NZ Herald on Green policy to pay in work tax credit to those not in work

August 20th, 2014 at 9:00 am by David Farrar

The editorial:

The Green Party is offering a simple answer to child poverty: give beneficiary parents the same wage subsidies paid to low and middle income earners with children. That, the party calculates, would give beneficiaries an extra $60 a week. “This money will transform life for these kids,” said co-leader Metiria Turei. “It’ll mean having warm clothes, school books, lunch and turning on the heater when they are cold.” If only it was that simple.

It will mean more families will be penalised if they go from welfare into work.

Quite apart from the cost this would present to taxpayers ($500 million a year, the party estimates) it is an admission that the extra $60 a week the Greens would put in the hands of parents might not be spent on warm clothes, school books, lunch and home heating. Child poverty is not simply a matter of income.

If it were, then all children being raised on current benefits would be poorly housed, clothed and under-nourished. People’s circumstances vary greatly and the welfare system has become much better at providing allowances for particular needs.

Living off welfare is hard, but most families manage to do it without disadvantaging their kids significantly. And there is a lot of flexibility with hardship grants for those who need it.

The much maligned benefit reforms of 1991 reduced base rates and introduced or boosted grants for accommodation and the like. Ms Turei, as it happens, became a single parent in 1993. She referred to this in her speech, noting that her daughter has grown up in an era of “shocking levels of deprivation and poverty among our children”. Yet in that era she managed not only to raise a child but obtain a law degree with the help of a training incentive allowance.

Six years after becoming a sole parent, Ms Turei graduated from Auckland University and began work with Simpson Grierson. Her experience suggests that the welfare system as it exists is not necessarily a poverty trap.

Absolutely.

National argues the cure for poverty is employment, not just because work can pay more than welfare but because it provides the social mobility that a benefit does not. A job is liable to bring opportunities to broaden skills and responsibilities, increase earnings and productivity.

Work is about more than higher incomes. It brings masses of other benefits.

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34 Responses to “NZ Herald on Green policy to pay in work tax credit to those not in work”

  1. Black with a Vengeance (1,865 comments) says:

    Work is about more than higher incomes. It brings masses of other benefits.

    Especially if you only work 20hrs a week

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  2. Inthisdress (280 comments) says:

    Well the wages are so low generally it isn’t much of an incentive to work. So what is being proposed is a vicious cycle of state-interference to offset low wages which is paid for by increased taxation which then further reduces the disposable income which then creates another disincentive to work, becasue the wages won’t match taxation or inflation or the general cost of living.

    Give me choice. Ask me if I want to pay $140.00 less taxation based on income and number of kids off my wages or receive WFF from taxes I have to pay anyway?

    Go on National I f**n dare you. Tell you what if Labour offer me that I’d even vote for them.

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  3. alloytoo (544 comments) says:

    The problem with Green policies are that they presuppose that money grows on trees.

    The natural consequence of money growing on trees is massive deforestation. (With cudos to Douglas Adams)

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  4. OneTrack (3,111 comments) says:

    From each according to his ability, to each according to his need.

    Oh dear.

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  5. BeaB (2,125 comments) says:

    So the beneficiary parents get a free gift of $60 while the State pays for free lunches at school etc – exactly what the extra benefit is supposed to pay for.
    When will the Left learn that chucking money does not solve problems?
    I am amazed that hard-working wage and salary earners still vote for any of them.

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  6. kowtow (8,512 comments) says:

    Parents transform the lives of kids ,not $60 and not $60000.

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  7. SPC (5,636 comments) says:

    1. I do not see how the payment of the tax credit to them while they are on a benefit will penalise them when they find work. All it would do is reduce the extent of advantage that would be derived from finding employment.

    2. The (socially neutral) ability of families to survive poverty without adverse impact is dependent on their housing circumstance (and heating need in that region) and duration of time on the benefit.

    3. Yes Turei had the TIA to afford tertiary study.

    4. Does the non payment of the tax credit to them increase the number of jobs available or their chance of finding employment?

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  8. SPC (5,636 comments) says:

    BeaB, there are working poor in need of those school meals too.

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  9. Peter (1,712 comments) says:

    The scheme to pay for lunches and after-school care proves that the Greens know it’s not about money. It’s about parental responsibility, and the failure, thereof.

    I don’t have too much of a problem with the care and lunches in low-decile areas, SO LONG as this money is taken off the carers benefit/dpb/whatever to pay for it. It’s high time the welfare was directed at the child, not the “parent”.

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  10. JC (958 comments) says:

    There is a much simpler and just way to resolve these sort of issues..

    Its said there are 20-25% kids who are obese and 20-25% of kids who are hungry.. I propose the fat kids give their food to the starving ones.

