John Key National Party Finance Spokesman

8 February 2005

Working For Families a pathway to debt

National's Finance spokesman, John Key, says hundreds of thousands of families could find themselves in debt because of Labour's badly designed Working For Families package.

"The Working For Families scheme relies on people correctly assessing their total household income, and if they underestimate their projected income they will be required to repay any overpaid entitlement to the Inland Revenue Department.

"In a similar scheme in Australia, only 4% of recipients calculated their income accurately in the scheme's first year, leaving a huge number with a debt averaging $850.

"In the Australian scheme's first two years, 1.3 million families owed the Government more than $1 billion, and the Government was forced to write it off.

"The other problem for New Zealand families is that if they choose to get their benefit in a lump-sum, they will have to wait 12 months and could well end up with big credit card debts for an entitlement that may never be paid."

Mr Key says the simplicity of taxing New Zealanders less and leaving them with the cash they have earned has some clear advantages over such a complicated scheme as Working For Families.

"This is the second major design fault of Working for Families. The scheme also exposes Kiwi families to tax rates of up to 90c in the dollar."

Ends

© Scoop Media