The politics of welfare

This week’s column in the Herald focuses on what was by far the most significant announcement of the week, but one which received little publicity as Labour was so silent on it.

In talking about the potential welfare reforms, I also focus on Labour’s welfare policy:

In fact Labour’s official policy is to increase the net value of benefits, and pay people more to be on a benefit as their tax policy is to move benefits being calculated net of tax, to gross of tax, meaning they will get $10 more a week for being on the benefit with Labour’s policy to have no tax on the first $5,000 of income.

There has been remarkably little attention paid to the fact that Labour is promising every beneficiary an extra $10 a week for not having a job. This is different to 2008 when Dr Cullen cut the bottom tax rate, but kept benefits calculated on a net basis.

So we will have an interesting choice come the election time – National will be offering welfare reform to reduce the numbers on welfare, and Labour will be offering to pay beneficiaries $10 a week more.