OVERHAUL OF WORKING FOR FAMILIES HAS WIDE SUPPORT

Child Poverty Action Group (CPAG) is pleased a large number of submissions to the Working for Families' (WFF) review recognized WFF’s failings for children and validates CPAG’s campaign for a thorough overhaul of the system.

The 585 survey responses, 53 written submissions and 16 key stakeholder sessions revealed strong support for increasing rates of payment to those on the lowest income and paying the In-Work Tax Credit (IWTC) to all families, regardless of work and benefit status.

Many submitters highlighted that too many whanau struggle with inadequate incomes, exacerbated by the cost of living and housing crisis. Indexation of payments and thresholds was viewed as vital to maintain support over time.

Submitters also said current rates of abatement were too high, acted as a disincentive to work or to increase hours and drew attention to the importance of supporting whanau with the costs of work such as child-care costs and transport. Incurring debt from overpaid WFF and demands for repayment were cited as detrimental to whanau well-being as well as a barrier to take-up of WFF.

Submitters said the current system is too difficult to navigate and is not designed for diverse family types or families with variable income and circumstances.

However, CPAG is dismayed that despite so many submissions pointing to the clear failings of the current system, there is no action plan. The slow progress on the promised review means nothing will be done this year when the needs of whanau is so great.

"The signs are not looking promising for next year either with any reforms enacted likely conditional on Labour winning the election," says CPAG spokesperson, Susan St John

The IWTC does not operate as an incentive by rewarding the extra hour of paid work as a normal work incentive does, but rather acts as an incentive to be fully off the benefit. When that is impossible for families struggling with sickness, their own disability, disabled children, and casualized work, or as sole parents, the most vulnerable children are punished with a cut in their vital WFF support.

St John asks supporters of the IWTC to explain why perpetuating child poverty is justified as a work incentive.

"A reformed WFF could help reduce the worst in child poverty and support and prevent poverty in families in low-paid full-time work."

CPAG wants immediate government action to:

1) Rename WFF to reflect the needs of children, not paid work.

2) Decouple WFF from all paid work requirements and the source of parental income. Thus, the IWTC should be joined up to have just one WFF payment. This would mean at least $72.50 weekly more for one to three children, and more for extra children in the worst-off families in the benefit system.

3) Index WFF to wages annually (and to inflation where it exceeds wage growth) as is the case for NZ Super. Also increase the threshold at which WFF starts to reduce to restore the real value last set in 2018. In 2022/23 it should be at least $50,000.

4) Make work pay with a range of alternative measures. They include decreasing the WFF abatement to 20 percent to lower the effective marginal tax rates for low income working families and improve the returns from work; increasing the threshold for abatement of benefits to 10 hours at the minimum wage ($212 in 2022) and explore other more targeted ways to help with the costs of paid work such as child-care and transport subsidies.