LINDSAY MITCHELL: Understanding the $50 boost for working families
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- 2 hours ago
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I am not a supporter of government hand-outs. That's because I am not a supporter of the government taking people's money by force and deciding who to redistribute it to. That ability confers enormous power on the state. Taxing to redistribute only ever spirals upward. Wherever possible, earnings should be left largely with the earner - not expensively churned by dead weight bureaucracy.
However, this latest 'rescue' package raising the In Work Tax Credit (IWTC) by $50 a week makes sense.
It was Helen Clark's Labour government that introduced the IWTC as part of Working For Families. Its major objective was to get single parents - male and female - into work. Clark and Cullen, the last of Labour's relatively sensible leaders, stated that the best way out of poverty was work.
At that time, the very really objection to coming off a benefit for a job was that work didn't pay any better. So the boost from the new IWTC aimed to turn that claim on its head.
Subsequently the employment rate for single mothers has improved significantly (although is still low by OECD standards.).
But the gap between income from a benefit and income from work closed again under Jacinda Ardern's war on child poverty. The margin is now pretty tight.
For those parents in work, but on low wages or salaries, if the cost of working (eg filling the car) gets too high, they will be at risk of returning to a benefit. I believe that is the major concern driving this highly targeted policy.
So I get it.
But it also proves the point that state wealth redistribution only ever leads to more state wealth redistribution. Where does it end?
NZ, like all expansive welfare states, is now stuck in a 'Damned if you do and damned if you don't' bind.
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Hi Lindsay, the petrol price squeeze is hitting household budgets hard right now — especially with 91-octane climbing sharply in recent weeks. I get why this feels urgent.
That said, framing the government’s position as being ‘between a rock and a hard place’ — damned if they do targeted relief, damned if they don’t — sets up a false choice. Criticism comes with the job in politics (and in pretty much every working life where challenges have to be addressed head-on), but it shouldn’t lock us into policies that blur the important boundary between personal/family responsibility and state intervention.
This temporary $50/week boost to the in-work tax credit for around 143,000 working families with children still creates that fuzzy line:…
Sorry Lindsay but you lost me when you started your second paragraph with however…
Does it apply to owners of electric cars otherwise coming within the qualifying criteria?
Hugh Perrett