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Recession’s ‘rough edges’ hit families – no help from govt

Written By: - Date published: 4:20 pm, July 20th, 2009 - 48 comments
Categories: benefits, families, labour, national/act government, unemployment - Tags: ,

Labour leader Phil Goff has called for a temporary relaxation of the rules for getting the dole. Too many Kiwis on low and middle incomes are losing their jobs but are not able to get any assistance from the Government (despite having paid taxes for years) because their partner has a modest income.

John Key ruled out any help out of hand. In his mind, you losing your job is just a “lagging indicator”.

His Social Development Minister, Paula Bennett, rather than addressing the issue, lustily attacked a strawman saying she didn’t think a person whose partner is on $200,000 (less than 1.5% of people are on more than $150,000) needs the dole. Farrar tries the same distraction – waffling on about a theoretical family where both adults were on $100,000 before one lost their job (less than 10% of households have a total income over $143,000).

As they did with Working for Families, the Right indulges in meaningless rants about a few well-off families getting assistance. This overspill into higher income is meant to be justification for not giving much needed assistance to low and middle income families at all. It’s throwing the baby out with the bathwater stuff.

The stupid thing is that these objections, marginal as they are, could easily be addressed by imposing a household income cap or a sliding scale on any relaxation of dole rules. It says a lot that the Nats would rather dismiss the policy out of hand than find a way to help these families.

Because the fact is tens of thousands ordinary Kiwi families on low and middle incomes are losing their livelihoods and being denied any government assistance.

If your partner has any income, it decreases your dole. If your partner is on $534 a week you can’t get the dole at all. That means if your partner is on just over the minimum wage and you lose your job, you can’t get any dole. You and your family have to make do on a total income as low as $534 a week. That’s a major drop in your income and financially devastating for a family trying to service a mortgage.

It’s good to see Goff coming forward with these constructive ideas. It shows the distinction between Labour, which is looking for ways to help ordinary Kiwis hit by the recession, and do-nothing National, which can only think of the rich.

48 comments on “Recession’s ‘rough edges’ hit families – no help from govt ”

  1. Easy way to get around the strawman arguments: make the policy only applicable to those earning under a certain amount.

    There. Done.

    • jcuknz 1.1

      Since the Government is willing to help firms stay in business why don’t they consider the effect, disasterous for more than the family concerned, of a two income family mortgaged to the hilt [ I know that is stupid, but it is hard to forecast the future] when one of them looses their job.

      Rather than Jarbury’s suggestion of a ‘cut-off’ it should be a gradual reduction depending income. Otherwise one dollar under is AOK and one dollar over is nothing … that is also silly..

      John Key is obviously talking to the selfish folk who object to anybody getting more than they have, such as the folk who are always gunning for DPBites.

  2. Lanthanide 2

    I don’t understand why Goff didn’t just propose a sliding scale on total household income to ward off any of National’s predictable attacking and deflecting responses.

    I think a good total household income level would be about $70k, or the same threshold for the top tax rate. Over 70k, you aren’t eligible for the dole, and then say from 35k to 70k there’s a linear sliding scale of how much of it you are eligible for.

    Pretty simple to think about, and pretty simple to communicate – why didn’t Goff say this himself?

    • Bright Red 2.1

      because it’s a marginal side issue?

      The bigger issue is getting families the help they need.

      • Lanthanide 2.1.1

        That’s exactly my point, it’s a marginal side issue, so take the small amount of time and effort to fix it up to begin with, to prevent National from having an easy target they can make a big deal over and therefore avoid having to discuss the idea on its merits altogether.

  3. Anita 3

    Labour would never have given income support to the very wealthiest – but they’ve used this issue to their political advantage. Not only has it pointed out to National’s core constituency that National won’t act to help them, but it’s also set up any number of media stories of articulate presentable people hit by the recession and abandoned by National.

    Cynical and disingenuous, sure – but smart politics.

  4. Mike 4

    Interesting graph in this Matthew Yglesias post about how small unemployment benefits are in the US for people losing their jobs.

    It seems laid-off NZ workers are markedly worse off than American, dead last amongst the OECD countries listed.
    I guess that’s one OECD ranking Key doesn’t care about.

    • Tim Ellis 5.1

      Interesting graph, Mike.

      Labour had nine years to increase unemployment benefits, but didn’t.

      • aj 5.1.1

        In that 9yrs the focus was reducing unemployement and they were hugely successful

        • Chess Player

          Ah, well, yes, I guess it’s true they employed 44% more public servants….

  5. graham 6

    where does the money come from?

    • poptart 6.1

      you could start with putting the top tax rate back up to 39 cents. and cutting the $35 million subsidy to private schools.

      • BLiP 6.1.1

        Lets get the $1 billion the foreign owned banks owe us – oh, that’s right , the banks are running the show now. I mean, they did pay to get their man John Key in place. So, while New Zealanders go hungry and shiver in the cold of winter, BNZ, WestPac, ANZ, and National are creaming it.

        Thanks National Inc.

        • Tim Ellis

          So nothing constructive from you then Blip.

          • BLiP

            What – suggesting we take back the billion dollars John Key’s mates have stolen is not constructive? Well, fuck you and everyone that looks you.

