CPAG welcomes attention to Working for Families at last

Child Poverty Action Group (CPAG) is pleased that both National and Labour now acknowledge that Working for Families (WFF) needs a substantial overhaul if it is to deliver much-needed income to struggling families and to reduce child poverty.

"For ten years we have argued that WFF is a flawed programme in its design and we have been especially alarmed at the silent erosion under National’s policies since 2010," says Associate Professor Susan St John, CPAG economics spokesperson.

Labour's Families Package builds on the increases to the system of Family Tax Credits set out under National’s package announced in the 2017 Budget.

CPAG welcomes the substantial increases to the maximum payments, especially for young families. Labour will help low-income working families by adjusting the income threshold at which the maximum is received, to a more realistic $42,700. The flaw in National’s package is that the extra assistance is to be clawed back (abated) from a very low total income of just $35,000.

Helping low-income working families is one of the principles of the Fix Working for Families (#FWFF) campaign.

"CPAG would like Labour to also reduce the rate of abatement back to 20% instead of retaining National’s 25%. It is important not to increase disincentives to earn for low-income families," says St John.

Labour’s package also recognises the extra needs of families when there is a newborn and offers additional support for each child up to the age of three to help a parent look after their own children. Best Start delivers $60 a week to all newborns for a year after any Paid Parental Leave is taken.

CPAG is concerned that many of the poorest families currently miss out on Paid Parental Leave (PPL), the In-Work Tax Credit (IWTC) as well as the Parental Tax Credit (PTC).

"Best Start replaces the hopeless and inadequate PTC in a way that means all newborns will now get at least $60 a week for a year. One and two-year-olds in low-income families will also benefit," says St John.

"CPAG suggests however that Best Start would be better if it was simply a part of the WFF tax credit package instead of a separate and quite complex payment. It is a pity that the opportunity was not taken to address the cumbersome and discriminatory IWTC in this package.

"Currently there is no sign of a plan to regularly increase WFF and the threshold in line with inflation, including a link to the average wage - as is done for New Zealand Superannuation (NZ Super) every year.

"This is imperative, otherwise these potentially significant improvements to the system fall prey to the similar erosion that WFF has experienced since 2010."

CPAG is releasing a series of policy priority papers outlining recommendations to improve New Zealand’s healthcare, education, welfare and housing systems. CPAG says that implementing these recommendations will reduce child poverty substantially and improve the lives of all low-income families with children, as well as contribute to a reduction in hospital admissions of children with poverty-related illnesses, paving the way for a New Zealand where all children can flourish.