    Next problem?

    JC

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  11. deckboy (18 comments) says:

    The same lady was on Radio NZ this morning giggling excitedly about how she can’t wait to be a deputy Prime Minister!
    God help us.

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  12. tvb (4,430 comments) says:

    Raising children on welfare is hard. Some on welfare benefits who are paid to raise their children have drug and alcohol issues and they smoke. You cannot have those habits and raise children on welfare without causing significant hardship to the children I would support beneficiaries with such issues losing control over most of their benefit money with rent, electricity being paid directly. And a cash card limited to purchases of food (no alcohol or cigarettes) from a supermarket/dairy. A similar scheme that operates for young people on independent benefits. They can get treatment for their smoking and alcohol and drug addiction problems.

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  13. dime (9,977 comments) says:

    ““shocking levels of deprivation and poverty among our children”. BULLSHIT!

    In 93, most of Dimes friends were having kids! We were 17. Living in West Auckland.

    The only time i saw deprivation was when the mum spent all the DPB on alcohol, smokes & drugs. Even then i dont recall any kids going hungry. it was more that they had to stay at home an be bored. no gas money etc

    To be honest, the single mums were the rich ones! The dudes were living on about $130 a week. The chicks were getting $350-$400.

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  14. Mark (1,488 comments) says:

    Of all the parties on the left the Greens the the most damaging. Paying working for familes will come off the table fairly quickly as the economy flounders and our farming sector is buggered.

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  15. Cunningham (844 comments) says:

    Lets face it, this policy is all about embedding dependency on the state. Once implemented those beneficiaries will continue to vote for the left out of fear of the benefit being rolled back again to what it was. The Greens can try to dress it up any way they like but that is the true reason. We all suffer in the long term though when the debt levels sky rocket. It happened in Aus, it will happen here as well if they get in.

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  16. polemic (460 comments) says:

    There is no substitute work.

    Unless you are medically unable to work then the benefits of work far outweigh the negatives.

    It is Govts responsibility to care for the sick and the poor.

    A very key part of that responsibility is giving those who need it a hand up.

    A hand up is TOTALLY different from a handout and the Labour/Green bloc (who are joined at the hip) have failed to see the difference.

    That is why the battlers are prospering under National.
    Create an environment that promotes growth and everyone gets the benefit.

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  17. georgebolwing (869 comments) says:

    The fundamental difficulty is that those on the left reject (or, to be kind, don’t understand) the basic idea underlying economics that “incentives matter”. This comes about because they see the world as static, not dynamic. I have always thought this strange, since the left are supposed to be in favour of progress and change, yet they are, in fact, often champions of the status quo ante.

    Successive government around the world have spent much time and effort trying to design welfare systems that are both just and efficient. Justice requires a system that is sufficiently generous as to allow those who, for no fault of their own, fall on hard times, to participate in society. Efficiency requires a system that is sufficiently parsimonious to ensure that those who have the ability to participate in society through their own efforts do so.

    The New Zealand in-work tax credit (which is based, in part, on the US earned-income tax credit) is accepted by policy experts as one of the best examples of getting this balance right: it provides an incentive (extra income in excess of wages) for those who can move from welfare to work.

    Because the left take a static view, thinking that all people are unemployed because there aren’t enough jobs, see this as being unfair; it gives more state assistance to those “lucky” enough to get a job. The promoters of such schemes, including, it must be said, Sir Michael Cullen, take a more dynamic view and believe that at any time there will be frictional unemployment — people becoming unemployed because of the normal forces of creative destruction — and these people in particular, should be discouraged from remaining unemployed.

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  18. big bruv (13,923 comments) says:

    “Well the wages are so low generally it isn’t much of an incentive to work”

    No incentive????

    So you would happily be a parasite, a bludger or a Ure?

    Fine, that is an easy fix. Slash or remove the benefit and then you have no option.

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  19. Doc (91 comments) says:

    “Work is about more than higher incomes. It brings masses of other benefits.”

    …like:
    * Discipline
    * Industry / Effort
    * Self improvement
    * Self worth / Pride
    * A sense of achievement
    * Independence
    * Setting an example for children
    * Sense of contributing to NZ
    …and no doubt many more!

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  20. Padriv Ustoev (69 comments) says:

    I like where this policy is going. The Left is moving in the right direction. Schools are not just a place of education, but cultural centres like a Madrass, that spread the word and teach the children what is right. The poor are helped by taxing the infidels and through donations or a from believers – Zakat. That way the poor have to attend the cultural centres and learn the rightcious word in order to receive their Zakat. And the Kaffir either pay or move out of the country. Your country is on the right track with leders like these. Insha’Allah.

