New Zealand’s child benefit as a percentage of average earnings after taxes, benefits and housing costs was 4.5 in 2001, declining to 3.2 in 2004. In both cases, New Zealand ranked the lowest of the 15 countries used in the comparative study, indicating a decreasing emphasis on children specifically and welfare more generally. The Working for Families Package was the first acknowledgment of children by the government since the 1980s and was not a wholly new initiative; rather it built on existing family assistance that was targeted and centred on incentives to work.
The package was introduced in 2003, with the specific aims of reducing child poverty and providing incentives for parents/caregivers to enter the workforce. This was to be done through the use of four tax credits:
- The Family Tax Credit (FTC).
- Parental Tax Credit (PTC).
- Marginal Family Tax Credit (MFTC).
- In Work Tax Credit (IWTC).
- To be eligible for the MFTC and the IWTC, a work requirement must be fulfilled of 20 hours for a single-parent and 30 hours for a couple. The PTC is a weekly payment of NZ$150 for eight weeks for a new child and the FTC is a child-related supplement that is not tied to work requirements.
Impact since introduction:
- There has been only a slight decrease in the rate of child poverty for children whose parents/caregivers are in paid work but the rate for children whose parents/caregivers are reliant on benefits remained relatively static.This indicates that the Working for Families package discriminates against children whose families are reliant on benefits, which is unacceptable when the goal of the package is to reduce child poverty in New Zealand.
- Providing tax credits on the basis of work requirements has also shown to be detrimental with the economic recession causing labour market fluctuations as well as people losing work after the Christchurch earthquake, creating a double burden of loss of income and loss of government assistance.
Child Poverty Action Group New Zealand have compiled a report outlining how policies are hurting New Zealand Children. View a complete copy of the report here.