Family tax credits vital

Bernard Hickey's column last week elicited this response from Susan St John, associate professor of economics at the University of Auckland business school.

Bernard Hickey says dropping "middle-class welfare" such as Working for Families would be the fastest way to reduce the budget deficit.

His analysis displays no understanding of family economics at all.

Unfortunately, the antipathy to Working for Families is now widespread and he helps smooth the path for the Government to slash this programme.

But Working for Families tax credits simply adjusts tax to take account of family size and to share the costs of raising the next generation.

In Australia, one-child families, including those on benefits, receive maximum assistance of A$10,200 ($13,000) if there is a baby bonus paid, A$8815 for a child aged 1-4 and A$7738 for a child aged 5-13.

In New Zealand, if this one-child family is on a benefit the most they can get from Working for Families is $4472. A family defined as "working" qualifies for the In Work Tax Credit, but they can only get the full entitlement of $7592 if their total income is less than $36,868. Contrast these with the Australian figures when our dollar is only worth about 75 per cent of Australian currency.

If we do away with the meagre Working for Families tax credits, how will we stop the exodus of our young struggling families to Australia?