Earning less by being in work

March 24th, 2010 at 1:00 pm by David Farrar

The Press reports:

Christchurch woman , 29, quit her job in a flood of tears after three months.

As a single parent looking after her four-year-old son Riley, she gets $357 a week on the domestic purposes benefit (DPB), with some bills being paid by Work and Income.

Struggling to make ends meet, she took a part-time job as a laboratory assistant at Canterbury University in January.

After advice from a Work and Income case worker, Quy believed she would be better off by $100 per week.

However, her part-benefit, part-wage income left her $10 a week worse off.

After the Government changes were announced yesterday, Quy said she was scared she would fall back into debt.

“It doesn’t make sense, working but not earning money,” she said.

“It’s like the Government is punishing us.

I feel very sorry for Ms Quy, as no one should end up worse off by going into work. One of the changes announced yesterday will help a bit, by increasing the threshold before your benefit rebates from $80 a week to$100 a week.

In theory it should be near impossible to be worse off, by taking up work. There are high abatement rates on the main benefit and sometimes the accommodation supplement, but income from Working for Families should not decrease if you replace benefit income with work income – in fact the in work payment should make you better off.

It would have been useful if The Press had asked for and/or printed the details of how much the job she moved to was paying, because this would have allowed verification of the figures. By this I don’t mean that Ms Quy is misrepresenting them – more that she may be missing out on something she is eligible for – such as WFF.

Its frustrating that the story doesn’t detail why the combined income is $100 a week less than what estimated. Were wrong, or is some benefit not being fully claimed?

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38 Responses to “Earning less by being in work”

  1. Michaels (1,318 comments) says:

    ANSWER:

    Get off the DPB, get a full time job, put four year old in a few hours care a day.
    Have more money at end of each week.

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  2. Grendel (1,003 comments) says:

    $357 a week is not exactly chump change either.

    i suspect that she is now adding in cost of travel, cost of childcare, and maybe even buying lunch. and then deciding that its not worth it.

    whats annoying about it of course is that someone working full time, getting a similar amount in the hand has always had those expenses, so its not extra, its just the cost of standing on your own two feet, not living off the rest of us.

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  3. big bruv (14,125 comments) says:

    I do not feel sorry for Ms Quy at all.

    The simple answer to her problem is to cut the amount she receives on the DPB.

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  4. Colonel Masters (409 comments) says:

    I will check back in here later on when somebody (Whaleoil?) will have unearthed that she is another one of Phil Goff’s lackeys. Usually more to these stories than meets the eye.

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  5. KiwiGreg (3,259 comments) says:

    I’d like some more facts.

    How do these stories make the news if the person doesnt out themselves?

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  6. Michaels (1,318 comments) says:

    EXACTLY Greg!!!

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  7. Murray (8,847 comments) says:

    $357 is tight but not the path to debt. The DPB is a dead end street, does she expect us to keep her for life so she can be comfortable?

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  8. burt (8,305 comments) says:

    This is exactly the intent of the system designed by Clark & Cullen. People will vote for handouts when they are better than working. Never ever vote Labour as long as the idiots are still socialist and proud of it.

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  9. burt (8,305 comments) says:

    When I first started working I was $6 (yes six dollars) a week better off than if I had been on the dole. Add in the cost of clothes suitable for working and transport costs I would have been better off smoking dac at home all day. Work ethic is the only thing that made me get up each morning.

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  10. burt (8,305 comments) says:

    for context, at that time the dole was $96/week – I was earning $102.

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  11. serge (108 comments) says:

    Let me see, the DPB is by an large paying for children born out of wedlock, in my time they were described as bastards, so why should the taxpayer be burdened for someone else’s indiscretions?

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  12. KiwiGreg (3,259 comments) says:

    “so why should the taxpayer be burdened for someone else’s indiscretions?”

    We might have sympathy with a woman and children abandoned by the father for example.

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  13. Brian Smaller (4,024 comments) says:

    So $10 a week is what her self-esteem is worth? In my opinion she is just another person who thinks that the “government” owes her a living. Borrow the $10 a week off her family, or reduce expenditure somewhere. I bet her a $100 worth of Pakn Save vouchers that I could reduce her weekly grocery bill by $10 a week and still let her and her kid eat properly.

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  14. PaulL (6,038 comments) says:

    I disagree with many here. The answer is to reduce the abatement substantially.

    Most of us here agree incentives matter. We regularly tell the lefties that at 39% in the dollar tax, it isn’t worth putting in extra hours, earning extra money. Yet even on the standard figures, someone coming off a benefit by working part-time will lose 60-80% of the extra they earn in abatements of one sort or another (depending on their exact situation).

    What’s sauce for the goose is sauce for the gander. If we believe incentives matter, it is pointless to say “but you should do it for your own self respect.” That isn’t a real answer.

