Best intentions worst results

21/02/2017

LIving Wage advocates want employers to pay a minimum of $20.20 an hour from July.

The rate, more than $4 above the adult minimum wage, is at the level needed to provide families with the necessities, they say.

How many jobs will that cost?

The current Living Wage, of $19.80 has already cost 17 jobs at Wellington City Council according to a report by Jim Rose for the Taxpayers’ Union.

The report’s key findings were:

  • Seventeen Wellington City Council employees lost their jobs after being under the skill level required for the living wage.
  • Councils hire on merit, so candidates under the skill level commensurate with the living wage will be crowded out by higher-skilled candidates.
  • There is no consensus or scientific basis for the calculation of a living wage. Any calculations are politically subjective.
  • Any living wage in New Zealand will be abated by up to 40% by decreases in government transfers and increased income tax obligations.
  • Living wages shift the burden from means-tested taxpayers to ratepayers and business owners.
  • Below-living-wage employment allows for in-work training, where employees trade off lower wages for the opportunity to learn skills that increase their future earning potential. 

Living Wage Aotearoa New Zealand nobly want to alleviate poverty and reduce unemployment with their activism for a living wage, but the evidence to date shows they are achieving the exact opposite. This report shows that a living wage will only make it harder for low wage earners to find work.

Contrary to intentions, living wage policies actually hurt the very people they seek to help. For the first time, we reveal that seventeen parking wardens lost their jobs at the Wellington City Council as a result of its living wage policy.

Living wage policies mean higher-skilled candidates apply for jobs previously occupied by lower-skilled candidates. Of course councils will hire on merit and shortlist the candidates who previously would never have applied for the lower, pre-living wage role. That’s exactly what happened when Wellington City Council brought its parking services in-house.

Minimum wage applicants do not get a shot against better-qualified candidates attracted by the higher wages. So much for the poverty alleviation and reduced unemployment.

The economic theory is clear that living wages do more harm than good, but the job losses in Wellington is the proof in the pudding. Councils should stop implementing these living wage policies which achieve so little but cost ratepayers who can ill afford it.

Living wage policies mean ratepayers pay more for less and achieve none of the intended poverty relief.

Those are very damning conclusions, but not surprising.

The Living Wage is based on what someone thinks a family of four needs to have a reasonable life.

It bears no relation to individual employee’s needs, ability or performance.

I have several reservations about Working For Families but it is a better way to help low income workers with dependent children than the living wage which takes no account of the value of their work.

The full report is here.


This isn’t a recipe for growth

16/01/2014

Colin Espiner interviews Labour’s finance spokesman David Parker and finds that:

If Parker is holding the country’s purse strings after this year’s general election, there’s plenty he wants to change. The top tax rate would be 39% on income over $150,000, although the company rate would be unchanged at 28% (and no, he doesn’t think that would encourage tax evasion). He’d introduce research and development tax credits, a living wage of $18.40 an hour for state-sector workers, a higher retirement age and a 15% capital gains tax.

This isn’t a recipe for growth.

Increasing the top tax rate is merely pandering to the sock-the-rich politics of envy. Those on the top tax rate already pay far more than their fair share of tax and adding the burden will increase tax avoidance as it always has in the past.

Treasury and Brian Scott have shown the flaws in the living wage concept.

Only a small proportion of those who get less than that now are single-income families and they get top-ups through Working for Families. Anything they gain through an increase in pay they’d lose through losing WWF. there’s not even any gain for the taxpayer, they’d be paying less in WFF but more in wages.

I’m not opposed to a capital gains tax in theory but if it is to do any good it must be universal and replace other taxes. Labour’s will exempt the family home and will be on top of other taxes.

The underlying theme to all this – and what really seems to drive him – is recapturing the egalitarian spirit he believes we inherited but are slowly squandering. “Not just equality of opportunity,” he says. “I believe in equality of outcome. That doesn’t mean communism,” he adds, pre-empting my question. I ask it anyway. Doesn’t it? “No, no, no. I personally wish I had made more money for myself. I’m not a pauper but neither am I a super-wealthy person. I believe that people should be rewarded for their efforts.”

