The Herald this week revealed a review of the $3 billion Working for Families tax credit system warned that changing the system represented the “best opportunity in the coming years to achieve substantial reductions in measured child poverty and to make significant ‘headway’ towards achieving the 10-year targets”.
The papers received by the Herald showed sector groups recommended broadening the number of families who receive the in-work tax credit, a payment of $72.50 a week for families with one to three children (and $15 a week for every fourth and following child).
Officials reported back to ministers that anti-poverty groups said this tax credit “should be paid to all families and not just those who are off a benefit and in paid work”.
“These stakeholders argued that the payment was discriminatory or unfair, particularly given children were unable to choose whether their parents were working. They also emphasised the need to value other contributions people make, such as caring for children or voluntary work,” the review said.
On the review, Social Development Minister Carmel Sepuloni recently told Herald that “no decisions have been taken” and “we continue to consider the advice that we’ve been given”.
“Any decisions would have to be part of a Budget process if there were going to be any changes to Working for Families but I can’t preempt … whether or not it’s part of this Budget,” she said.
University of Auckland associate professor Susan St John said in light of today’s figures broadening the tax credit could have an “immediate impact” on reducing poverty further.
“It is a no-brainer. It removes discrimination so the children who are currently falling through the cracks as their parents are on benefits.
“It is not their fault if their parents are not working.”
She said there was often a range of reasons a parent might not be working, and they should not be punished for it.
St John, who is also a member of Child Poverty Action Group, said they also agreed with other recommendations from the Government review around tightening up how the scheme was applied, which currently was so confusing for some users they ended up getting into debt.
St John said the tax credit should also be increased, as it had not been touched since 2016. The $72.50 baseline should currently be about $89, she said.
“We know about 140,000 children are under the lowest poverty line, and this would be a very cost-effective policy that would get to those in the most extreme poverty.”
This would also have a greater impact on Māori and Pacific children, who are disproportionately in families where someone is on a benefit.
One in five Māori children and one in four Pacific children lived in material hardship, with no change compared to 2019. This compared to one in 10 children overall, which had reduced from about one in eight in 2019.
Green Party social development spokesman Ricardo Menendez March has been strongly supportive of the policy.
“The tools to lift every family and child out of poverty exist, the Government just needs to use them,” he said.
“They can start by increasing benefits to liveable levels, expanding Working for Families, and doubling Best Start and making it universal for the first three years.”
National and Act oppose the policy proposal, both on the grounds they see it as a disincentive for people to work.
“It is important to provide increasing opportunities and incentives for people to be in work but there also needs to be a gap between those in work and those not,” said National’s social development and employment spokeswoman Louise Upston.
Child Poverty Action Group’s professor emeritus Innes Asher said another key change the Government could make would be to increase the disability allowance, which had not been indexed to average wage rise nor inflation.
Today’s statistics showed one in five children impacted by a disability were living in material hardship.
