E tū: thousands to benefit from 1 July Families Package
E tū says thousands of its members are expected to benefit from the Government’s Families Package, which comes into effect today.
The package includes:
widening eligibility for key benefits including Working for Families which will increase for many
wider access to the Accommodation supplement and an increase for eligible people in expensive locations such as Auckland and Hamilton
a Winter Fuel benefit
A lift in the Family Tax Credit and an increase in the abatement threshold.
Best Start payments for families with a new baby.
The implementation of the package also coincides with the extension of Paid Parental Leave to 22 weeks.
“The Government is committed to addressing child poverty in this country and the only way to do that is to lift the family income,” says E tū Industry Coordinator, Jill Ovens.
“That’s what this package does in many different ways, including crucially in the child’s first year of life, and for three years for those on low incomes. $3,000 a year will make a huge difference towards giving children a really good start,” she says.
Jill says the extension of paid parental leave will also benefit children by giving parents, whether the father or the mother time to strengthen the bond with their baby.
“That’s all about giving parents choices,” she says.
Jill says the changes are complex and members should check the details of the package to establish their correct entitlements.
“Whether it was intentional or whether it was an unintended consequence … Working for Families has worked as a mechanism to keep wages down because it removes motivation,” Marra said.
“It removes … the incentive, for workers [with families] to go for relatively small or moderate pay rises because it actually has no effect on the household income – because Working for Families tops up the income and then it abates [when pay increases].”
But the policy also impacted wages for those who did not have families, Marra said. They had to compete with those receiving Working for Families, who would be happier to settle for a lower salary because the tax credits brought them up to the median income anyway.
“Why would I employ you if you have no children and I have to pay you more when I can employ Bill, who has children and because there is this subsidy I can get Bill for cheaper than you. So I’m going to employ Bill.”
Those factors, along with the Employment Contracts Act, had created “downward pressure” on all incomes “and that is part of what has created this low-wage economy that we have going on in New Zealand”.
“It means wages are kept artificially low, because the wage is no longer about having adequate income to support a family, it’s just allowed wages to be a market figure.”
The result was Working for Families, framed as a tax credit, was functioning as “an employer subsidy”.
David Marra (Christchurch Budget Service)
https://www.stuff.co.nz/national/104490079/when-a-16k-payrise-only-gives-you-50-a-week-extra-in-the-hand
“The problem with the Accommodation Supplement was that it tended to be a subsidy to landlords” – Andrew Little.
https://www.stuff.co.nz/national/politics/92983398/The-Government-has-re-written-the-rules-of-the-accommodation-supplement-creating-some-big-winners
“These regulations, Minister Woods has now signalled, are to be dumped overboard to clear the way for the industry to increase its squeeze on the poor. Recognising that will probably leave more and more poor households unable to pay, and so cut off from supply, the industry’s solution is for taxpayers to subsidise electricity purchases by the poor, thereby underwriting the electricity industry’s profits in the same way as the Accommodation Supplement has enabled landlords to hold up rents”
Geoff Bertram (Senior Associate at the Institute for Governance and Policy Studies, Victoria University)
https://www.stuff.co.nz/national/politics/opinion/102708888/way-to-be-cleared-for-big-electricity-players-to-prey-on-lowincome-households