Redistribution won’t recapture the egalitarian spirit and equality of outcome is impossible without the state playing a far greater role in the economy and society than is desirable and that is communism which has failed.

The best ways to improve life is to have sustainable economic growth.

We won’t get that with more of the higher tax, higher spending policies which Labour promoted  through the noughties and which put New Zealand into recession well before the global financial crisis.


Work beats welfare

25/11/2013

Figures released by Social Development Minister Paula Bennett illustrate the benefits of going from welfare to work, factoring in tax credits for families.

“On average around 1,500 people a week, move off welfare into work which brings pride to individuals and families and is financially beneficial.”

An average sole parent with two children under thirteen, living in South Auckland would receive around $642 on benefit, including accommodation supplement and a minimal extra allowance for costs.

“If that sole parent works just 15 hours while receiving benefit, they would be $107 better off, taking home $750 a week.”

“If they are able to go off benefit and by working just 20 hours a week on a minimum wage, they would be $171 better off each week at $814.”

Going off benefit and working 40 hours a week on a minimum wage, that same sole parent would be $190 better off at $833 a week with the Family Tax Credit, Accommodation Supplement and In-Work tax credit.

“I get how hard it can be to make the move from welfare to work, but it makes such a difference to your state of mind, not to mention financially.”

Lisa, a sole parent in West Auckland wanted to work and earn her own money and found a part time job with 20 hours work a week.

Her work focused case manager did a Better Off Assessment and Lisa was able to see how much better off she’d be doing 30 hours a week, without a benefit but picking up the In-Work tax Credit.

Lisa said her case manager showed her, “there is light at the end of the tunnel”.

The benefits of work for a single person are also clear.

The average single person on Jobseeker Support with Accommodation Supplement and minimal additional allowances earns $320 a week.

“If they work 10 hours a week while on benefit, they’re $57 a week better off.”

“If they work 40 hours a week, on a minimum wage and go off benefit altogether, they will be around $200 better off, earning $520 a week.”

“No one says it’s easy; it can be hard to find a job and it can be tough putting yourself out there time and time again,” says Mrs Bennett.

“The first job may not always be the best job, but it’s a doorway to the next one and the feeling of standing on your own two feet is worth it.”

There are currently 2,900 job vacancies with Work and Income around the country, SEEK has 15,600 jobs and Trade Me has 12,800 jobs listed.

In an ideal world the taxpayer wouldn’t be subsidising low wages and working out how to improve wage levels in a sustainable way, which rules out the so-called living wage, ought to be a priority.

In the meantime, the only justification for Working for Families and other wage subsidies it that it makes lower-paid work more financially rewarding than being on a benefit.

That’s better for the people involved, any dependent and the economy and society.


“Rattiest and most cunning”

17/11/2013

Rodney Hide on tax policy and politics:

. . . Economics teaches that the tax system should be efficient: that is, raise the required amount with least cost. That means a flat tax or, better yet, a poll tax. The flatter the income tax, the less the distortion. And a poll tax creates next to none. The only way to dodge a poll tax is to emigrate.

But poll taxes and flat taxes rob politics of its magic. It would no longer be possible to vote for a handout paid for by others. More handouts would mean more tax for everyone. Where’s the magic in that? What’s more, a flat tax stops politicians buying the votes of the many at the expense of the few. Politicians will never support such a change.

Those elected to office don’t know and don’t care the deadweight cost of tax. But they sure as hell know what it takes to win middle voters: money for free if you just vote for me.

There’s no obvious way for a government to win and hold 50% of voters while making the tax system fairer and more efficient. . .

When it comes to tax good policy isn’t good politics and once redistributive policies like Working for Families or interest-free student loans are well established it would be political suicide to stop them.

You can, as the National government has, reduce their burden by for example lowering the income level at which WFF stops and making more of an effort to track down loan defaulters.

But they were dead rats the party had to swallow before the 2008 election in the knowledge the alternative of advocating for their removal was another three years in opposition.

