Slowdown possibility raises concerns for family incomes

Child Poverty Action Group (CPAG) says that the Government should be turning up welfare and tax credits as the foundation for better family income protection in the likelihood that the country is facing an economic downturn.

With New Zealand seemingly at the top of its game financially, there are signs that things are slowing down - the latest being the announcement of major construction companies going into receivership and unemployment numbers rising.

While the economy has reaped the benefits of massive immigration growth and a building boom, the signals are not so favourable in the near future. More than ever families will need financial support if job losses occur, or work hours are reduced along with spending power.

“If parents who currently receive Working for Families tax credits find their hours drop below the minimum threshold for eligibility for the In-Work Tax Credit (IWTC) they will suddenly find themselves short not only the pay from hours of work but also $72 50 per week for their children,” says Associate Professor Susan St John, CPAG Economics spokesperson.  

“The rising costs of housing and basic necessities have undercut family budgets. The Families Package will help some but much more needs to be done. The loss of assets and accumulation of debt becomes harder and harder to fix the longer families’ balance sheets are left to deteriorate,” says St John.

“One thing that can be done immediately is to remove the minimum hours of paid work criteria from WFF tax credits. The hours of work test performs no useful function as a work incentive and the loss of the IWTC could be critical to families caught in a slowdown.”

“Even in the good times children in New Zealand are being hospitalised at rates of over 40,000 per year with preventable illnesses associated with poor quality housing and poverty. We must have better policies in place to provide more of a cushion in the not so good times to protect the young.”

This year CPAG is calling on policy-makers to reform the welfare system so that it is fit for families in the 21st century.  That reform should be based on principles of compassion and caring, and the real needs of families, without stressful over-emphasis on paid work, and punitive, corrective methodologies.