            • Tim Ellis

              I suspect the moderator’s on holiday.

              BLiP, what billion dollars are you talking about?

            • BLiP

              Wake up, dickhead. The John Key National Government Inc rort of Aotearoa is underway – they know, I know, and now you know. But what’s being done about? Sweet fuck all .

            • Tim Ellis

              BLiP, calm down. There is no excuse for that kind of language and abuse.

              The transactions you are referring to took place between 1998 and 2005. That is, almost entirely during the last Labour Government. The IRD assessed tax; the banks disputed the tax, and the dispute is following the normal judicial process.

              If the banks lose their appeal, they will have to pay the entire tax owing, plus interest and penalties.

              It has nothing to do with John Key, or who his friends are. He has no power to intervene to stop banks from paying the tax they owe.

              The select committee inquiry you are referring to would have no power to intervene in a tax case currently before the court.

            • BLiP

              Fuck off – shit for brains!

              Your mutual masturbation buddy Bill English had a chance to stop the rorting of the economy dead in its tracks but wimped out.

              Nine months in and you’re still blaming Labour – you’re an old 33 RPM stuck in a filthy groove.

              [Dude, settle down. Seeing as you’re a regular I’ll leave it at a warning, but please be aware that abuse like yours above is not tolerated on this blog.]

    • poptart 6.2

      i mean, that is if you are really interested in helping working families with the rough edges off the recession and not just in governing for your rich mates.

    • Bright Red 6.3

      putting the 38 cent tax rate back to 39 cents would pay for it.

      Hands up who got anything from that tax cut?

      9% of taxpayers, according to Treasury. And over half of those (the ones on 70K to 90K) got less than $4 a week.

      • stormspiral 6.3.1

        $4 a week would pay for a couple of loaves of cheap bread for a poor family. It wouldn’t be very nutritious, with the folate stripped away along with most other nutrients, but it would fill a few stomachs.

        Now wouldn’t that cause a scream!

      • jarbury 6.3.2

        I got the independent earner credit. That was about it.

  6. toad 7

    As I suggested here this morning, I really think think Goff’s suggestion should be introduced permanently, not just for the duration of the recession.

  7. Sting 8

    Oh great stuff toad the spouse of the Air NZ Chief can claim the dole while the parasite sucks $3 million a fucking year. Get a grip you stupid greeny retard dickhead!

    • Zaphod Beeblebrox 8.1

      Or she could have a legal separation and get it anyway. Then they can have a second marriage when she gets a job.

      • Sting 8.1.1

        Hey why worry as 250, 000 government parasites got their snouts in the public piggy bank. Fucking appalling in a country of only four million. Mental as anything! Just watch the waste on TVNZ idiot box or fly on no food Air NZ.What a jackass country.

        • Zaphod Beeblebrox

          Bit like the parasites with their rental properties claiming the interest payments or the ones with family trusts not paying their proper amount of tax or those with overseas tax havens or those driving around in company vehicles for private use- if you really wanted to get angry you could target them.

  8. TightyRighty 9

    wail wail gnash gnash go the left as the evil genius DPF points out a flaw in their knight in shining armour goffs plan. what about the social effect of welfare? the endless cycle of poverty, squalor and violence that has steadfastly refused to die amongst the poorer sectors of society, and can seemingly be traced to one common denominator, the recurrent lack of a job. how about spending money, which is in short supply, on efforts to get people back into work, and not paying them to do nothing. how about work for the dole? there we go, nice simple answer, everyone wins. we’ll even save money on a productivity commission, as all those previously unproductive, will now be productive. some millions we can save right there, and we can have some nice new motorways, railways or cycleways.

    anti-spam: reliable, only when the right is in

    • stormspiral 9.1

      You’re talking about the social effects of joblessness and poverty. They are the triggers.

      Welfare causes nothing, other than poverty itself. The societal disconnection is the poison in the mix. That’s the starting point.

      …and working for the dole has been tried. Who do you think planted all the trees in the Kaingaroa forest during the Depression for 7/6 (about 75c) a week?

      Aside from anything else, it’s too darned expensive in monetary terms.

      Better to put the money at the top of the cliff, rather than running over the injured with the ambulance, and the longer the hammering continues, the more costly it will get.

  9. infused 10

    I’ve always thought you should work for the dole… I was on it for 2 years and sat on my ass.

  10. Doug 11

    TV3 called poor Phil Santa Clause at least he was dressed in red.

  11. RedLogix 12

    All these suggestions are half-way measures. The simplest, most powerful reform of the tax system is called Universal Income.

    In the NZ context it would work like this. Everyone over the age of 18 has one unique tax associated bank account. IRD puts say $160 pw into it (~$8,500 pa). All PAYE income is taxed at a flat rate of about 33%… first dollar to the last. All company tax is assessed at the same rate.

    All individualised benefits, unemployment, DPB, student allowances, etc, are then abolished. (Saving something in the order of $500m pa administration costs annuallly.) Any remaining benefits, like superannuation, accomodation allowances and WFF are assessed on a household/family basis, and consolidated within a smaller more focussed WINZ.

