty the outcome,very sad.
Where is Kelvin Davis, the Minister for Children ? Come in, Kelvin, the Children of the Poor need you. Are you there, Kelvin ? Forget Sepuloni, she can take care of herself. Focus on the kids like you’re paid to do, the kids too small and poor to take care of themselves, unlike you and Minister Sepuloni.
I find it odd that anyone wants to fix a scheme that’s intentionally and proudly vindictive.
Scrap WFF and it’s sickening name.
Fund kids.
Done.
WFF is a dog’s breakfast. They should be brave and make the first $40,000 tax free.
Simpliest way to fix the problem it isn’t f*cking Rocket Science, they all want to make things so f#cking hard for everyone, when are we going to get some Common Sense. Even the silly old fool Winston is starting to look pretty good.
The first 40k (plus more) is already effectively free of tax.
The vast majority of people earning up to $60K pay less in tax than it costs the government to have them here.
This is the very reason why benefits need to be universal. The concept of ‘directed’ benefi9t is a neoliberal canard that simply gives the dispensing authority leeway to bugger about.
Bring back universal benefits.
Or just rid of all of them?
If they were an emergency response then fine. However they’ve gone from being there in an emergency to being something for life.
It should be legally impossible for a ANYONE to remain on a benefit for more than 10% if their lives.
The welfare system Savage introduced has metasticised into something he would neither recognise nor approve of I would imagine.
Susan.
Yes.
There’s your answer.
easy -peasy chocolate squeezy legislate decent wages then the taxpayer won’t have to subsidise rapacious nz business….and yes it is that simple’
Just what subsidies are my businesss getting gargin?
I keep getting told of them by a few TDB posters but buggered if I know WTF they are wapping on about.
peter the low wage economy is a subsidy to all nz business…low wages reduce your cost of business…which has to be made up by the state…ie the taxpayer
That didn’t answer the question.
Please explain what me and/or my team are being given by the taxpayer?
Time to start putting a none of the above option on voting papers.
” Time to start putting a none of the above option on voting papers ”
You have seen the light Allan.
I am waiting for National to release their costing for all their policy promises are they going to leave it to the last minute so there is not much time to critique them. National can’t make those tax cuts without it effecting our public health and social services delivery, something has to be cut or reduced immensely and who will suffer the most. We know this as Key did the very same thing and we are still playing catch up. You can’t fix nine years of cuts, selling and privatization and deal with devastating floods, storms, erosion and epidemic disasters so easily. Look around the world we aren’t the only ones in a mess.
Meanwhile they let in net migration of 86600 in the year to June.
https://www.stuff.co.nz/business/132737929/net-immigration-back-near-record-high-as-revolvingdoor-syndrome-strengthens
This is second only to the record 91700 they let in, in the year to March 2020.
You don’t need to be a rocket scientist to work out what this does for rent prices, and wages.
They can tinker with WFF but this all gets eclipsed in rising housing and living costs and flattened wages when you continually let record numbers in without the commensurate increase in housing.
Meanwhile we have housing shortages, record waiting lists, spiralling rent prices, emergency hotel accommodation and 2 billion a year and growing in accommodation supplements enriching landlords.
You wont hear a peep from the left though, particularly the greens, because, you know, xenophobic.
This (below)
“When a payment to a caregiver is designed to be enough to address child poverty but it is withheld from the worst-off families who are on benefits to create a work incentive, the result is deeper child poverty not more parents off-benefit.”
And this (below)
“They announced yesterday (13th August) that if elected the IWTC will be increased by $25 a week from 1 April 2024 creating an even bigger gap between children in families on benefits and other low and middle income families in paid work. The threshold stays fixed at $42,700 and there are no automatic indexation provisions. However, the threshold will rise to $50,000 by 2026, just in time for the next election. The rate of abatement stays at 27%. The worst-off 200,000 children get nothing- they remain invisible and left further behind”
Thanks for posting this, Susan St John.
This is not incrementalism, it”s the sacrifice of a whole generation to sucking the phallus of the corporate masters.
Just bring back the old Family Benefit. Flat payment per child for every family.
The way I see it is we are encouraging people that cannot afford more children to breed and subsidising employers who pay poor wages . Another page of a poor Labour move as they Hu t desperately for votes .
Trevor “employers who pay poor wages” is pretty much what NAT Act do . That’s like a commandment to them. They suppress wage growth and then wank on about people moving to Australia!
That is complete nonsense Wheel.
Reviews can make things much worse, eg the peter dunne led review into child support and subsequent changes.
Winston,Albion Rovers.
Susan St John is great. She needs to network with other eminent figures and push a no confidence vote in the system. Form a no confidence party for that purpose. It needs to be taken down.
” The worst-off 200,000 children get nothing- they remain invisible and left further behind- Cut Price Kids indeed ”
Just out of interest Susan is there anyone worth voting for on or before October 14 ?
Island, farm fence.
Our Government Portfolio MP’s have been so badly performing I have no interest in their farewell speeches. As far as I am concerned – farewell and most please do not come back.
I second that Rogue Estate.