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Don’t create more social costs by reducing WFF

3 March 2011

Don’t create more social costs by reducing Working for Families

The Government has said it may cut spending programmes such as Working for Families (WFF) to help pay for the Christchurch earthquake.

But CPAG says that pressures on already struggling families will intensify.

Spokesperson Susan St John says that more, not less, spending on WFF is called for. There are other far better ways to raise money, such as increased taxes on incomes over $70,000. Such taxes will also impact on higher income families who qualify for some WFF and thus spread the cost to families that can bear it without attacking WFF.

CPAG urges the government to recognise that:

1. The biggest problem with WFF is that the low income families that lose their jobs in Christchurch stand also to lose $60 or more a week in WFF tax credits for their children
2. The ReStart package that allowed families to keep the $60 of in work tax credit applied only to those made redundant and was phased out at the beginning of 2011.
3. The earthquake in Christchurch has affected not only families who have lost full-time work, it has also affected those on benefits who will also experience extra pressures and often loss of part-time supplementary income.
4. The rules around the In Work Tax Credit (IWTC) are archaic and inappropriate, requiring fixed minimum hours of work and no benefit income.
5. The administration of the IWTC is far too complex and absorbs more staff time at the IRD that could be more usefully deployed.

CPAG says the reasons for loss of income in Christchurch will be varied. The consequences will include increased child poverty and a legacy of higher social costs. As an urgent and permanent social policy, the IWTC should immediately be added to the first child’s Family Tax Credit and made available to all low income families, whatever their income source.

ENDS

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