Should paid parental leave be means tested?

May 11th, 2014 at 11:01 am by David Farrar

Stuff reports:

A group of high-powered New Zealand women, some of them mothers, say should be means-tested to give more assistance to poorer families.

I agree. Taxing people more to give welfare to families who don’t need it is inefficient and morally unjustifiable.

Means-testing paid parental leave is supported by Therese Walsh, mother of two, the inaugural Women of Influence winner and head of New Zealand’s 2015 Cricket World Cup campaign.

“We means-test for almost every other kind of benefit, why should this be any different? There isn’t enough taxpayer money to go around and the spend must be appropriate. I don’t have a strong view on how much time should be taken but the dollars should be enough to provide the necessities.”

I think all welfare should be means tested – including NZ Super – so long as the administrative cost of doing the means testing is minor.

Victoria University professor of public policy Jonathan Boston said that if the aim was to assist low-income families, there would be better ways than changing current parental leave arrangements. “In order to get parental leave you have to be at work and you have to have been in work for a year continuously. If you simply extend paid parental leave it’s not going to help any of those not in work.”

Yep.

BusinessNZ chief executive Phil O’Reilly said it was a nice idea but he did not believe the means-testing proposal could be practically implemented. “We have always supported targeting of government assistance. But this won’t have wide support. I suspect in practical terms employers may support universality.”

A very disappointing statement. I don’t believe means testing paid parental leave would be difficult at all. NZ Super would be. But PPL wouldn’t be.

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50 Responses to “Should paid parental leave be means tested?”

  1. Redbaiter (8,350 comments) says:

    “Taxing people more to give welfare to families who don’t need it is inefficient and morally unjustifiable.”

    WFF?

    [DPF: WFF should be targeted more at lower income families. The challenge is that if you set abatement rates too high, then the effective marginal tax rate gets close to 100% which is also bad]

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  2. duggledog (1,505 comments) says:

    I don’t think I should have my taxes going towards supporting other men and women who have children whether they are together or apart, at all. Their kids are their problem and their family’s problem if they can’t afford them or to have time off work with them.

    We never got a bean from the government, and we could have done with a bit of relief I can tell you, when we had our kids.

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  3. CharlieBrown (994 comments) says:

    Great idea – lets encourage poor people to breed more.

    Parental leave should be removed full stop. Get rid of all the middle class and corporate welfare and reduce all tax rates. Why take money of people only to give some of it back to them. But good luck getting the socialist nats to undo Aunty Helen’s envy inspired policies.

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  4. flipper (3,950 comments) says:

    David…,.
    Agree with you on means testing all benefits.

    But Nat Super is NOT a benefit. And if you want a reason for not going down the testing road, look at the mess that Australia is heading for as a consequence of their “Pension” and saver schemes being totally out of wack. Moreover, ask any self employed Australian about the slinters worked there to get around the means test.

    Nat Super is best left as it is…apart from a gradual increase in entitlement age, accompanied by ring fencing employment laws to prevent age discrimination in employment.

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  5. ShawnLH (4,482 comments) says:

    I agree with paid parental leave. Children are a necessity to any societies survival, they are not a lifestyle choice. The question is would it not make it more expensive to administer if it was means tested?

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  6. duggledog (1,505 comments) says:

    How about means testing like this – let’s attach a dollar value to a person’s contribution to society and figure out how much they have cost the country as opposed to how much they have contributed.

    You know, tot up all the court appearances, traffic fines, children on the DPB, everything. Then, when they retire we can say, well, you’ve actually cost the country more than you put in so, sorry, your pension is null and void.

    Many New Zealanders would be in the red to the tune of hundreds of thousands

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  7. Viking2 (11,368 comments) says:

    I think all welfare should be means tested – including NZ Super – so long as the administrative cost of doing the means testing is minor.

    =====================
    Interesting watching Marilyn Warring this morning. When asked that question she without hesitation said , no, because the super is taxed.
    Quite correct and its about the most level and efficient benefit there is for that reason.

    always liked the way that lady used her mind. Showed up a lot of cowardly National Men.