The brute reality is that policy is designed to win and to hold power. There’s a rat cunning that drives politics in western democracies, and the big-spending pollies are the rattiest and the most cunning of them all.

That’s a pretty blunt assessment but that’s the reality of politics.

You can die in a ditch in opposition where you can do little or swallow a few dead rats to get, and stay, in government where you can make a difference.


Fathers are parents too

15/04/2012

The headline says: working mothers caught in childcare trap.

The story begins:

A generation of young, educated New Zealand women is being lost to the workforce because they can’t afford childcare.

Many tertiary educated and trained mothers are deciding to retrain as teachers or nurses, professions that offer more flexible work options.

Some are opting for temp work, and others said returning to the workforce was not worth their while.

Passing quickly over the insult to teaching and nursing, it is only in the 16th paragraph that there is any mention of a father:

Laura Lyttelton has two children, aged three and 16 months. She returned to work after having them, and in the last six months resumed full-time work. When she and her partner were both working full time they had a joint income of about $90,000.

But now, she said, childcare had become so expensive it was better for her partner to resign from his work so he could get Working for Families tax credits.

Fathers are parents too, yet this story is typical of almost all on childcare which portray it as a woman’s issue.

Then there’s the irony that a story complaining about the costs of childcare and suggesting the government spends more on it, also shows that existing government assistance – WFF – provides a disincentive to work.

Paid Parental Leave is also mentioned. Arguments in favour of that include the benefits of at least one parent staying at home with children yet this story also mentions the benefits of workforce participation.

Yet more proof, life requires choices and there are costs and benefits to them all.

UPDATE: Kiwiblog looks at the stats in the story.


Struggling on $85,000?

20/05/2011

The headline says Working for Families cuts makes life harder for families .

In Richard London’s house they bring in $85,000 a year. With three children, that means $85 dollars a week from Working for Families.

They’ll lose about $2.55 a week under today’s changes, life’s hard enough as it is.

“It’s difficult so any cuts to Working for Families, it affects us quite immensely,” he says.

It depends on how you define hard but would a family of three really struggle on $85,000 a year? That’s well above the average income and if they need the extra $2.55 a week, they do have options.

One or both parents could do more paid work or they could look at their budget, give up some luxuries and reassess what’s necessary.

That’s what the government is having to do because previous administrations have given money to people in want rather than need.

A couple of tradesmen called in last night, they brought up the this topic and neither had any sympathy at all for the families who will be losing a little bit of their WFF payments.

They’d both brought up their children on incomes well under $85,000 and without any government assistance. Like me they didn’t mind paying tax to help people in need but neither approved of paying for people in want.


No surprises Budget

19/05/2011

Jane Clifton wrote in her column in The Listener:

“It has been a couple of decades since any Budget truly surprised anyone. All the measures are carefully explained in advance – as they should be – and only the fiscal details, again, containing few surprises are kept secret .  . . by Budget day, there are only two questions of any real novelty: what colour tie will the Finance Minister wear and will there be sausage rolls?”

She got it right. Today’s  Budget held few surprises – increased spending for education and health, necessary support for Canterbury earthquake recovery, much needed, but pretty restrained, changes to Kiwisaver, student loans and Working for Families, some partial sale of assets . . .

There was no sign of the usual election-year lolly scramble but there was good news. The Budget will return to surplus in 2014/15 – a year sooner than forecast in December.

This is a significant achievement given the impact of February’s earthquake since the forecast was made. We’ll all benefit from the reduced need for Government borrowing and the lift in national savings.

We’ll also benefit from the escape from a credit rating downgrade:

Standard&Poor’s has made no change to New Zealand’s credit rating and says the Government must achieve its fiscal targets for its external position to improve.

Last November the credit rating company placed the outlook for New Zealand’s AA plus rating on a negative outlook.

Today it said that the contents of the Government’s 2012 budget were “consistent with the assumptions that feed into our sovereign ratings on New Zealand”.