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  21. smttc (752 comments) says:

    Is there you Sir Cullen’s Sidekick?

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  22. NoCash (258 comments) says:

    ^ I think he’s Sir Cullen’s Sidekick’s Sidekick…

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  23. infused (656 comments) says:

    It’s the same as the living wage argument. Why not give them an extra $200 a week?

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  24. mara (788 comments) says:

    Padriv is taking the piss. It will get boring soon.

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  25. alwyn (427 comments) says:

    Isn’t Metiria the person who was so hopeless at budgeting and planning that, even after about five years on an MPs pay and perks, she claimed the only place she could afford to buy a house was in Dunedin? She seemingly was incapable of saving anything on about twice what Cullen described as “rich”.
    Anyone who can’t save money on the ridiculous amount that bludgers like her are paid should most certainly not be in Parliament. At least if we are going to have prats who insist on the right to tell us how we are to live they should be competent at what they do.

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  26. rangitoto (247 comments) says:

    Why bother to work when the Greebore government will pay for all the booze and drugs you want. We saw the sort of thing on Latte’s prog the other night. No food in the fridge for the kids but a large bin full of empty booze tins parked by the door.

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  27. Inthisdress (280 comments) says:

    Funny Cunningham, you explain to people about about dependency on the state and get an overwhelming thumbs up.

    I dare political parties to pledge a tax cut and abolish WFF and get an overwhelming thumbs-down.

    Gosh. is it because I used the ‘f’ word?

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  28. box345 (50 comments) says:

    It should not be a choice between work and welfare. You should only get welfare if you are UNABLE to work. CHOOSING not to work, should not switch on a benefit entitlement. The entire Greens policy is based on some sort of money entitlement. Whether you opt in or opt out of work – the Greens see no difference. To Hell with paying people who simply opt out. But then, I’ve been saying this same thing since I came to New Zealand forty years ago, and the entitlement mentality has only got worse, a lot worse, over those forty years. Finally, Paula Bennett has changed this slightly in the last 12 months (by replacing the dole with the job-seeker benefit). Already dividends from this change are showing. Don’t chop Paula’s efforts off, as soon as they have begun.

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  29. Nigel Kearney (1,016 comments) says:

    Let’s give credit where it’s due:

    They scaremongered about GE. We ignored them and nothing bad happened.
    They scaremongered about peak oil. We ignored them again and nothing happened again.
    They scaremongered about climate change. We’ve had 10 years of little change in climate despite ever more carbon based gases being emitted.

    This time they are just being up front about their desire to take even more money from people who earned it, and buy the votes of those who choose to sit on their arses all day. I call that progress.

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  30. Padriv Ustoev (69 comments) says:

    And don’t forget the scaremongering about the rise of Islam, 20 years on and still no world Califate. Had enough of these lies!

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  31. burt (8,275 comments) says:

    Her experience suggests that the welfare system as it exists is not necessarily a poverty trap.

    That’s true – the poverty trap is indoctrinating people into a sense of entitlement to other peoples money.

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  32. burt (8,275 comments) says:

    alwyn

    She seemingly was incapable of saving anything on about twice what Cullen described as “rich”.

    That’s partially because what Cullen described as rich was (at that time) only about $5k-$10K above the average household income, and half the threshold for being eligible for WFF. Socialists – rich is earning more than a beneficiary.

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  33. hj (7,031 comments) says:

    Green’s Robin Hood Tax Misses Target on Wealth & Inequality

    A good tax system is a simple tax system. To collect the maximum revenue possible with the minimum impact on the economy, the ideal is to tax as many activities as possible, all at a low rate. That way there isn’t an incentive for people to find ways around the tax regime. The more complex it gets, and the higher the rates, the more sense it makes to pay an accountant to find ways to reduce your tax bill. And New Zealand has a massive loophole in that we have only a partial tax on the income from capital. In particular capital that doesn’t generate cash returns (owner occupied housing and land are good examples) in effect produces income that slips through the net.

    Hiking the top rate of income tax isn’t the best way to raise more revenue, simply because the most well-off New Zealanders don’t pay much income tax. They are able to arrange their affairs, taking advantage of the widely varying rules about taxing capital, to avoid having a high taxable income. Don’t believe me? In 2013, 103 of the wealthiest 197 New Zealanders declared an income less than the top threshold.

    http://garethsworld.com/blog/tax-and-welfare/greens-robin-hood-tax-misses-target-wealth-inequality

    No one could accuse Gareth Morgan of being a populist (knock the moggy on the head/ tax the family home)!? He would make a good dictator (until the PSA got involved?).

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  34. lolitasbrother (701 comments) says:

    heh Farrar, good to see you back at work

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