Will Joyce’s Working for Families changes be enough?

Budget 2017 must significantly step up the level of income support for low-income families to prevent an escalation in child poverty and reverse damage done by past policy, says Child Poverty Action Group (CPAG).

Minister of Economic Development Steven Joyce says there will be increases to Working for Families (WFF) - a long-awaited response to CPAG’s  Fix Working for Families  (FWFF) campaign.

But the changes must be comprehensive, and benefit all families in need - not just some.

“Tinkering around the edges of the system will never solve the increasing poverty seen in families both on benefits and in low paid work,” warns CPAG economics spokesperson, Associate Professor Susan St John.

The purpose of Working for Families tax credits is to recognise the extra income needs of families raising children.

“Unfortunately WFF is very badly designed and has been quietly eroded by policies set in motion automatically since 2012, which have been highly damaging” says St John.

“CPAG research shows that real spending on WFF has fallen sharply and now it would take an extra $700 million per annum just to restore its real value.  Moreover the worst-off families remain excluded from a substantial portion, the In-Work Tax Credit, worth at least $72.50 for those who meet criteria.

“More working families are struggling, while the worst-off families, those on benefits, have fallen even further behind. Including them in the full WFF would cost around another $500m.”

Joyce has said that the Government will be looking at WFF because it now recognises that low-income working families are struggling to survive.

CPAG strongly recommends that the cuts are restored and WFF made more inclusive: This would mean:

  • The income threshold for maximum payments is lifted to a much more realistic level.
  • The rate of abatement is reduced to 20%.
  • The work-hours criterion and the requirement to be off-benefit are removed from the In-Work Tax Credit.
  • All parts of WFF are properly indexed, with automatic adjustments to reflect wage and price movements every year.

    To invest in children and make the necessary difference in the lives of struggling families the problems inherent in WFF must be fixed immediately.