Finance Minister Bill English said:

Budget 2011 builds a strong platform for jobs and growth, sets a credible path back to surplus by 2014/15 and helps increase national savings . . .

“This is a responsible and balanced budget for the times,” Mr English says. “It ensures New Zealand will build faster growth based on savings and exports, so New Zealanders have the jobs and higher incomes they deserve.”

It will not surprise regular readers that I agree with that.

As for the tie – I couldn’t see it on the radio and I don’t know whether there were sausage  rolls.


No broken promises

11/05/2011

Labour has been trying to say that National will be breaking the promises it made about Kiwisaver, student loans and Working for Families.

Those promises applied to this term.

John Key’s pre-Budget speech makes it clear any changes will not take place until after the election.  People will be able to take the proposed changes into account when deciding whether or not they give National a second term.

Mr Key said the Budget will contain changes to KiwiSaver, Working for Families and interest-free student loans – programmes which collectively cost almost $5 billion a year.

“These programmes were introduced during a debt and consumption-driven economic bubble, and it is clear that they are unaffordable,” Mr Key said.

“None of the changes we will be making will affect people before the election so New Zealanders will be voting with all the information they need and can make their own choices.”

The Government intends to reduce the amount of money it has to borrow from overseas to put into KiwiSaver, and increase the amount of genuine savings from the private sector.

It makes no sense for the government to borrow to help other people save nor to help those who could and should be looking after themselves.

Mr Key said Working for Families will also be better targeted at lower-income families, who have a much greater need for assistance, and a little less generous to families higher up the Working for Families scale.

“We will do this gradually, in a way that minimises the impact on families,” Mr Key said.

The student loan scheme will also be adjusted but will remain interest-free.

“The changes we are making in the Budget will make all of these programmes more affordable and ensure they survive into the future,” Mr Key said.

WFF should never have been given to upper income families. A three year repayment holiday on student loans for people who go overseas was also far too generous.

There was no justification for welfare for wealthy people when the government’s books were in surplus and there is even less for it now they’re in deficit.

It will be very interesting to see how opposition parties react to this. It won’t be easy to convince people that borrowing to give money to wealthy families and people who’ve left the country is a good idea.

The full speech is here.


Working for welfare for the wealthy

19/04/2011

The advertisements encouraging people to apply for Working for Families made it quite clear it was aimed at middle and upper income earners and this is the result:

 . . . 3 News has obtained the details for 2009 – the latest data available.

It shows: 

  • Those with a household income of between $60,000 to $80,000 claimed $240 million on Working For Families tax credits
  • While those on $80,000 to $100,000 claimed $55 million
  • Families on more than $100,000 claimed $10 million that year in tax credits.

“Working For Families does some important and good things – it relieves child poverty and gets solo parents into work – but at the same time it’s not very well targeted, so a lot of money goes to the wrong type of people,” says Jean-Pierre de Raad of the NZ Institute of Economic Research.

Few would begrudge welfare for people in genuine need but giving to people in want means we’re all working to provide welfare to the wealthy.

It wouldn’t be a good idea if there was a budget surplus, it’s a really bad idea when we’re in deficit.

No sensible individuals would borrow to buy luxuries when they didn’t have enough for necessities and it makes even less sense for a country to do it.


Term by term

04/04/2011

National swallowed several dead rats before the 2008 election.

One of those was asset sales. Even though there are very good reasons for selling, partially or fully, some of the assets the state owns, National promised it would not do so in its first term. Furthermore the party made it clear it would go to the electorate with any plans it might have for sales in a subsequent term.

That is what it has done.

Among other dead rats swallowed was Working for Families

National has kept its promise not to touch it this term but has signalled there could be some changes if it is returned to government.

The party has been criticised for doing this. Opposition parties, and lobby groups outside parliament, are trying to say this is breaking a promise.

It is not. Some policies, and it is usually those which are fundamental planks of a party’s philosophy, are long term ones. Others are made for a term and new policy is developed and offered to the electorate for a mandate term by term.

National was very critical of Working for Families before the 2005 election but lost. It swallowed that dead rat to help it win the 2008 election. That commitment to not alter payments was for this term and it has been kept.

