Working For Families - Opinions On The Package

Opinions On The Package

The Working for Families package has received a mixed response. Some (such as Victoria University Professor Robert Stephens) have praised the package for encouraging adults to come off benefits, and for targeting families in need.

Others, however, have criticised the package for potentially extending to the relatively wealthy and for increasing effective marginal tax rates for many people. The economist Gareth Morgan, for example, commented on how some (generally middle-income) people can face effective marginal tax rates of over 100%.

The package (with the exception of the family tax credit, accommodation and childcare components) does not extend to families on the Domestic Purposes Benefit, or to families not in work. Critics say this social group will become worse off, and get left further behind (relatively speaking) by not having access to the in-work tax credit and minimum family tax credit components.

The Child Poverty Action Group has commenced legal proceedings against the New Zealand Government for discriminating against those not in employment in the "Working for Families" package. The case focuses on the In-Work Tax Credit and on the Child Tax Credit it replaced. The Action Group estimates that at least 175,000 children have been "left behind". In a judgement from the Human Rights Review Tribunal, it was stated that the in-work tax credit payment is discriminatory, but in this case, is justified. The Action Group are appealing the decision claiming the discrimination is not justified.

Susan St John has supported poverty-prevention over poverty-alleviation, advocating policies such as a simple universal basic payment indexed to wages as well as prices for pensioners — not conditional on work. She criticises the Working for Families package for not delivering extra income until 2005, provided nothing for the poorest in 2006 and only a small increase in 2007. She states: "a large part of Working for Families is based on the flawed logic that all families need to escape poverty is an incentive to get off benefits."

Phil O’Reilly has included Working for Families in a list of alleged low-quality governmental spending that has purportedly contributed to higher interest-rates and lower productivity rates.

Some find the very name of the "Working for Families" package ambiguous. While supporters portray "working for families" as meaning "making efforts for the benefit of families", others interpret the phrase as " families work to perform".

Current National Party leader, John Key, called the scheme "communism by stealth" but has, since becoming Prime Minister, not repealed or cut back the Working for Families tax credits.