On resources and choice for mothers

Tapu Misa describes today what Minister of Social Development, Paula Bennett's priority should be;

The more important question for Bennett ought to be how public policy is contributing to a lack of choice for some mothers, and how it might support those who have neither the choice nor the resources.

This is code for Misa's desire to redistribute more resources from the 'rich' to the 'poor'.

Let's analyse what the current situation is.

There are essentially 4 types of mothers with dependent children. Partnered - working and not working - and single - working and not working.

Partnered women are heavily affected by public policies which apply to their other half. Those who don't work, to a large degree, and those who do, to a lesser degree. Taxation plays a big part in the resources they have and consequent choices. To service loans, a mortgage and raise children many women will find they have to return to work. But after paying for childcare, and the costs of going to work, often there isn't a lot left. Their future work prospects are however secured and enhanced. Low and flat tax would make a huge difference to the choices that were available to them. Indeed, with a partner's income increased, the mothers may not even have to work should they so choose.

Misa might argue that universal free childcare would have the same effect of increasing resources. But nothing is 'free'. That and other measures like extending Paid Parental Leave (and including fathers), has to be paid for through taxation which straight away prohibits moving to the low, flat tax that would actually do a lot more to increase choice.

Working For Families is a prime public policy intended to give mothers more choice. Instead it creates a ceiling. There is no incentive to work (or for the partner to increase his income) if the government is going to remove tax credits when that happens. Like benefits, WFF traps people, just at a higher rung on the income ladder.

Instead of taxing families only to hand it back, the money should be left in their bank accounts in the first place. This avoids all the dead-weight cost involved and removes disincentives to get ahead (which would also incidentally add to what NZ needs most - increased productivity.)

The above applies likewise to working single mums who, as part of the lowest income sector of society, would benefit from decent tax breaks more than any other group. A income free threshold would also serve this group well. That's another public policy that could be considered. Such a policy would boost their resources and choice dramatically.

Non-working single mums, reliant on welfare, while often having the least resources have, in some ways, the most choice. Their days are theirs to fill as they choose unimpeded by having to work. Unfortunately this short-term advantage too frequently translates into long-term disadvantage. Up to half of these mums find, as children become less dependent, their own lack of educational qualifications and work experience present real barriers to paid work. Their choice is then limited to staying on a benefit and staying relatively poor. There are currently 42,000 single parents reliant totally on welfare, whose youngest child is 5 or older.

The choices of the last group are paid for wholly by the taxpayer. They are choices - to leave a relationship or have children without a supportive partner - that often yield negative consequences. In general, these aren't choices that public policy should be encouraging.

The choices that public policy should be encouraging are those that see people making decisions about having and raising children when they are emotionally and financially ready and not before. Becoming mothers at the right time for themselves and their children. That kind of policy should be as neutral as possible eg low, flat tax enabling people to make their own decisions about how to combine family and work. Policy that simply redistributes resources from one sector to another will always come with both destructive incentives and disincentives.

As a broad prescription then government should be looking to removing the incentives to single parenthood (ensure welfare for mothers is strictly emergency assistance only) and reducing taxes on all working mothers (as part of universal low rates.) The first enables the second. This would maximise resources and choice for as many as possible.

Above all public policy should take account of the following; the choice to work or stay home is actually a personal one. It is for the parent(s) to make. It is not for society to make or fund.