Once a policy has bedded in as this one has it is very difficult to ditch completely. But it is possible to make changes to lower the costs of it and there are pretty clear signals this will happen to Working for Families if National gets a second term.

Only died in the wool socialists and the deluded could think it is a good idea to pay upper income families benefits to help them buy luxuries in the best of times. Even they must realise that necessities must be the priority in what is now a much worse time but if they don’t they will have the chance to show that when they vote.


Rich in want can’t take from poor in need

03/03/2011

Remember the television advertisements for Working for Families?

They showed well dressed people in an upmarket home with the father texting to get the teenage daughter to the table while she lounged on a sofa listening to an iPod.

Did that look like a family in need of public money? No and it wasn’t meant to. The advertisements were aimed at middle and upper income people who ought never to have considered themselves in need of a benefit and probably never did until they were targeted by the ads.

It was an election bribe and it worked, one of several which enabled Labour to scrape back into power in 2005.

Of all the dead rats National swallowed before the 2008 election, WFF was one of the most indigestible. It might be an acceptable way to help the working poor end up better off than those on benefits. But giving public funds to people who already have everything they need and at least some of the things they want is neither economically nor morally sustainable.

Theodore Dalrymple says:

The problem with the State taking care of everything is  twofold. First it tends to destroy our character, something that can be observed every day. Our faculties such as prudence and planning for unpleasant eventualities are lost if they are not exercised, a trend surely borne out by the fact that we as a nation save nothing and borrow much.  . .

. . . In  effect, we are all paupers at the gate of King State. We are paupers even when we are not poor.

There is no doubt that this is very gratifying to many of our governors. It flatters their self-importance which is often their strongest character trait. But it leaves the rest of us reduced human beings.

No one who’s had many dealings with British officialdom can be under any illusions as to the warmth of its heart. Indeed, it can show no compassion because it, unlike real charity, can make no distinction between the deserving and the undeserving. To fail to make this distinction is to increase the number of  the undeserving.

How could anyone think that people earning well above the average wage were either in need or deserving of benefits?

It is much easier to give than to take away. If, as Bill English and John Key have signalled, the wealthier recipients of WFF lose their benefits they won’t like it but if they have any conscience they’ll lump it.

They’re keeping more of the money they earn as a result of tax cuts, they can’t expect to have money desperately needed in other areas as well.

Money spent on allowing middle and upper income families to maintain or improve their lifestyles has came at the cost of their independence and public goods,  services and infrastructure the country and its poorer citizens really needed.

That need is even greater now.

If you’re not convinced, picture again those television ads . Do families like that need public money when others don’t have food, shelter, water, sewers, roads and other essentials?


WFF lump sums not the answer to affordability

07/02/2011

Giving benefits to middle and upper income families is madness. Peter Dunne’s suggestion that people be able to capitalise Working for Families benefits  as a lump sum to buy a home is even worse.

It would add to the burden on the public coffers by bringing forward the payments. The country would be borrowing more to enable a select group – families who could afford to buy a house – to borrow less, or pay more than they could without the lump sum.

WFF payment are based on family income and the number of children. As income increases the benefit decreases imposing a very high effective marginal tax rate.

Offsetting Behaviour has the figures which show that around half the 357,200 WFF recipient families in the 2008 tax year faced an EMT rate of more than 50%.

Why would you work harder, gain higher qualifications or take a promotion if at least half the money you received for doing so was clawed back?

 If people took the lump sum which would be based on their current income, what would happen if their income increased?

They would have to pay back the difference between what they got at the start and what they would be eligible for after a pay increase, increasing the EFT rate.  If not those who took the lump sum and got the benefit from it would in effect get more than those on the same income with the same sized family who didn’t.

Offsetting Behaviour makes another valid point – increasing the demand for houses, by giving some people more money to buy them, won’t solve the problem of home affordability by itself.

Price is affected by supply and demand. If more people have more money but the supply of houses doesn’t increase to meet the new demand then prices will which will negate any gain in affordability.