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  8. Kea (12,030 comments) says:

    Should paid parental leave be means tested?

    NO.

    It should be scraped all together.

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  9. Right of way is Way of Right (1,121 comments) says:

    I’m no fan of means testing Superannuation, especially for someone like myself who has never been dependent on the state, never drawn a benefit, and has contributed tax dollars for all of his working life. I would be most upset when I reach the age for superannuation and am informed by the state that I have to be means tested. Now I have a pension that will kick in when I turn 60, plus I have kiwisaver on top of that, so I am making preparations for my eventual retirement, but it does piss me off that there is a possibility that when I get to the required age, my access to national superannuation will be limited simply to pay for those people who have made little or no provision for their own future. Maybe I am being selfish, but I do believe that I should have some sort of recompense for being a working and productive member of society for so long.

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  10. martinh (1,257 comments) says:

    i think rich people should just get much less weeks.
    super shouldnt be means tested, if you a rich you deserve some payback.
    means testing super just gives tricky accountants money

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  11. martinh (1,257 comments) says:

    right of way,
    yeah totally agree

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  12. Psycho Milt (2,405 comments) says:

    Taxing people more to give welfare to families who don’t need it is inefficient and morally unjustifiable.

    Means testing just means we tax wage/salary-earners more to give welfare to families who can arrange their financial affairs to qualify. Making benefits universal while making it a lot harder to avoid paying your taxes would be a lot more sensible – which probably rules it out of consideration by government.

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  13. Jack5 (5,014 comments) says:

    Means testing wouldn’t bother the rich, but it would be another squeeze on the middle class.

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  14. wiseowl (861 comments) says:

    There should be no paid parental leave period.
    Once again the Nats can’t stick to their principles.

    $300m or so for this policy. NO.

    Kea I’d rather see it scrapped in preference to scraped.

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  15. SPC (5,563 comments) says:

    Parental Leave should firstly guarantee a parent up to 12 months leave and return to their job.

    The second issue is income maintenance, if it is like annual leave or sick leave the employer pays wages. In the absence of employer payment, it is clearly not like these payments.

    This then raises the issue of taxpayer preference to someone in work over someone who has lost a job, finds it hard to find a new one and puts the time to use to have a child.

    Because of this I favour a change.

    Parental Leave at the MW for 12 weeks universal paid by the employer and taxpayer half each.

    A tax paid option.

    an exemption from the work test and means test to new parents – so they can get the dole (about half the MW) for up to 12 months. Working parents eligible after 12 weeks.

    This replacing the first year of the Labour plan. Thus their means tested baby payment from ages 1 to 3 only.

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  16. ShawnLH (4,482 comments) says:

    “Parental Leave should firstly guarantee a parent up to 12 months leave and return to their job.”

    12 months is too long. No employer should have to keep a job open for that long.

    Tweaking aside, the current policy is about right.

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  17. SPC (5,563 comments) says:

    12 months is available now.

    http://www.dol.govt.nz/er/holidaysandleave/parentalleave/paid-unpaid.asp

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  18. Ben2001 (25 comments) says:

    If Labour forms the next government it will be means tested. Only the poverty stricken earning under $150000 will be eligible.

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  19. Casey (14 comments) says:

    I tend to agree with parental leave, but totally disagree with means testing superannuation. Maybe its nice to have for the real rich, but for most, even those earning $100-200k the future availability of national super has been part of most people’s calculation of how much they need to save during their working lives. You don’t pull the rag from under a tax payer like that.

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  20. lolitasbrother (635 comments) says:

    Farrar states that he believes all welfare including super should be income tested, leaning left with he light high air in his head again.

    My brother and sister in law came round to eat here yesterday, my brother he had no reason to lie to me, but his taxes for the last ten years were more than I had earned in my entire life.
    And according to Farrar he should not be eligible for superannuation.

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  21. Aredhel777 (290 comments) says:

    Jack5 is quite right. Means testing will put yet more pressure on the middle class. Why do you people not see that discouraging people from having children is a stupid idea?

