Andrew Dickens: Is Working for Families a sign of success or failure?

Finance Minister Steven Joyce said the Family Incomes Package was expected to benefit about 1.3 million families. Photo / Stephen Parker

Opinion

Are Working For Families and the accommodation supplement a sign of New Zealand's success or failure?

The centrepiece of this week's Budget was the Family Incomes Package, which included a mix of tax cuts, and increases for many on Working for Families and the Accommodation Supplement. This package will cost $6.5 billion over the next four years.

Finance Minister Steven Joyce said it was expected to benefit about 1.3 million families by an average of $26 a week, as well as 750,000 superannuates and 41,000 students.

So Working for Families got a shot in the arm from a party that when it was first mooted called it communism by stealth. They hated it.

So what is Working For Families? In essence, it's a benefit disguised as a tax credit. But it's not a benefit paid to our poorest. It's paid to honest working households, who despite contributing to our society as best they can, still struggle to make ends meet and provide for their children.

You can call it a success, because it's offering the greatest opportunity to all. Subsidising the poorest workers with the tax dollars of the highest paid New Zealanders for the benefit of the next generation. An example of a caring, inclusive society.

Or you can look at it another way, which is how Fran O'Sullivan saw it in yesterday's NZ Herald.

She said it is really quite disturbing that the Government is having to fund a massive increase in Working for Families tax credits and the level of the accommodation supplement simply because for many families their take-home pay packets are not sufficient to live on.

She says it's evidence that New Zealand is failing in terms of wage growth. She uses the term stagnating. Stagnant productivity. Stagnant export growth. Low wages in a high cost economy. And because the Budget concentrated on helping people who get paid and still can't live on what they earn then it lacked a real vision of growth.

So you can call it a failure, because Working For Families is proof that 1.3 million families can't pay their way in the world we created.