One of the factors affecting supply, and price, is regulations. A builder told me that tighter regulations in the wake of the leaky homes disaster had imposed new costs of $10,000 on the price of a new home. That was four years ago and the costs of regulations will not have improved since then.

If Mr Dunne wants to make homes more affordable he’d be better addressing the costs imposed by bureaucracy which would help everyone, rather than tinkering with WFF which would apply to only a few people and may not do anything to improve home ownership affordability.


Costs not worth the benefits

20/12/2010

Remits seeking to enable single income families to split their income for tax purposes used to be hardy annuals at National Party conferences.

I used to think it was a good idea but patient explanations from people who work on facts rather than emotion persuaded me to change my mind.

One point raised was the difficulty if the income earner had an accident or became ill – his or her ACC  or insurance payments would be based on the split income not the full one.

High administration costs; an increase in marginal tax rates if the partner on no or low income started work, worked longer hours or got a pay rise; and the bulk of the benefit going to those who needed it least were other arguments raised.

Lower taxes and a simpler tax system would do more for most people than tinkering which adds compliance costs.

These arguments apply to the income splitting bill Peter Dunne is trying to get through parliament and several government departments have raised other concerns:

Papers obtained by Radio New Zealand News under the Official Information Act show the Government consulted the Labour and Inland Revenue departments, the Ministries of Social Development and Women’s Affairs and the Treasury.

The departments raised concerns the proposal discourages women’s workforce participation, discriminates against sole-parent and low-income families, and increases the gender pay gap.

I’m not going to take issue with any of these points but note all these arguments could be used against Working for Families.


What’s wrong with WFF

24/03/2010

Finance Minister Bill English illustrated how the current tax system is unfair for many families.

It’s also unfair for many taxpayers.

Take this as an example:

They own a couple of profitable farms, a crib with a boat and all the trimmings and they get Working For Families.


Avoiding tax not only preserve of wealthy

22/01/2010

A drop in the tax rate doesn’t always mean a drop in the tax take.

 Kiwiblog reminds us that in the 1980s when tax rates dropped the tax take increased. I rememberthen- Finance Minister Ruth Richardson showing a graph which illustrated the same thing happened in the early 1990s.

The inverse is also the case. If tax rates go up the tax take may not increase as expected because people find ways to avoid paying.

The Tax Working Groups said:

. . .  an Inland Revenue sample of 100 of the highest wealth individuals in New Zealand, data indicate that only about half are paying the highest marginal tax rate on their income. These taxpayers are not necessarily doing anything wrong but are merely taking advantage of the opportunities offered by the current system to shelter income from higher rates.

Tax evasion is illegal, avoidance isn’t. When the top tax rate increased to 38% and Working for Families was introduced, lawyers and accountants had a field day with clients looking to minimise their tax liability.

It wasn’t just minimising tax, it was minimising their income so they’d qualify for WfF and this isn’t confined to the wealthy.

A friend has a business in which employees often work a lot of over time. When WfF was introduced he found several of his staff didn’t want paid for all the hours they worked because the reduction in what they got from WfF had the effect of giving them a high marginal tax rate and it wasn’t worth their while.

Some wanted to work the extra hours and be paid cash or in kind so that their earnings could escape the notice of the IRD. That is not avoidance, it’s evasion and our friend declined to abet them.

Not everyone will be that honest.

That’s why rises in tax rates, or measures like WfF which have a similar effect, don’t necessarily result in a corresponding increase in the tax take and might even reduce it.

And cuts in the rate may increase the take because people stop trying to avoid taxes and put their efforts into earning more instead.


Help those in need not want

02/11/2009

What is wrong with encouraging people who don’t need a benefit to find a job?

That doesn’t mean that those who are in genuine need of state assistance shouldn’t get it, and get it long term if necessary.

It just means that those who no longer need it should be encouraged towards independence.

But if people on the DPB and sickness or invalids benefits will be expected to stand on their own feet so too must others.

Turning middle and upper income earners into beneficiaries as Working for Families does was never a good idea.

