Working for families?

by David Holtslag
Money is questionable

I’ve been thinking.

And the more I think, the more concerned I become regarding the “Working for Families” scheme that Labour’s pushing. I’ll go so far as to say that, in the long term, it won’t really help out any families, and will eventually be “working against families”.

When reading about policies like these on paper, it can be hard to understand their actual impact in everyday life. There are lots of facts and figures that can easily confuse many “mainstream” New Zealanders. So I hope that the real situations below will help you understand the true impact the package will have.

Currently, my wife and I do not receive any financial assistance from the government – and rightly so, considering my handsome pay-packet. If Labour has their way, however, next year April will see my wife and I become beneficiaries, by approximately $45 a week (about $2300 per year). That’s no small amount of money, and I guarantee you we will become very skilled in putting the money “to good use”. If we had two children, we would be looking at approximately $90 a week ($4700 per year). All of a sudden, I’m voting Labour! But please, bear with my gripe …

Then comes the day in 2006 when my wife and I have spent the $45 a week extra and NZ Post (my employer) says, “Well done, David – you put in an outstanding effort, and we’re going to reward you with a 5% pay rise plus a $2000 bonus!” Well, isn’t that good news. I look forward to the bonus payment and an extra $35 a week (about $1800 after tax). But wait … pay day comes and what do I see, only another $18 extra in my pocket (about $950 after tax). Why is that? Where is that missing $850 I worked hard for?

Well, you remember the $45 a week Labour had started giving me? Remember how I became very used to it very quickly and became nice and reliant on it? Well, as soon as I received my pay rise, that $45 a week dropped to $28 a week. So my pay went up but the “government’s pay” went down. Why on earth did I bother to work hard to receive that increase? What incentive is there for me to work hard for my family to earn more money, when the end result is not really more money!

And another example. A good friend has five children and runs his own business. He’s getting government pay too, about $200 a week. Why should he try and grow his business (possibly work more hours and hire someone to help out) when the extra $5000 he earns a year does not mean he gets an extra $5000 in his pay-packet!

Where’s the incentive for people to achieve and work harder, both for themselves and their families? I don’t think there really is an incentive.

But what’s happening in the background? Come April 2006, Labour believes that 260,000 families will be on this scheme. They call it “tax relief for families”. No it isn’t. Someone works, gets a pay-cheque that has been fully taxed and then also gets paid some money by the government (which means there is some very large government machine being paid to return the tax people have paid already!). April 2005 saw $36.6 million of family assistance payments compared to $22.7 million in April 2004, a 61% increase. I’d be afraid to know how much it cost the government machine to actually make those payments of $36.6 million. And the payments and costs are only going to increase further.

Are we seeing a government keen to get more and more people reliant on the State to provide their weekly pay packet? Are we seeing a government putting themselves (paying themselves?) into a position where no one would want to vote them out?

Working for Families is a programme I believe is not in the interests of New Zealanders. Short term, many people with families will be getting some more cash in their pocket, which no doubt they will find useful. Long term, they will become reliant on the State to provide their pay. They won’t look to themselves to work harder and earn more, but will cry out to the State to increase their lot.

Working for families? Definitely not, it’s working against families.