KEY POINTS:
Married couples are being penalised by nearly $15,000 a year for choosing to stay together.
That's the view of lobby group Family First, which says the Government has created "perverse disincentives" for people to get married or live together by making it financially more attractive to separate.
The group has commissioned research from the NZ Institute of Economic Research (NZIER) showing that a married couple, both working and being paid $40,000 each, with three children, has a joint income $14,715 lower than if they were separated or divorced.
Where one parent chooses to stay at home to raise the children while the other is on a low income ($40,000), the parents could be $12,000 better off by separating, says Family First. Additionally, the group says a small pay increase for married couples can result in the family tax rate on their extra income being as high as 69 per cent.
But John Donaghy, manager of single-parent support group Birthright, rejected Family First's claim that couples were splitting for the money. Donaghy said that would be "rare".
"I don't believe it," he said. "There are many more significant reasons before people get to that point. Really and truthfully it probably doesn't happen as often as people think."
Donaghy said when a couple separated it cost more for them both to survive - more accommodation costs, more bills - and one of them would often have to go on a benefit. "People make all sorts of decisions to separate, and they are all valid."
Family First blames relationship break-ups on the interaction of family income assistance programmes such as the Working for Families tax credit and the accommodation supplement, income tax, ACC levies and various welfare benefits.
Family First national director Bob McCoskrie said there was "anecdotal evidence" of couples separating to improve their financial position by taking advantage of assistance such as the DPB or income supplements.
"The financial benefits that kick in when relationships break down are so great. We don't want to slam them, but the pendulum has swung too far to the point where it's actually better not to be in a committed relationship. A marriage relationship shouldn't be penalised. That's wrong, it should be the opposite."
Family First released a report in October (also produced by NZIER) estimating family breakdowns and decreasing marriage rates were costing the taxpayer at least $1 billion a year. This estimate included the increased take-up of tax credits and increased social problems in areas such as health, crime and housing.
McCoskrie said in the past the debate had often concentrated on moral issues. "Our report shows it's also an economic concern."
A report in Britain has found that people who marry or set up home together are 20 per cent worse off than if they stayed apart. It also found one in five who stopped receiving benefits did so to move in with a partner, indicating more would take that step if they were rewarded with tax breaks.
McCoskrie said the British and New Zealand situations were similar. The previous Labour Government "didn't want to mention the M-word [marriage]", but he urged the new administration to address the issues raised in their research.
