Working for Families

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In 2004 the New Zealand Labour-led coalition government introduced the Working for Families package as part of the budget. The package, which commenced operating on 1 April 2005, has three primary aims: to make work pay; to ensure income adequacy; and to support people into work.

Working for Families Tax Credits are paid to families with dependent children 18 or under to help with the cost of raising a family. They include four types of payments:

Family tax credit provides ongoing support for beneficiary and working families.
In-work tax credit is available to working families and pays up to $60 per week for families with up to three children, and up to an extra $15.00 a week for each additional child.
Minimum family tax credit is paid to families earning up to $22,119 a week before tax and ensures a minimum income of $347 a week.
Parental tax credit helps with the costs of a new baby for the first eight weeks after your baby is born.

Additional help with childcare and accommodation is also available under the Working for Families package.

The package is being jointly delivered by both the Ministry of Social Development and Inland Revenue.

1 Cost
2 Scope
3 Impact
4 Timeline
5 Opinions on the programme
6 External links
7 Reference

[edit] Cost

The total amount delivered by Working for Families will build to $1.6 billion a year in 2007, with an estimated 360,000 families qualifying for entitlements.

[edit] Scope

The level of assistance to individual families depends on their income and number of children.

Three out of four families now qualify for extra financial assistance under Working for Families. Nearly all families earning under $70,000 a year, many families (with children) earning up to $100,000 a year, and some larger families earning more are now eligible.

Thousands of New Zealand families are also benefiting from the increased income thresholds and rates for Accommodation Supplement and Childcare Assistance.

For more information go to www.workingforfamiles.govt.nz

[edit] Impact

The impact of Working for Families has been substantial and widespread, increasing the incomes of thousands of New Zealand’s working and beneficiary families.

Working for Families has made beneficiaries better off by around $31.00 per week, and working families by around $64.00 per week. The April 2007 increase will lift families’ incomes further.

Working for Families has reduced child poverty by an estimated 70% since it began. This equates to at least 70,000 children who have been lifted out of income poverty by Working for Families.

[edit] Timeline

October 2004

Announcement of the Working for Families as part of the Budget. Changes included:

Abatement of Accommodation Supplement removed for beneficiaries.
Accommodation Supplement entry and abatement thresholds increased for non-beneficiaries.
Childcare and OSCAR Subsidy rates increased and aligned, and income thresholds increased.

April 2005

Stage One of Working for Families implementation went live and a further implementation deliverable was released in October 2005. The changes included:

Family tax credit rates increased by $25 for the first child and $15 for additional children.
The child component of main benefits was moved into family tax credit.
Foster Care Allowance, Unsupported Child’s Benefit and Orphan’s Benefit rates increased by $15 per week.
Accommodation Supplement maximum rates increased in some areas with high housing costs.
Family tax credit is treated as income for Special Benefit and standard costs are set at 70% of main benefit plus family tax credit for people with children.
Childcare and OSCAR Subsidy rates increased by another 10%.

April 2006

Stage Two of Working for Families implementation went live. The changes included:

The in-work tax credit replaced the Child Tax Credit. The in-work tax credit pays up to $60 per week for families with three children, and up to an extra $15 per week for each other child.
The minimum family tax credit threshold increased from $15,080 to $17,680.
The two family tax credit abatement thresholds of $20,356 and $27,481 are replaced by one higher abatement threshold of $35,000.
The 18% abatement rate applying to the lower abatement threshold for family tax credit is removed completely and the 30% rate applying to the higher abatement threshold is reduced to 20%.
Introduction of the Temporary Additional Support to replace Special Benefit.

April 2007

Stage Three involves the final components of Working for Families implementation and went live in April 2007. The changes include:

Family tax credit rates increased by $10 per week per child.
The income threshold for the minimum family tax credit increased to $18,044
Regular inflation adjustment was put in place to prevent the erosion of payments over time.

[edit] Opinions on the programme

Some (such as Victoria University Professor Robert Stephens) have praised the package for encouraging adults to come off benefits, and for targeting families in need.

Others, however, have criticised the package for potentially extending to the relatively wealthy and for increasing effective marginal tax rates for many people. The economist Gareth Morgan, for example, commented on how some (generally middle-income) people can face effective marginal tax rates of over 100%.

The Child Poverty Action Group has commenced legal proceedings against the government for discriminating against those not in employment in the "Working for Families" package.

Some find the very name of the "Working for Families" package ambiguous. While supporters portray "working for families" as meaning "making efforts for the benefit of families", others interpret the phrase as "[giving] families work to perform".