And you'll notice a large number of articles in the NZ Herald of limited interest to a general audience (one would have thought) and with a definite slant in favour of buying the expensive US product. Not that the paper might have been induced at some level to take this line, of course.
Back in Wellington •
Since Nov 2006 •
Haven't seen any pundits discuss this wrinkle yet: compulsory part-time hours worked by beneficiaries goes up by 5 hours. Because of savage abatement rates on every dollar earned, I wonder how much of the headline $25 benefit increase will remain? Someone in MSD/Treasury must have modelled it.
Here’s some of the type of analysis you’re looking for:
As usual, however, the devil was tucked away in the detail. Although many low income families will benefit from the increases to Working for families tax credits (“WFTC”) from 1 April 2016 the sting in the tail is an 5.9% increase in abatement rates from 21.25 cents to 22.5 cents in the dollar.
From 1 April 2016 WFTC will reduce by 22.5 cents for each dollar earned over $36,500 of gross income (a term which has itself been widely expanded in recent years). What this means is for families receiving WFTC their effective marginal tax rate (“EMTR”) will increase by a combination of tax and abatements.
For a small group of about 4,000 families on low income their EMTR is 100% that is every extra dollar they earn will be lost in tax and abatements of WFTC and other benefits such as accommodation supplement. Until the interaction between the tax and social spending systems are overhauled this intractable problem will remain.
$25 a week is not likely raise many families out of poverty. I’m torn between saying it’s a token bone thrown – and admitting that for some it will surely make a positive difference. What it really is is a kick in the teeth to Labour. They haven’t been a party friendly to or favouring beneficiaries since the 70s. National just threw that into stark relief.
What it really is is a kick in the teeth to Labour. They haven’t been a party friendly to or favouring beneficiaries since the 70s.
They still made friendly noises as recently as the 80s. Back then, the DSW sent out facsimile missives to its clients signed by Ann Hercus, addressing the recipient as Dear Beneficiary. Of course there was a bit of opposition carping that it was a kind of thinly-veiled off-season electioneering.