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Home / New Zealand

Key and Labour clash over families payments

By Paula Oliver
1 May, 2007 05:00 PM3 mins to read

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KEY POINTS:

National has been accused of jeopardising the Working for Families payments of as many as 160,000 families as it argues that the money would be better given through a tax cut.

National leader John Key yesterday said he would prefer that "middle to higher" income earners who were
eligible for assistance through the Working for Families programme got it through a tax cut instead.

In a repeat of the arguments made during the 2005 election campaign, Mr Key said families with an income of $120,000 and four children - now eligible for Working for Families assistance - should not have to apply for help.

While he was confident the money could instead be delivered through a tax cut without making anyone worse off, he said National had not made a final decision about whether to repeal at least part of the Government scheme.

"At this stage we haven't designed our tax package for 2008, but our preference would be to implement a policy which sees New Zealanders being able to keep more of what they earn rather than having it recycled through the Working for Families package for higher to middle income earners.

"The aim is not to reduce the after-tax effect of the current payments that New Zealanders receive through Working for Families, but to deliver it in a different forum."

Mr Key was forced to clarify his party's position after a news report yesterday suggested that a National government would repeal the $550 million extension to Working for Families announced by Labour at the 2005 election.

Labour yesterday seized on the report and claimed that families would lose out under National.

Social Development Minister David Benson-Pope said that if the extension which came into force on April 1 was repealed, about 160,000 families would lose around $50 a week.

"Instead the money would be given to the rich in the form of tax cuts."

Prime Minister Helen Clark also attacked Mr Key's plan and said that if the money going into tax credits was spread across every taxpayer, many families would be "immensely worse off".

But Mr Key was adamant National could make the change without negatively affecting families.

He pointed to National's 2005 tax cut package which he said would have made 95 per cent of New Zealanders better off.

But there is considerable doubt whether National will be able to repeat that package, given the state of the economy and the fact Labour has already committed some of the money National would have had available for tax cuts.

Mr Key said "we'll just have to wait and see" whether National could repeat its 2005 package.

If it couldn't, and it appeared that some people on Working for Families would be worse off with a tax-cut package, National "probably wouldn't make the change" from the current scheme, "but our view is we can deliver it through tax cuts".

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