Hon Dr Michael Cullen
Minister of Finance

28 July 2008 Media Statement

Key: ‘costly welfare monster’ suddenly affordable

Having previously attacked Working for Families as ‘communism by stealth’ and ‘a costly welfare monster’, John Key is now claiming that the package is actually not that expensive and important support for families.

After committing a huge policy flip flop by pledging not to change the Working for Families programme, the National Party has come under pressure to reveal how their tax cut package will be funded. The Party’s Finance Spokesman Bill English has reacted to this pressure by claiming National was only ever looking to trim around $1 million off the package, so keeping it in place alongside bigger tax cuts would not impact on the fiscal position.

Finance Minister Michael Cullen said Key and English “cannot seriously believe their own spin on this issue” and that the real cost of the National Party reversal is at least $645 million over the next three years alone.

“Anyone who has followed the debate on Working for Families with even a passing interest will know that John Key and Bill English are reinventing their own history,” Dr Cullen said.

“When I announced the $1.3 billion expansion of Working for Families in the 2005 campaign – extending it to those who earned upwards of $70,000 – John Key attacked the entire expansion as an extension of the ‘welfare driftnet.’

“When I brought the legislation to Parliament to give effect to the expansion, Mr Key said “National members will be opposing this legislation with every bone in our bodies.”

“Now we’re meant to believe they’ve discovered it was actually affordable all along. Mr Key should just admit the truth that he traded in his principles for political expediency some time ago.”

The total cost of Working for Families and related tax credits in 2008/09 is $2.7 billion.

The 2005 changes – which National always signalled would be reversed – extended Working for Families to those households earning more than $70,000 per annum (even with one child).

Just next year the Crown will spend $215 million on Working for Families payments for those earning more than $70,000 per annum.

ENDS

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