    What we should start with is a proposition that nobody should face a marginal effective tax/abatement rate greater than 40-50%. We should then go through all the policies that govt has foisted means testing on, and find a different way to deliver that policy so as to avoid the abatement rate. My understanding is that the two places the abatement rate is really hitting at the moment are those coming off the benefit, and those towards the top end of the WFF range.

    My simple view:
    – get rid of WFF (replacing it as below)
    – restructure all tax rates and abatement rates at the bottom end
    – tax free first $19,000 income
    – tax above $19,000 is around 19% as per now
    – benefit abatement rate set such that someone in receipt of all the means tested things loses 50% (incl the tax)
    – this means most people who don’t get the full whack, are probably seeing 35-40% abatement
    – this means people up to about $50,000 will be getting benefit still – but realistically since I’m replacing WFF, they were already anyway
    – tax cut for those people above $50,000, in addition to the cut they get by the bottom tax rate being removed.

    Result, something that no leftie could serious complain about, clear incentives for those on a benefit to get a job, and a rebalancing of the tax system that will increase productivity and incentives through the middle incomes. And gets rid of the stupid “if you have children the govt gives you money” WFF.

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  15. MikeNZ (3,234 comments) says:

    Brian Smaller (2536) Says:
    March 24th, 2010 at 2:18 pm

    I’m with Brian
    Missing from the story was her admission that “her” money each week wasn’t hers but ours.

    PaulL
    Are you available for the Finance Ministers job?

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  16. side show bob (3,660 comments) says:

    PaulL misses the point completely. The bloody lefties don’t want people to work, they require them to be downtrodden and dependent, fuck, how else could these fruitcakes get to rule. And I doubt any of the measures the National socialists have taken will lower the welfare bill by one cent. They need to change the came completely. How about limiting the dpb to one child only, stop turning the lazy and useless into baby factories.

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  17. Tauhei Notts (1,746 comments) says:

    If that whinger works (actual term is employed) 20 or more hours per week her minimum pay will be $395.00 per week. That is prescribed amount as mentioned in Section ME 1 (3) (a) of the Income Tax Act 2007.
    End of story.
    No more arguments.
    The prescribed amount in section ME 1 (3) (a) will rise, from 1st April 2010 by about $10 per week, I cannot remember how much.
    So if she works more than 20 hours per week she should be remunerated with fringe benefits, because she will be on a 102% marginal tax rate. That is because she is on a 100% income tax rate plus 2% ACC Earner premium.
    The Minimum Family Tax Credit is the nowadays name for what was called Guaranteed Minimum Family Income introduced in about 1988. Interestingly I understand the prime minister did not like that idea of Douglas’ because the pm’s drop kick son would have been ineligible for the GMFI because he was self employed.

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  18. menace (402 comments) says:

    the majority of opinion in this thread is just arrogant and selfish, for the government to be humain it has to pay some of these cases out.

    to be honest, personally i would have a fucking good laugh breaking out the razor wire, putting the security cams up, placing bats above all external doors, sitting back and watching it all unfold as the dpb and dole and sickness benifit are abolished.

    fortunatly though, much to the hate and discust of much of the comentors in this thread we dont live in that world.

    And i dont know if the commentors here actually know people in these circumstances but it is pretty fucking hard to get out of those spots, there should be much greater insentives for people to get of benifits, yes the 80/100 bucks you can make is good but it needs to go a bit furthar with incentives really, incentives need to actually draw its targets so far out into the open that they actually end up of the dole, then they have to keep that path or wait months to get the dole back.

    as for the woman inthe story, i know a few friends in that situation and basically they are pretty fucked, rocks and hard places.

    people say to them that life isnt fair get over it, life isnt fair? life isnt fair? well is it a fact, that life isnt fair? if this is the fact tehn how should people cunduct themselves? should they be fair or not?

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  19. menace (402 comments) says:

    PMs drop kick son? spin some more yarns about him aye, rofl

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  20. PaulL (6,038 comments) says:

    MikeNZ: yes, available for finance minister. Minor problem with getting elected.

    @sideshowbob. I disagree. Lefties trap people in dependency because they don’t understand incentives, not because they’re actively evil. Many people fail to realise that both left and right want similar outcomes, they just have very different ideas about how to get there. My view is that, on the whole, the right have the better means to the end.

    As for cutting DPB, one child only etc etc. The reason we pay DPB is because we, as a society, don’t want to end up in a situation where a significant number of children don’t have the necessities of life. The system isn’t ideal, but generally achieves this aim – the money given to a family correlates to the number of children they are trying to support. The suggestion of not paying extra for extra children would mean either paying more than some people need (i.e. set the rate high enough for three children, but pay that irrespective of 1 or 4 children) and less than others. Or it means just accepting that a large number of children won’t get the basics paid for – if we only ever pay for one child. I don’t find that to be a good idea.

