Not Working for Families
CPAG has long thought that Working for Families (WFF) needed to be renamed to put children at its centre, not work.
In a letter to the editor today (26 January) Chris Brown of Tauranga came up with a title that accurately reflected the reality of low income families struggling in WFF maze. He called it Working to Discourage Families (WTDF).
Ironically Chris Brown and his wife are both in work, one on the minimum wage, the other part-time for family reasons. Despite this they do not qualify for much if any WFF. When Mr Brown learned that the income threshold at which the full WFF applies had not been altered in a decade he was incredulous. He pointed out that for one child there is very little benefit after $50,000 and payments cease entirely at $65,000. He asked how could any government put low income wage earners in New Zealand in this cruel position?
CPAG shares his outrage. We have already written to the new Prime Minister with a list of recommendations to be implemented immediately to put WFF on a better footing. In fact the first of our asks is to rename WFF to reflect the needs of children, something like Tamariki Support perhaps. Until they are put at the centre of this initiative the poorest children will continue to miss out.
As well CPAG recommends that the new Labour team:
● Decouple WFF from all paid work requirements and the source of
parental income.
Thus, the In Work Tax Credit (IWTC) should be joined up to the payment for the first child so there is just one WFF payment. This would mean at least another $72.50 weekly more for one to three children, and more for extra children in the worst-off families in the benefit system. The cost is around $500m pa, but would be highly cost effective in reducing poverty and remove discrimination on benefit/work status.
● Index all aspects of WFF to wages annually (and to inflation where it exceeds wage growth) as is the case for NZ Super.
● Also increase the threshold at which WFF starts to reduce to restore the real value last set in 2018. In 2022/23 it should be at least $50,000.
● Reduce the WFF abatement to 20 percent (currently 27%) to lower the effective marginal tax rates for low income working families (often over 70- 95%)
Too many children—at least 120,000 are in hardship and 60,000 in severe hardship according to official figures. That will be higher in 2023 because of Covid, severe cost of living problems and lack of policy progress. Meanwhile those in low paid work cram social agencies seeking help since they face impossible clawbacks from low income levels.
So we agree with Mr Brown that WFF is structured to strongly disincentivise paid work. So much for the catch-cry “work is the way out of poverty.” It’s why we suggest a better acronym might be NWFF - Not Working for Families.