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  22. thePeoplesFlag (242 comments) says:

    “… Making benefits universal while making it a lot harder to avoid paying your taxes would be a lot more sensible – which probably rules it out of consideration by government…”

    Also, universal benefits are much easier to administer, eliminate poverty traps, and ensure all citizens equally benefit from the taxes they all pay. All in all, universal is always the way to go if you have any sense.

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  23. Judith (8,534 comments) says:

    Are we talking about means testing or income testing, the two can be quite different?

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  24. seanmaitland (498 comments) says:

    Until you’ve had children DPF, you’re comments on this are as valuable as pissing into the wind. Until you’ve had kids, you just don’t understand how hard it financially is.

    Parents have to go down to one income, and the cost of raising children these days are horrendous. Most budgeters will tell you that from having a child, you should add $200 a week to your weekly budget to cover all the extra costs, and thats before you put them into daycare for 40 hours a week once you have to go back to work.

    There are very few families out there for who having kids is not a financial struggle.

    Means testing itself for Super and Parental leave is wrong – as the people who have paid in the most tax, get penalised, while those who have paid in the least benefit more.

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  25. MT_Tinman (3,099 comments) says:

    Aredhel777 (277 comments) says:
    May 11th, 2014 at 12:53 pm
    Jack5 is quite right. Means testing will put yet more pressure on the middle class. Why do you people not see that discouraging people from having children is a stupid idea?

    Perhaps because, quite simply, people multiply freely without the encouragement of my hard earned bloody money.

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  26. seanmaitland (498 comments) says:

    MT_Tinman: “Perhaps because, quite simply, people multiply freely without the encouragement of my hard earned bloody money.”

    The parental paid leave allowance is not relevant to your tax, as the people who get it are all required to be in jobs themselves. If you were talking about Working For Families you would have an argument.

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  27. Southern Raider (1,800 comments) says:

    The only fair way to handle any of this is to have a portion of your tax put into a separate account just for you (and dependants). Any benefits you consume including parental leave get deducted from this account and then when you retire you get an annuity payment based on the balance.

    Why should my parents have worked their arses off in average jobs so they could be debt free in retirement and have some modest savings which would impact their super and yet some mongrels down the road who haven’t worked for 30 years, live in a state house etc get the full amount.

    Half of you sound like bloody socialists

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  28. Kea (12,030 comments) says:

    Until you’ve had children DPF, you’re comments on this are as valuable as pissing into the wind. Until you’ve had kids, you just don’t understand how hard it financially is.

    seanmaitland why should DPF pay for your lifestyle choices ? How do you justify your incredibly arrogant sense of entitlement ? If you can not afford kids then do not have them. Simple as that.

    You have not done the world a favour by having kids. It is not any sort of accomplishment. Even lice reproduce. The fact is bringing more hungry consumerist obsessed over indulged kids into the world is probably the most damaging thing you will ever do. Even the most invasive and draconian environmental protection measures will only secure the human race a handful of extra years if the population continues at the current rate.

    See what you have really done:

    https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcR8oeMtwdMn0jha1wRIdO9Tw_4_VfsuLIS0SiX3d2KTb2vU-3hTVQ

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  29. Kea (12,030 comments) says:

    The parental paid leave allowance is not relevant to your tax

    It seems the entitleitis has moved into stage two terminal stupidity. I guess he just thinks he can cry “Think of the Children !!!!” and the money magically appears because babies are cute.

    This is the expected level of debate when kids are involved.

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  30. wikiriwhis business (3,883 comments) says:

    “But good luck getting the socialist nats to undo Aunty Helen’s envy inspired policies.”

    I don’t think everyone has woken up to the Nats being socialist yet.

    Curious when there’s no true left/right anymore.

    Obamacare, Kiwisaver, all strategies to lift premiums to untenable rates and crash the economic infrastructure

    Tactic used by all major parties

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  31. wikiriwhis business (3,883 comments) says:

    “Why do you people not see that discouraging people from having children is a stupid idea?”

    UN depopulation. That’s why homoexuality is so encouraged.

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  32. Kea (12,030 comments) says:

    wikiriwhis business, we are going to depopulate one way or the other. You have two, and only two, choices.

