Rants, Raves, Reviews

Labour - We Put People First

By Gary R, in , posted: 29-Mar-2007 12:32

This is Labour policy:

‘Families and Social Development

We put people first. All our policies are designed to help ensure that all New Zealanders and their families have a fair go...’

How untrue this actually is. From April 1st 2007 the Welfare for Families Tax Credits will increase. This is a policy aimed squarely at only helping low income families at the exclusion of any person who does not have or want a family or any person who earns ‘too much money’.

Too much money could probably be defined as anyone who earns more than $60K p/year because these people pay the highest tax rate of 39 cents in the dollar for every dollar earned over $60K and they have paid this rate since Labour increased it from 33 cents in the dollar in 1999. Ironically it appears that in NZ the poor get richer and the supposed rich keep getting poorer.

Consider this:

You earn $20,000 p/year on which you pay $3900 p/year in tax. If you have one child you are paid an extra $9048 p/year in ‘Tax credits’. Add a second child and you earn $12,012 in ‘Tax Credits’.

Compare this to a person earning $35,000 p/year who pays $6825 p/year in tax. Add a child and they get an extra $7384 p/year. Another child would net $10,348 p/year.

You are better off then having 2 children, only working 20 hours a week and not earning more than $20,000 to $35,000. On top of this the government will pay you $10-$12K p/year and will also pay for 20 hours p/week child care. Fantastic you effectively pay no tax, in fact you are in 'Tax Credit'.

If you are single person with no children earning $20,000 p/year your net annual income is $16,100. Have two kids and your net annual income increases to $28,000 which is equivalent to a single person who earns $35000 p/year gross. That is quite a pay rise for no additional paid work. In fact a 42% net pay rise.

If you earn $100,000 p/year (apparently a lot of money) you pay $30,720 p/year in tax. For one or two children you get nothing. Have a third and you get $2.00 p/week. Add a fourth and you get $74.00 p/week.

This sends a clear message:

  1. If you want to get ahead financially have more children
  2. Do not try and up-skill yourself through education
  3. Do not work hard (you only need to work 20 hours p/week to qualify)
  4. Do not have any aspirations to earn more money through a better job as you will be worse off.
  5. Pay income tax but get it all back (and more) from the government
  6. If you earn $100,000 p/year do not have children, it is not worth it and you will be financially worse off.

You only have to be a minimum of 16 years old to receive tax credits so leave school, get yourself pregnant, work part time at McD’s, get your mum to look after your child and you will make lots of money. Simply, have another kid at 18 to increase your income.

And the support wagon doesn’t stop here either. Check out the IRD website for information on Family Tax Credits, In Work Tax Credits, Childcare Subsidies, Affordable Housing and the list goes on. It is huge amount of information to absorb and I spent a few hours last night trying to fathom the depth of the handouts. I think Labour have adopted a ‘use confusion as a marketing tool’ type policy.

Now don’t forget that tax is still collected first before any handouts are given. This is a bureaucratic money merry-go-around. What is the cost to collect and administer the tax before turning around handing it back? I have nothing against helping out less fortunate people but I do have a problem with rewarding mediocrity. Would it not simply be cheaper and easier just to say ok ‘there will be no tax paid on the first $20,000 of income’? If you want to pay low income parents a bonus for rearing children, how about at least having some sort of positive parenting incentive rather than just a 'free for all' hand out. Simply breading is not always a positive contribution to society when you look at the number of young criminals in our society.

I will leave this with you:

I worked with a woman who calculated that she would be better off only working 30 hours p/week. The lower income from the reduced hours meant she received more from the government which effectively gave her more money in the hand than she would get working 40 hours p/week. I asked her if she got to spend more time with her son. Her answer was ‘no’, instead she now has more time to potter around the garden.

Other related posts:
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Comment by mclayma, on 29-Mar-2007 20:38

Well written Jama..... I for one think it is terrible that I pay more tax and then I pay more for things such as the Doctor or Dentist.

It really irks me that some of the people in society can and will benefit from not doing anything apart from breeding and working as little as possible and as you mentioned its not always a good thing for these people to be the ones who contribute to the Gene pool.

Comment by juha, on 29-Mar-2007 22:31

I wish I could write off the above as the rantings of a right-wing troll but... I can't. Not when middle-class acquaintances are able to opt out of working life and/or get a free tertiary education courtesy of the tax payer. Or, by not marrying yet raising a family, able to pay off a mortgage on beach front house on Waiheke through benefits.

The answer isn't of course to remove it all and drop support for the weak in society, but you have to wonder if the help couldn't be better targetted.

Author's note by Jama, on 30-Mar-2007 08:15

and that is the point really. Help needs to be better targeted. I am just sick of paying, paying, paying and get nothing in return. My wife volunteers 10 to 20 hours a week at Playgroup and Plunket as well as raising our son. Every year in real terms we earn less money than the year before because of higher prices for goods and services. I want to be treated as an equal in society with an equal share in the financial growth of this country. And yes I am right wing and proud to be so because I am not a burden to society at all. The government rewards me by raising interest rates.

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