Monday, May 23, 2011

Update on Working For Families (WFF)

Reading Helen Kelly in the DomPost this morning it struck me that many people do not fundamentally understand what WFF consists of. Kelly describes it as "effectively a tax cut aimed at those who need it most."

The $2.7 billion WFF bill is mostly made up of family tax credits to beneficiaries with children. If a family pays no tax they cannot receive a cut. Family tax credits used to be more accurately called Family Support. But when they started being paid to higher income workers the named was changed.

Here are some facts from Treasury:

In 2006, $1.5 billion of WFF tax credits were paid out to 159,000 people. By 2009, this had risen to $2.7 billion paid out to 419,200 people.

In 2006 the vast majority of recipients were parents on a welfare benefit. There are more now than there were in 2006.

To buy votes (and to be fair, try and entice more beneficiaries into work with the In Work tax credit) Labour introduced WFF.

National is not prepared to seriously risk fickle votes so has tinkered with various thresholds and payments slightly. Then trumpeted that they are saving almost half a billion.

Like most touted government savings they are the difference between forecasts if they do and forecasts if they don't and calculated over years, not annually. Back to Treasury:

These changes are expected to generate $448 million of savings over the four years to 2014/15. As a result, the total cost of WFF will reduce from $2.8 billion in 2011/12 to $2.6 billion in 2014/15.

Thoroughly underwhelming. I would put money on it that if no further cutbacks or complete repeal of WFF is made, by 2014/15 the forecast figure of $2.6 billion will be well under actual spending.


Anonymous said...

WFF is a benefit pure and simple.
A bribe to keep people voting Labour - and now Labour-lite.

Communism by stealth

It should be abolished. Overnight. Along with the rest of the "nice-to-have" welfare we simply cannot afford.

Anyone who doesn't vote ACT in the election - simply demonstrates they cannot add.

Unsolicitedious Rebugger said...

Lindsay I like the way you think. I have seen you on Red Alert - gosh that party annoys me. ANYWAY! Totally agree with this post. WFF & the propaganda & leftist sound bites that seem to have so successfully found their way into the brain of the brainless drives me nuts. I actually loved the scheme in theory - and even went out of my way to find a job within MSD that played a part in its policy & administration. But it is flawed beyond belief. The objective is meant to be "make work pay" but in reality it is "having children pays". I don't believe there is a valid argument that can show me how this scheme has not created a sense of expectation & entitlement that we simply cannot afford. What REALLY gets up my nose is that not only are all families with 2 kids earning up to $50k p/a paying NO tax at all, but some of these families - and most certainly those in higher income brackets - are able to use this tax credit (paid by taxpayers who do NOT get any govt assistance) to put money into Kiwsaver which then gets matched by MORE of other taxpayer's hard earned income. THEN they have the audacity to complain about the Kiwisaver changes (totally agree with them btw - have written a blog) & claim that everything is about supporting the rich/its tax cuts for the rich. Very easy to make demands when it is not you that is picking up the tab. WFF is a scam - while family assistance has existed in NZ in one form or another for decades, the 5th Labour govt took it to a whole new level. No one has the right to have children based on how much assistance they can get and this is exactly what this scheme encourages. It does not teach people to take personal responsibility & live within their means. Anyway, that's my 2 cents or so worth!

Anonymous said...

Can you explain how WFF is substantively different from the National government's tax cuts? Both are bribes, both are a benefit to their different constituencies, and both cost the government money each year (WFF $2.7b/year, Key's tax cuts $5b/year according to Kelly). Thanks.