John Key MP
National Party Finance Spokesman
12 June 2006

Working for Families rort exposed

A rort involving Working for Families shows just how cynical Labour’s election bribe in extending the package to higher income earners was, says National Finance spokesman John Key.

“Self employed higher income earners can form a trust to own their company. The trust pays them a small wage and they can be eligible for Working for Families payments.

“The trust can also pay the owner as a loan, so their incomes don’t suffer.

“This comes about because Working for Families is only income-tested, not asset-tested.

“The fact that this rort can even exist shows just what a desperate, ill-conceived and cynical election bribe Labour’s extension to Working for Families was.

“The extension, put together in haste to trump National’s tax cut plan, moved the eligibility of WFF payments so far up the income scale that the authorities now face perverse outcomes like this rort.

“Self employed people on higher incomes have the opportunity to structure their businesses so they can get these state payments.

“So we have a situation where people who are not otherwise eligible for Working for Families are being funded by Kiwis who are far less well off. That’s bizarre.”

ENDS

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