20 February 2014

Key telling porkies on Working for Families

Prime Minister John Key is trying to mislead the public of New Zealand over his history of cutting Working for Families payments to families, Green Party Co-leader Metiria Turei said today.

On Radio New Zealand’s ‘Nine to Noon’ show this morning, Mr Key defended his statement that Working For Families is “communism by stealth”, saying that Working For Families had been “a system so hopeless that when you earn an extra dollar of paid employment you get to keep none of it … We spent a long time fixing that problem… we changed abatement rates”.

In fact, National changed the rules on Working For Families in 2011 to increase the abatement rate and lower the income level at which abatements kick in. Ultimately, the changes by Mr Key’s government will see families lose 25 cents of Working For Families payments for every extra dollar they earn, rather than 20 cents, which was the level when he came to office.

“John Key needs to come clean about his role in cutting back Working For Families payments for Kiwi families,” said Mrs Turei.

“Today, Mr Key claimed that he had “fixed” abatement rates that mean Kiwi families lose WFF money when their income rises. That was not true. In fact, he has made those abatement rates worse.

“In 2011, Mr Key’s government chose to increase the abatement rate for WFF from 20% to 25%, and lower the level at which the abatements kick in from 36,827 to $35,000 in the name of cost-cutting.

“Mr Key’s increased abatement rate and lower abatement threshold reduced Working for Families payments to Kiwi families by $448 million.

“It was the previous government, with the support of the Greens, that reducing abatement rates for Working for Families from 30% to 20% in 2006. John Key strongly opposed that move to ease the burden on families,” said Mrs Turei.

Additional information:

Key’s quote from Nine to Noon today [~22.40]: “[WFF was] a system so hopeless that when you earn an extra dollar of paid employment you get to keep none of it is exactly that. We spent a long time fixing that problem: we changed tax rates, we changed abatement rates”

Beehive press release on the 2011 changes:

Why are changes being made?
•          The changes will save $448 million over four years, which can be used for other Government priorities like improving frontline public services or reducing borrowing.
What is changing?
•          The next four times Family Tax Credit (FTC) payments are adjusted for inflation:
•          The WFF abatement threshold will decrease by $477 on the first adjustment, and thereafter each time by $450.
•          The WFF abatement rate will increase each time by 1.25 cents in the dollar.
•          After those four adjustments, WFF will therefore have:
•          A slightly lower abatement threshold of $35,000, compared to the current $36,827.
•          A slightly higher abatement rate of 25 cents in the dollar, compared to the current 20 cents in the dollar (this means WFF payments will reduce faster as income increases).

Key in Question Time in 2006 opposing the lowering of the abatement rate: “When will the Minister finally admit the truth, which is that Helen Clark ordered the extension of this welfare package to higher-income New Zealanders,”

ENDS

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