NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / New Zealand

Economist says Govt wrong about savings

Derek Cheng
By Derek Cheng
Senior Writer·NZ Herald·
25 Mar, 2010 03:00 PM3 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

The Government's claim that its reform of the domestic purposes benefit will save up to $200 million is an "illusion", an economist says.

Susan St John, an associate professor of economics at Auckland University, says the savings are minimal when taking into account the cost to the Government of Working
for Families (WFF) tax credits.

In an opinion piece in today's Herald, Professor St John says Prime Minister John Key's savings claim "is in fact an illusion".

The Government admitted yesterday its calculations do not factor in WFF tax credits.

This week, the Government unveiled Future Focus, its welfare reform package, aimed at giving long-term beneficiaries incentives to search for work and penalising them if they do not.

Those on the DPB - single parents with dependent children - will face work tests once their youngest child is 6 years old.

They will have to be available to work 15 hours a week, and failure to comply will see their benefit halved, though they will retain supplementary assistance.

Mr Key said that if 5 per cent of those on the DPB moved into jobs, it would save $200 million over 10 years. The figure is based on the cost of the DPB in June 2007, when the DPB was worth $9460 a year.

But Professor St John, who is also a spokeswoman for the Child Poverty Action Group, says the savings evaporate when taking into account WFF tax credits.

"Did [Mr] Key forget that when the 2150 people go back to work, instead of the benefit, the Government will have to pay the In-Work tax credit of at least $3000 a year?

"And if each sole parent works at least 20 hours at the minimum wage, they also qualify for an annual $9152 of the minimum family tax credit."

She used a timeframe of 6.5 years, which is how long it would take to save $200 million for 2150 DPB recipients using today's DPB rate. "The cost of these extra WFF payments for the 2150 sole-parents for 6.5 years is $170 million."

Social Development Minister Paula Bennett said this was a worst case scenario of a person on the minimum wage, working the minimum hours to get the In-Work credit, and receiving the maximum value of the minimum family tax credit.

Professor St John also criticised the reforms as mean-spirited. "If single people are squeezed out of the casual labour market to accommodate these extra sole parents, more unemployment benefits will be required.

"Raising happy and healthy kids is a parent's dream, but trying to do this as a sole parent is sheer hard work. They don't need it made into a nightmare by mean-spirited and so-last-century, visionless welfare reforms."

NUMBERS GAME

* 2150 single parents are 5 per cent of DPB claimants.
* Govt sums: DPB costs $9460 a year (2007 rates); if 2000 people move into work, savings are $200 million over 10 years.
* Taking today's DPB rate, annual cost is $14,180.40 net ($272.70 per week).
* 2150 parents moving into work would save $200 million in 6.5 years.

WORKING FOR FAMILIES TAX CREDITS

* In work $3000.
* Minimum Family Tax Credit: $9152.
* Cost for 2150 parents over 6.5 years: $169.8 million.
* Savings to the Government over 6.5 years: $30 million.

Discover more

Opinion

<i>Susan St John:</i> Govt's sums on welfare savings don't quite add up

25 Mar 03:00 PM
Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.
Save

    Share this article

Latest from New Zealand

New Zealand

16-year-old accepted as volunteer firefighter, puts out his first flames alongside dad

10 Jun 06:00 PM
Premium
New Zealand

Residents stop contractors' work on 15-metre cell tower in Gisborne

10 Jun 06:00 PM
Politics

'Undermine a two-state solution': NZ bans two Israeli ministers

10 Jun 05:55 PM

Why Cambridge is the new home of future-focused design

sponsored
Advertisement
Advertise with NZME.
Recommended for you
School shooting death toll rises to 10 in Austria, shooter among dead
World

School shooting death toll rises to 10 in Austria, shooter among dead

10 Jun 05:32 PM
Deepfake porn to covert recordings: Are our laws keeping up with tech?
New Zealand

Deepfake porn to covert recordings: Are our laws keeping up with tech?

10 Jun 05:00 PM
'A long hard-fought dream': Fire destroys vessel but vision remains
Northern Advocate

'A long hard-fought dream': Fire destroys vessel but vision remains

10 Jun 05:00 PM
Dad on meth died after jumping off iconic crane and hitting cold water at 98km/h
New Zealand

Dad on meth died after jumping off iconic crane and hitting cold water at 98km/h

10 Jun 05:00 PM
Morning quiz: What is the SI unit of electrical resistance?
New Zealand

Morning quiz: What is the SI unit of electrical resistance?

10 Jun 05:00 PM

Latest from New Zealand

16-year-old accepted as volunteer firefighter, puts out his first flames alongside dad

16-year-old accepted as volunteer firefighter, puts out his first flames alongside dad

10 Jun 06:00 PM

It’s rare to be accepted at just 16, but Tyler Parkinson's waited his whole life for this.

Premium
Residents stop contractors' work on 15-metre cell tower in Gisborne

Residents stop contractors' work on 15-metre cell tower in Gisborne

10 Jun 06:00 PM
'Undermine a two-state solution': NZ bans two Israeli ministers

'Undermine a two-state solution': NZ bans two Israeli ministers

10 Jun 05:55 PM
Morning quiz: What is the SI unit of electrical resistance?

Morning quiz: What is the SI unit of electrical resistance?

10 Jun 05:00 PM
Clean water fuelling Pacific futures
sponsored

Clean water fuelling Pacific futures

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • What the Actual
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven CarGuide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP
search by queryly Advanced Search