LINDSAY MITCHELL: Understanding the $50 boost for working families
- Administrator
- Mar 25
- 2 min read
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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Why oh why can’t the Government just tell people that life sucks sometimes - and we need to harden up. If we were being bombed, would they give hand outs? The “greatest generation”endured and survived a global war, with many losing everything, including homes, husbands, fathers and sons. They picked up the pieces and rebuilt their lives. The subsequent welfare state has created a dependency on the government (ie the other tax payers) to bail you out in any misfortune. Here we have yet another “hand-out”, with arbitrary boundaries between who gets it and who doesn’t. I’d support something more directly related to the cause of the pain - (reduced fuel excise, or subsidized (free) public transport).
Most people tend to be like water - they will take the easiest route to get where they are going. If your goal is just survival, then welfare seems to provide that.
Welfare should be distributed under very strict guidelines and should be for the needy. Single mothers should have their children supported in a large measure by the fathers of their children. Those with severe disabilities should be helped by the system.
Those who won't work need to work for their dole. Anything menial, that gives an incentive to find something better and better paid.
Minimum wages should be set at a rate that encourages employees to employ people, labour laws need to be there to prevent real abuse…
At last something positive!
I suspect the $400m approximate cost of this will be more than recovered by the extra fuel tax, GST and income tax payable by the Fuel companies ( from super profits on their inventory ).
It appears more a token gesture than an attempt to lower costs and get the economy back in recovery mode. National governments don't do real reform ( reform that's needed to stop our slide into 3rd world status).
The saving grace is that it is tightly targeted and won't break the bank in terms of government spending.
The bad aspect is the targeting and " benefit increase" aspect misses helping many of the most needy. Lowering the cost of fuel ( by lower fuel taxes…
This is my current understanding of how and why our civilization and culture are failing. Perhaps I am mistaken and someone else has better ideas?
There are some very basic realities that tend to be ignored or denied when discussing issues that concern us.
Firstly, SELF INTEREST. Members of our species and others as well are motivated by self interest. We will naturally do more of what we perceive as beneficial and less of what we perceive as detrimental to ourselves.
That is not right or wrong.
It is a Natural Law related to survival.
The benefits that motivate behaviour are social as well as material because survival requires acceptance by and cooperation with other members of our group. The Law of…