Continuing to give people in want money from the public purse when people in need are being encouraged to look after themselves can not be justified.


Mistakes, we made a few

11/09/2009

Phil Goff has admitted that Labour made a few mistakes and let sideshows sidetrack them from what really mattered.

But he hasn’t yet and maybe never will, accept that they also did the wrong thing with the things that mattered.

He cites Working For Families as one of Labour’s achievements.

Turning middle and upper income families into beneficiaries is nothing to be proud of. This policy and others like interest free student loans, KiwiRail, buying vast tracts of the high country at inflated prices . . . put New Zealand into recession early and continue to hold back the recovery.

Nanny state sideshows annoyed people. But Labour’s expensive social policies and the handicaps they put in the way of economic growth did, and continue to do, much more harm.


Night follows day

18/08/2009

Yesterday we learned that some people on benefits receive more than the average wage. Today we discover that Labour’s tax increase and welfare for working families has also resulted in rorts.

The only surprising thing about this is that it has taken so long to make headlines when it is the logical outcome of policies based on political ideology and a desire to retain power rather than an understanding of economics and human nature.

Night follows day and people offered incentives take them.

When National reduced the tax rate on higher incomes in the early 1990s the tax take went up. One of the reasons for that was that people stopped wasting time rejigging their finances to reduce their tax burden and concentrated on making money.

Labour’s increasing the tax on incomes over $60,000 had the reverse effect of encouraging people to arrange their finances to reduce their liability, especially when there was the added incentive of qualifying for a benefit.

The advertisements for Working for Families were clearly targeted at people who already earned enough to afford luxuries.

National swallowed a very big dead rat before the last election in agreeing to keep WFF. But that was before the full extent of the recession and forecast deficits was obvious.

When the government’s aim is to take the sharp edges off the recession it is unlikely to dismantle the scheme in the short term. But this report gives it the ammunition it needs to torpedo it in the long term.

All but the rabid right wing accept that welfare has a place for helping those in genuine need but these rorts show only to clearly the stupidity of extending it to those in want.


Casting stones from glass houses

10/08/2009

If I turned 65 tomorrow on a similar income to my present one I wouldn’t need superannuation.

But would I turn it down? No.

I wouldn’t say I was entitled to it but I would say I was eligible for it and I’d take it.

Would you?

Unless you’re very different from most of us I suspect you would.

We don’t make the rules but most would play the game if they could and not just with superannuation.

How many people who get Working for Families really need it?

It depends on how you define need. I don’t think anyone who can already afford luxuries needs a benefit.

I can understand why those who qualify for it don’t turn it down. Many will be the people who’ve always been too rich to be poor and too poor to be rich – having too much to qualify for any other assistance but not having enough to be really well off.

Most will set aside any qualms they might have about taking taxpayers’ money they don’t really need, arguing they’ve worked hard and paid a lot of tax and now they’re getting something back.

I wonder how many people who criticise MPs’ pay and allowances could put their hands on their hearts and say they’ve never taken anything they’re eligible for whether or not they need it?

Anyone who can’t is casting stones from a glass house.

There are differences between benefits and the salaries and allowances MPs get, of course.

MPs’ salaries are paid for the job they do and most more than earn it. The allowances are for work related expenses.

However, they make the rules which leads to the perception – probably unfair – that the rules are more than generous.

Their pay is set by an independent body, maybe allowances should be too.

That way MPs would get fair recompense for out of pocket expenses and free them from any suspicion of making rules which give them more than they need.

It would also give them some protection from the stone throwers.


Does he think they should have two bites?

20/03/2009

John Turton who runs the Lower Hutt Food Bank has criticised John Key’s suggestion that people who don’t save or spend their tax cuts could give them to charity.

His clients do not qualify for the tax cuts. Most of them get Working for Families payments, disqualifying them from receiving the cuts.

These people are probably getting nearly as much if not more than they pay in tax already so does he think they should have two bites at the public cherry?

Or is he just confused about the difference between tax cuts which allow people to keep a little more of the money they earn and welfare?


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