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  21. menace (402 comments) says:

    my favourite saying “society is a product of society”

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  22. Murray (8,847 comments) says:

    I dissagre Mike, when someone has been paid a benefit it is actually theirs. This claim of ownership and an implied right to second guess everything that person does is simply silly. Not to mention being a form of indentured servitude.

    It ranks right up there with druken assholes telling cops that they pay their salleries so that makes them the boss.

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  23. Rex Widerstrom (5,354 comments) says:

    Paul L:

    Well said. I believe Ministers don’t have to be MPs (this was the case, not sure if it still is) – they could be appointed from people the PM considers the best and brightest, as the US President does with his Cabinet. Heaven knows the standard of MPs is declining steadily… I’d promote you into the role over head of the incumbent or any of the declared contenders (on either side of the House) any day. Time for a referendum, methinks :-D

    IMHO you’re dead right. The same motivation that says to government “get your clammy hand out of my pocket” when it’s taking 39% of my hard-earned income is precisely the same motivation that used to have me railing against the abatement regime when I was on the dole.

    I’d tried applying for full time jobs and got nowehere (it’s the recession, stupid(s), not always laziness) so started a business. In the beginning I worked 80 or 100 hours a week and earned nothing. I had a family so needed to feed them somehow. DSW (as then was) went apeshit, desperate to claw away any money I might make and with one spotty little public servant telling me “we’re not here to help you start a business”.

    That business grew, rapidly supporting me and allowing me to employ others – 24 others, in fact, at its peak. But I had to battle bureaucrats and abatement rules every step of the way.

    If we want to encourage entrepreneurism amongst the “rich” in the 39c tax bracket, why do we want to crush it in those on a benefit with such narrow minded, greedy, “it’s our money” thinking?

    Murray:

    Well I do, so I am, kinda :-D In the once-removed way a shareholder of a company is though. It doesn’t give me the right to direct the cops day-to-day operational actions but it sure as hell gives me the right to input into the policy followed by his bosses. Same with MPs… and all public servants.

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  24. dave (988 comments) says:

    DPF.
    AFAIAA there is no abatement on accommodation supplement. perhaps this woman’s benefit amount also included accommodation supplement or temporary accommodation assistance? The latter would be lost or heavily abated on earnings, the former would stay if she was earning part time and receiving an abated benefit . As far as WINZ estimates go , I wouldnt take them as gospel.

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  25. MikeNZ (3,234 comments) says:

    Murray
    you are incorrect, it is not her money, she didn’t earn it, she has use of the money OPM and until people get that fact into their heads it will remain an entitlement.
    It is statism simple.
    The state has taken the place of family and friends a community with OPM.
    It would be different if it was limited based on what she had paid in but it isn’t.

    it is a contributary reason society is loosing its moorings.

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  26. Rex Widerstrom (5,354 comments) says:

    MikeNZ:

    What about someone who has no family or friends or whose family and friends are unable to support them? Or unwilling to do so? (there’s an argument perhaps that there’s some onus on family, but not on friends).

    And as for “community”… well, can you imagine asking any of those above for a voluntary contribution? Anyone selling “The Big Issue” will tell you the poorest sales are to be had in the better off areas. Just as many tradesmen will tell you they’d rather discover the property they’ve been called to is owned by someone working class, because otherwise they’re likely to have their bill dissected and be left waiting months for payment.

    In short, your theory relies on people’s better natures. And in my experience, they don’t have any.

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  27. Viking2 (11,550 comments) says:

    Paula reckons there is plenty of jobs out there. HMMM well I want to know what they smoke at cabinet each week. These guys are plain bloody stupid with their behavoir and ranting of late. I think the Nick Smith bug must be getting into their systems.
    How else do we explain the grossly inflated numbers about everything from deficits to ACC to mining.
    Why is it the banks have closed most of their lending to SME’s, house purchaser’s and anyone wanting to get on with business.

    Real estate person told me today that this month is worse than last. Looks to me like English and Key have theior mionds set on a depression.

    Business needs certainty and confidence and its rapidly going down at present. Even the surveys are showing that.

    Its going to be a long hard winter for most this year and it ain’t necessary.

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  28. side show bob (3,660 comments) says:

    PaulL , believe it or not I have no wish to see anyone starve but all this pontificating will very soon become academic if we as a country can’t produce more wealth. How long can the country continue to borrow at it’s present rate, the shit must hit the fan sooner or later. It appears to me that either we become a communist state and the government takes all or we find further means to fund the standard of living we have become accustomed to ( mining ?). Is it not better to tighten the belt while we can or do we wait for total catastrophe. As for the DBP, payments being made at present should stay fixed till the present generation of children comes of age. The government should have the balls to say something like this e.g from the !st of April 2010 the DBP benefits shall only cover 1 child and care giver, any new children other then the first child will not receive an extra benefit, you have been warning. All the government has done is to encourage those on the DPB to have a baby every 5 years.