    The critical advantages of this system are:

    1. Eliminates all marginal tax rate poverty traps. Every dollar earned is tax at exactly the same rate; makes right wingers happy.

    2. Treats all tax payers exactly the same, regardless of age, family status or income. Overall tax rates are inherently progressive; makes left wingers happy.

    3. Eliminates almost all loopholes and distortions. Eliminates the ‘fiscal drag’ effect of inflation. Eliminates the unfair treatment of couples who are taxed as individuals, but can only access a benefit as a couple.

    When taxation was first introduced it was done on an annual basis because the amount of cumbersome hand driven paper work made it impractical to assess tax any more frequently. My father recalls what a great step forward PAYE was for the average worker, no more whacking great tax bill at the end of the year.

    Worse still the process of collecting tax and redistributing was always divorced from each other, one function into what we call IRD, the other into WINZ. Logic would strongly suggest that this is a deeply inefficient arrangement. The IT age has changed all this. With computers shifting money in and out of tax accounts on a weekly or even daily basis, implementing a simple, robust Universal Income is trivial. It is an enormous opportunity whose time has come.

    Goff is almost onto it.

    • Daveski 12.1

      Surprised you haven’t got my comments on this. I agree that it does actually achieve many of the goals of the right yet achieves many of the goals of the left. Really really interesting.

    • jarbury 12.2

      Bloody interesting idea there Red……

    • TightyRighty 12.3

      best answer i’ve seen so far. apart from the flat rate at 33%, the idea is sound.

  12. mike 13

    Good ole ‘Wack it on the bill’ phil – did he say where he was taking the money from to do this or does it just go on the Govts credit card??

    • RedLogix 13.1

      Do the sums mike. The unemployment benefit at about $10k pa directly costs the govt about $100m pa for every 10,000 unemployed. It’s not actually a huge sum, not compared to the $1.5b tax cut Key gave the wealthy in April.

    • BLiP 13.2

      Here’s a coupla billion to start with – so long as you don’t mind pissing off John Key’s puppet masters.

  13. Hearing Goff’s comments and Key’s reaction made me glad that I voted for National for the first time.

    Keep talking Mr Goff your words are handing National a second term.

    • ghostwhowalks 14.1

      So you like Keys reaction – ( negative).

      Funny he had the same reaction to labours Working for Families which he opposed before he was for it.
      The same reaction he had to interest free student loans, he was against before he was for it.
      The same reaction he had to 40 hours free early childhood , he was opposed it before he was for it
      the same reaction he had to home insulation, could he be such a hypocrite to oppose and then adopt it.

      Could it be you like hearing bullshit, because Key could very well allow some couples to receive the dole while one is working leaving you high and dry

      You may be full of principles but Key has none.

  14. It was just a soundbite by Goff meant to get a reaction from his base, Key treated it as such.

    • Draco T Bastard 15.1

      Actually, the soundbite was from JK and you and the rest of RWNJs bought without a thought.

  15. Galeandra 16

    BD said It was just a soundbite by Goff meant to get a reaction from his base, Key treated it as such.

    You wish.
    Key looked quite small- minded with his contemptuous fairies at the bottom of the garden reference on 1 tonight, especially when it was pointed out after that clip that it’s a tiny 1.5 % of earners who’d be able to cream it from Goff”s idea.

    Key’s getting near the end of his chain with a lot of the average income & very worried punters

  16. George.com 17

    The policy Labour took in to the election was (roughly) 15 weeks dole when losing your job, irrespective of your parteners income. Time to look for other work, or do some retraining, and an adjustment period as the realties of living on sfa compared to a wage start to hit. It was actually a reasonable policy. “John Key or Phil Goff wife would get it” is sort of a dumb argument. Certainly benefits the low and middle income earners. And importantly, Labour also had a commit to ongoing training. Sure, National can point to the cost whilst simultaneously doing little about unemployment. Labours policy was about some financial cushion from unemployment and ramping up training. Not just a hand out but the opportunity to upskill and improve your value. Fleshing out the full Labour plan will highlight the compariitive ‘do nothing’ approach from National.

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    BeehiveBy beehive.govt.nz
    6 days ago
  • Further NCEA support confirmed for Auckland students
    The number of Learning Recognition Credits for senior secondary school students will be increased for Auckland students, Education Minister Chris Hipkins confirmed today. This recognises the extended time these students will spend in Alert Levels 3 and 4. “It means students in Auckland will have a fair opportunity to attain ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Long-term pathway next step to better mental wellbeing for New Zealanders
    The Government is taking a new approach to support people who experience mental distress, Health Minister Andrew Little says. “Kia Manawanui Aotearoa – Long-term pathway to mental wellbeing (Kia Manawanui) is the first 10-year plan of its kind that targets the cause of mental distress and also sets out how ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Keeping our Police safe to keep our communities safe
    The Government is committed to keeping our frontline police officers safe, so they in turn can keep New Zealanders safe – with one of the largest investments in frontline safety announced by Police Minister Poto Williams at the Police College today.   The $45 million investment includes $15.496 million in ...
    BeehiveBy beehive.govt.nz
    7 days ago