Wednesday, January 29, 2014

Labour's cynical election bribe just more legalised theft

The New Zealand Labour Party has announced that if it becomes the government later this year it will introduce a new welfare payment of $60 for babies born to families earning under $150,000 per year for the first year and continuing payments for families with lower incomes. This is on top of the Working for Families scheme that Labour introduced when last in power, which extended welfare to families on incomes of well over $100,000 per year, and other existing welfare benefits. 

As welfare commentator Lindsay Mitchell points out on her blog here, this means that a first time mother in Auckland on welfare will receive $672 per week and a further $124 for every child after that. The median New Zealand full-time wage (June 2013) is $844 per week. An individual taxpayer will pay about 15% tax on their income so will receive about $720 in the hand. Beneficiaries get additional entitlements such as lower cost government services and discounts from many private sector organisations, so you would have to conclude that most young, single women would be better off having babies than working for a living.

The inequity of this situation, and even the fact that all the evidence says that encouraging welfare dependency produces poor social outcomes, are not my primary objections to this policy. It is the cynical opportunism of it that gets to me. No one can seriously argue that New Zealanders incomes of up to $150,000 need welfare, so this policy is not about need. As with Working for Families, it is about making more and more New Zealand families dependent on, and grateful for, the largesse of a Labour Government. Elections are won and lost on the votes of the middle class and these policies bring almost all of the middle class into the welfare system. 

All taxation is, by definition, legalised theft (OED defines theft as to 'take another person’s property without permission'). Most people justify the taxation and welfare system because it enables government to provide for the needy in society. Labour's new policy doesn't even have that merit. As Lindsay Mitchell points out again here, the most commonly used measurement which counts children in households below 60 percent of the median household after-housing-costs income, has fallen from 37 percent in 2001 to 21 percent in 2012. No one needs this policy, least of all higher income earners. Where is the morality in taxing a young school leaver earning the minimum wage ($13.75 per hour) so the government can give money to someone earning say $145,000 per year?

Fortunately I think most New Zealanders will see this policy for what it is - a cynical election year bribe. However, between Labour and its fellow-traveller Green Party, they may muster enough votes to out poll the governing National Party and implement their dishonest policies.

1 comment:

Mark Hubbard said...

Yes to all your arguments, plus one more. The bureaucracy involved.

For those of us on the coal face preparing tax returns, Working for Families is a nightmare given the adjustments that have to be made. The majority of processing and other errors for tax returns in this office relate not to the rest of an income tax return, but to WFF.

If Best Start is brought in, there will be yet another layer in returns over top of WFF. If you could add up the cost of administering that across every tax return filed, it would be a big number.

If you have to have such policy - and you don't and a country shouldn't - then at the very least it should be via the existing mechanism, WFF, or, abolish that and bring in new system. Don't simply lay another system designed for the same ends as the existing convoluted system, over that system.

It's nuts. But then Cunliffe saying he's going to increase WFF is not sexy from an electioneering of view. Promoting Best Start is. More Left nonsense that we all have to pay for.

OT: I have no time to blog again until April, but am surprised to see the dearth of liberation styled blogs slamming David Clark's statement last night on TV 3 news that banning Facebook was a legitimate option for government if that company did not pay more tax here. If this Labour government does get in, I think it will be one of the most Stalinesque government for some time.