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Working for Families Submission - Preventing Debt

Working for Families Submission - Preventing Debt

2 July 2025

The following is CPAG commentary and submission on the Government discussion document “Empowering families: Increasing certainty and preventing debt in the Working for Families scheme released on 22 May 2025.

 

Original objectives of Working for Families included to ensure income adequacy with a focus on low- and middle-income families with dependent children to address issues of poverty, especially child poverty.  CPAG have undertaken numerous research pieces and campaigns to fix the failings of the Working for Families Package https://www.cpag.org.nz/our-campaigns/fix-working-for-families

 

Our commentary and submission on the Government discussion document “Empowering families: Increasing certainty and preventing debt in the Working for Families scheme released on 22 May 2025.

 

  • The title: Empowering families: Increasing certainty and preventing debt in the Working for Families scheme promises to empower families but appears to be more about reducing fiscal costs and administrative costs of debt recovery for the Government.

  • It does not start from first principles of asking what the purpose of WFF should be and therefore takes as the starting point the status quo. The original objectives of the Working for Families package were to ensure income adequacy for low- and middle- income families. In this consultation document instead, paid work is prioritised over the needs of children.  The deficiencies of WFF are embedded.

  • We are concerned the quarterly basis of assessment proposed may reduce annual Working for Families entitlements for low-income families as FACE submission has outlined. Higher income families who would otherwise earn income above the point of full abatement under an annual assessment basis might instead benefit. This outcome appears to be contrary to one of the original objectives of the Working for Families package, to ensure income adequacy for low- and middle- income families.

  • The problem that the policy is trying to address is about fixing how easily families seem to find themselves in debt under the current system. Debt is rightly suggested to be a problem for low- to middle- income families because it increases stress and reduces a family’s ability to meet their day to day- costs. However, the proposed solution as outlined in the consultation document will result in reduced working for families entitlements and this loss of income (at a time when benefits and low wage households are already facing weekly deficits and inadequate income) has a greater negative impact on daily lives.

  • The recent minimal increases to the threshold and the rise in the abatement rate to 27.5% are backward steps. They follow other backward steps that have increased the IWTC and frozen thresholds. Our recommendation is to instead make WFF child-centric and decouple from all paid work requirements and the source of parental income. This entails extending the equivalent of the In-Work Tax Credit to all low-income children, whether their parents are on-benefit or not and acknowledges the valuable unpaid work of parenting.

  • Jeremy Beckhams submission on behalf of FACE on the shortening of the period of assessment is endorsed in full. 

  • As per Susan St John’s submission CPAG submitted years ago on the IR transformation project that real time assessment for WFF will not work.  See Making Tax Simpler Better Administration of Social Policy: Working for families (WFF).  We also note the recent negative experience of 3 monthly assessment for Family Boost.

  • The problem is the design of WFF itself as we have said on so many occasions. It requires a multiparty approach  We are failing to support our poorest children.

  • CPAG’s submission to labour’s review spells out what needs to be done. If adopted significantly more children and their families will be empowered to live free from the toxic stress of poverty.

  • It must be accepted that WFF is seriously flawed and is in major need of reform: to simplify, to prevent poverty and to actually encourage work effort.

  • The MSD is asked to review all the submissions the NGO sector has made over the period of WFF review since the WEAG report. Tinkering is time consuming and takes the gaze off the real problems of flawed design 

  

CPAG calls on the Government to urgently reform Working for Families (WFF). The unaddressed flaws since the inception of WFF have contributed to the high rates of child poverty in New Zealand.