Labour's family package labelled a 'convoluted spaghetti of entitlements'

by Mei Heron / 12 July, 2017
Andrew Little outlines Labour's plan for families. Photo / Getty Images

Anti-poverty advocates say it's generous - but complicated.

Labour's new family package has been described as complicated by a poverty action group and a "convoluted spaghetti of entitlements" by the government.

The $890-million-a-year policy would boost Working for Families, give a $60-a-week payment to families with children under three, and help beneficiaries and pensioners pay for their heating.

The Labour Party would scrap National's tax changes that were announced in May's budget, which Labour said would deliver a disproportionate benefit to the top 10 percent of income earners.

Child Poverty Action Group economic spokesperson Susan St John said Labour's families package was more generous than National's. But it did make the system more complicated, which could result in people receiving less money.

She said the Best Start extra tax credit added to the complexity of overlapping 'clawbacks' - when tax credits start to reduce as a family income reaches a particular amount.

Finance Minister Steven Joyce said by not going ahead with the government's tax changes, Labour was fleecing billions of dollars from New Zealanders.

"Why don't they just trust people more with their own money? Let the thresholds move up to reflect the fact that wages are rising, and give superannuitants the benefit of that through the superannuation link to after-tax wages."

He agreed the extra entitlements would make it harder for people to know how much money they would receive overall.

"All they've come up with is a convoluted spaghetti of entitlements that will confuse everyone."

Ms St John said the boosting of Working for Families by Labour built on what National started and was a recognition from both parties that the current system did not work.

She said Labour should have also scrapped the in-work tax credit.

"[It is] an absurdly complicated tax credit supposedly for children but based on parental hours of work. It will have to be dealt with eventually, but Labour has parked it."

The in-work tax credit is not available to parents on the benefit or working part time - something advocacy groups say discriminates against children in beneficiary families.

The Labour Party campaigned in 2011 to scrap the credit by 2018, but deputy leader Jacinda Ardern said that was no longer the plan.

"What we're acknowledging is that there is some complexity with the way that things like the in-work tax credit interacts with other forms of payment.

"Doing it in isolation we didn't think was a good idea, so that's something that we thought would be better suited to looking at when we do our entire review of tax in New Zealand."

Ms Ardern didn't think the schemes announced in their families package made the system more complicated.

She said the money would help families in some of their toughest times.

This article was originally published by RNZ.

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