    1. We stop breeding like bacteria on a dog turd.

    2. We have mass starvation, disease and constant war.

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  33. Psycho Milt (2,405 comments) says:

    “We” already have stopped breeding like bacteria on a dog turd. NZ’s population would be falling if it wasn’t for immigration from the kind of places where they think children are a blessing from God. It’s those “blessing from God” types we have to worry about.

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  34. MT_Tinman (3,099 comments) says:

    seanmaitland (424 comments) says:
    May 11th, 2014 at 1:26 pm

    The parental paid leave allowance is not relevant to your tax,

    Are you trying to tell me that those paid for parental leave are just getting their own tax back?

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  35. Duncan Brown (16 comments) says:

    “Should paid parental leave be means tested?” The real question is, why should be the tax system be so convoluted, cumbersome and expensive to run, so as to pay for the lifestyle/procreation decisions of others? Robbing Peter to pay Peter. Imagine if we reduced tax and reduced handouts other than to those genuinely in need.

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  36. muggins (3,343 comments) says:

    http://www.enz.org/family-assistance-new-zealand.html

    I believe parental leave payments should be on a sliding scale similar to the family assistance scheme.
    I don’t believe superannuation should be means tested unless the person receiving it is still in paid employment.
    If that is the case then any superannuation paid should only make up the difference between what a person is receiving in paid employment and what they would receive in superannuation.
    For example at present superannuation for a married couple comes to $29354 pa.net.
    So if the net wage for that couple comes to more than $29354 than they shouldn’t get any superannuation.
    The word superannuation means a pension paid to a person on retirement .
    Obviously a woman who left the workforce to have a family and never returned would be deemed to have retired at 65,but if she is married and her husband is still earning more than a net salary/wage of $29354 then she shouldn’t be receiving superannuation as well.

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  37. Shazzadude (526 comments) says:

    New Zealand has a low birthrate, and of the few giving birth, most of them are from lower socio-economic backgrounds. The middle class and above are not having children, and this group needs more incentives to have children.

    On that basis I think extending paid parental leave is a good idea.

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  38. Michael (903 comments) says:

    WFF is available to very high income levels – if you have 4 kids you still get supported if you have an income over $100k! Same with National Super – if you earn $100k from other sources then full National Super is not needed.

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  39. mikenmild (11,247 comments) says:

    ‘this group needs more incentives to have children.’
    Why?

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  40. goldnkiwi (1,264 comments) says:

    I would say because careers have to be put on hold and the children more likely to be planned, mortgages likely to be higher etc. The children dare I say, are also more likely to be educated and contributing to and in the future.

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  41. ShawnLH (4,482 comments) says:

    Mike,

    a purely pragmatic reason is the problem of how a shrinking work force can support a growing elderly population on Super. Immigration helps, but it’s not enough.

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  42. freemark (564 comments) says:

    Many people don’t require payments for parental leave. Many people have made themselves valuable enough to an employer that the employer will pay them for that break in anticipation of getting them back to the job. Some people bleat that the children will be damaged by not “bonding” full time with their female or male breeder – we see every day that many children are better off either not being born or not getting anywhere near their breeders. I like someone’s idea above..if you have worked & paid tax (or other non financial contributions to society) you get credits for State funding if you need it (and voting rights). If you haven’t, or if your costs to taxpayers have been voluntarily large, you get SFA.
    The lying troughing Opposition parties should be sacked for the next few years while Nact/Maori gets on with improving Society, the Communist Norman should share a cell with DotCon to learn what a real shafting is, contraception should be added to fluoride in the water supplies (prove you can bring up children, you’re allowed to have them) and all these Green Hippies should be working for their dole killing possums & clearing scrub/fencing waterways near dairy farms (or driving Taxis so they see the value of new roads and let the Indian Doctors fix people)
    There, fixed NZ just like that.

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  43. Rex Widerstrom (5,349 comments) says:

    Southern Raider suggests:

    The only fair way to handle any of this is to have a portion of your tax put into a separate account just for you (and dependants).