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  29. Tauhei Notts (1,746 comments) says:

    Any change to the Domestic Purposes Benefit that is to commence within 277 days of the initial announcement would be deemed to be retrospective legislation. That is because people choose to follow a procedure to maximise their income from DPB and to bring in any changes within that 277 day period would be too drastic. The procedure I am writing about has a 277 day gestation period.

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  30. annie (539 comments) says:

    Pride in self-reliance seems to be a lost art. When my father was ill in the 1960s – for 5-6 years before he died, my mother took a job in a shop. She hadn’t been in paid employment for 20 years (this is back in the days when women got sacked when they got married), and her income meant that my father’s sickness benefit was reduced to $2. The cost of her working was higher than the extra income from the benefit – we would have been considerably better off if she hadn’t worked.

    But she did, as a matter of principle. We had huge difficulty paying our bills, but we did that too. We sold our car, the back of the section was all vegetable garden, and we wore castoffs. Ma certainly had principles.

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  31. PaulL (6,038 comments) says:

    Bob, I’d rather give people proper incentives to get off the benefit before we go the big stick. The bottom line at the moment is that many women on the DPB face 70% or more abatement rates. I know I wouldn’t bother working if the gummint was going to take 70%, no idea why someone who is already at risk of getting stuck on the benefit would go out to work in that situation.

    You may say it isn’t an entitlement, and I may agree with you. Neither of which will change that situation for that woman. But if we changed the tax/abatement rates, human nature would take care of all it. If you could go get a job and keep most of the money, it’d be brilliant at getting people off the dole. If you could take that short piece of work, 1 day a week. Get used to the money. They ask you to do another day. You think “beaut, more cash in the hand”, so you take it. Before you know it, working full time. Compare that to now. Do the first day, $80 cash in the hand. They ask you to do another day. You say “no thanks, I’d only get $10 net a week, I’d be away from my kids, have to get a baby sitter, etc etc etc”. Funny that people never make that move into full time work.

    It isn’t that hard to change. We haven’t even given it a go. But everything anyone knows about human nature tells us it would make a difference.

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  32. PaulL (6,038 comments) says:

    Rex: they have no way to tell whether you’ve been back or not. The rule is “out of country for more than 3 years without a visit home.” They can’t exactly data match every single voter with Customs to see if you’ve been back. And surely you’ve managed at least a weekend somewhere in there?

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  33. Clint Heine (1,571 comments) says:

    Bet Sir Rogers GMFI is looking better by the day folks….

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  34. side show bob (3,660 comments) says:

    Fair enough PaulL, incentives are indeed a good idea but after years of socialism I’m afraid incentive is no longer in the dictionary.

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  35. jackp (668 comments) says:

    Annie, your mother has guts and character, something sorely needed now. I had a customer that was on the dpb and while working at their house, her friends came over and sat in a circle and chatted and smoked. They did nothing all day. Their nephew was in the garage watching tv all day. He must have been about 15. What a waste of human resources and we are paying for it. Menace, why are you defending such derelict behavior? No it is not their money. It is also the dole that is causing the crime because there is no future in it.

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  36. MikeNZ (3,234 comments) says:

    Rex Widerstrom (2526) Says:
    March 24th, 2010 at 6:14 pm
    In short, your theory relies on people’s better natures. And in my experience, they don’t have any.

    Rex, sadly you are right and wrong, some people don’t but some do.
    The reality is my comment about statism is correct.
    Moreover many people all over the world do look after or act communally.
    Statism breaks that down as it intends to make people dependant on the state.

    These words of Thomas Jefferson are a stark reminder and warning:
    “A government big enough to give you everything you want is strong enough to take everything you have.”

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  37. crostrl (1 comment) says:

    I was on the domestic purposes and working part time at one stage – and yes unless you have family who will look after your children for free you do end up worse off than not working. For every hour I worked after the $80 threshold (actually approx $55 after tax) I earned negative $1 (after secondary and student loan tax: of 30%, childcare: $6 per hour for two children after subsidies and winz’s cut: 30 cents in the dollar)

    After the $180 gross threshold: winz took 70 cents in the dollar – I earned negative $6.00

    I haven’t counted petrol costs to get to work either

    Eventually got to the point where I was offered more hours but couldn’t take them as I would be so much worse off than not working.

    Not everyone has family to look after their children – childcare must be fully subsidised for this policy to work

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