Working for Families

The authorities assess income for tax credit purposes based on a "household", which will consist of the pooled resources from up to two adults in any family with dependent children.

Some New Zealand households also receive money from the increased income-thresholds and rates for Accommodation Supplement and Childcare Assistance.

[3] A government evaluation (see below) has found that the number of Domestic Purposes Benefit recipients since the Working for Families package has fallen by 8,000.

Some (such as Victoria University Professor Robert Stephens) have praised[5] the package for encouraging adults to come off benefits, and for targeting families in need.

Others, however, have criticised the package for potentially extending to the relatively wealthy and for increasing effective marginal tax rates for many people.

The economist Gareth Morgan, for example, commented on how some (generally middle-income) people can face effective marginal tax rates of over 100%.

The Child Poverty Action Group has commenced legal proceedings against the New Zealand Government for discriminating against those not in employment in the "Working for Families" package.

[7] In a judgement from the Human Rights Review Tribunal, it was stated that the in-work tax credit payment is discriminatory, but in this case, is justified.

Susan St John has supported[7] poverty-prevention over poverty-alleviation, advocating policies such as a simple universal basic payment indexed to wages as well as prices for pensioners – not conditional on work.

She criticises the Working for Families package for not delivering extra income until 2005, provided nothing for the poorest in 2006 and only a small increase in 2007.

Phil O’Reilly has included Working for Families in a list of alleged low-quality governmental spending that has purportedly contributed to higher interest-rates and lower productivity rates.

[citation needed] John Key called the scheme "communism by stealth" but did not repeal or cut back the Working for Families tax credits, during his time as Prime Minister.

– While awareness of the package and its advertising appears high,[citation needed] the evaluation-report found that only around three-quarters of people who believe they receive a tax credit actually did so when matched to administrative records.

[12][13] However, the study found that each additional year of receiving Family Tax Credit led to a very small reduction in self-rated health,[14] but it did not impact tobacco smoking among parents.

[15] Further evaluations completed by the Ministry of Social Development and Inland Revenue include: Announcement of the Working for Families package as part of the 2004 Budget.

The changes included: Stage Three involves the final components of Working for Families implementation and applied from 1 April 2007.

The changes include: While the package had been completely implemented with the final stage on 1 April 2007, the Income Tax Act 2007 provided for regular adjustments to rates based on cumulative movements in the New Zealand Consumer Price Index; a minimum movement of 5% was required before rates would be amended.

These increases would apply from the following 1 April of a year when a change was triggered based on actual data published by Statistics New Zealand.