    Compulsory super schemes as are operated in Australia go some way towards this model (though don’t take the overarching view of contributions vs liabilities you suggest). NZ First has had this as a policy since it was formed, and National cleverly snookered them by allowing it to go to a referendum. People didn’t look further than “…a percentage of your income…” and voted, overwhelmingly, “no”. More’s the pity, because the point you make is, IMO, a very valid one.

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  44. Crusader (302 comments) says:

    flipper (3,305 comments) says:
    May 11th, 2014 at 11:21 am

    But Nat Super is NOT a benefit.

    Correct. My father, having paid into this scheme all his life, is entitled to claim it, even though he remains self-employed and still working at age 72. He is not claiming a benefit. An entitlement, based upon his contributions.

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  45. Viking2 (11,368 comments) says:

    Southern Raider (1,400 comments) says:
    May 11th, 2014 at 1:26 pm

    The only fair way to handle any of this is to have a portion of your tax put into a separate account just for you (and dependants). Any benefits you consume including parental leave get deducted from this account and then when you retire you get an annuity payment based on the balance.

    Why should my parents have worked their arses off in average jobs so they could be debt free in retirement and have some modest savings which would impact their super and yet some mongrels down the road who haven’t worked for 30 years, live in a state house etc get the full amount.

    Half of you sound like bloody socialists

    Most of them are. didn’t you realise. :lol:

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  46. salt (133 comments) says:

    National Super is unquestionably a benefit, and those of you trying to claim otherwise are kidding yourselves. However, it’s a benefit that you’ve lived your adult lives expecting you’ll receive, and probably calculated your savings accordingly, so it would be unfair (not to mention unwise) of the Government to suddenly bring in means testing for those 40+. I, on the other hand, fully expect that by the time I reach retirement age it will, like student allowances, be a very strictly means-tested benefit available only to those with no investments and stuff all in the way of assets, and thus I have no intention of factoring it into my retirement savings.

    If you’ve got state-funded PPL (also unquestionably a benefit) it should be universal, or you’re putting the incentives in the wrong place. The country needs bright and ambitious kids, and (barring a complete, Scandinavian-socialism-style reform of the state-funded education system) those are most easily sourced from bright and ambitious parents, who, unsurprisingly, tend to be the ones at the higher end of the income and asset scale come family-bearing age. Do we really want to tell them, “screw you, we’ll pay the 22-year-old checkout operator to have four kids right now, but if you want to do that you can bloody well be out of pocket – or wait til you’re 38 and you’ve paid off a bit more of that mortgage, and take your chances that you’re still fertile.”?

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  47. Tauhei Notts (1,682 comments) says:

    Many comments here about means testing NZ Superannuation.
    The proliferation in recent years of family trusts (inter vivos trusts) would make such means testing a total minefield.
    Let me give an example; If you are discretionary beneficiary of a trust is the trust’s income your’s?
    Imagine a nasty person who hated a superannuitant who had molested his children. The nasty one sets up a trust with the child molester as one of several discretionary beneficiaries; and his own two children as the trustees. The child molester will never get a penny while the trustees exercise their infettered discretion. But as a beneficiary of a trust he will be unable to get NZ Superannuation.

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  48. JeffW (325 comments) says:

    Notts, the income from a trust has to be distributed to a beneficiary before that beneficiary is liable for tax. Otherwise, it is trustee income and the trust pays.

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  49. mikemikemikemike (323 comments) says:

    To the people here that suggest that they should not have to pay for ‘other peoples kids’. I don’t want to bail out your bad investments, farmers, or banks. I also don’t want to pay for your subsidised medicine or doctors visits. If I don’t own a car I will still pay for roads, But I do, and for the most part I do it knowing it is contributing to our standing in the OECD/world re: being among the fairest countries in the world.

    Paid parental leave and Super are two of the very few things my wife and I get back because of our tax bracket, so how about before you start taking that away, you remove the subsidies and bail outs from the examples I listed above.

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  50. seanmaitland (498 comments) says:

    @Kea – thats hilarious coming from you – based on comments you’ve made here, I know I pay more tax than your gross salary.

    What a muppet.

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