Working for Families

If NZ's new government wants a simple fix to improve child poverty, here’s what it should do

Retrieved on: 
Thursday, November 9, 2023

For those without children, its proposed payment of the full Independent Earner Tax Credit for incomes between NZ$24,000 and $66,000 would kick in from April 1 next year.

Key Points: 
  • For those without children, its proposed payment of the full Independent Earner Tax Credit for incomes between NZ$24,000 and $66,000 would kick in from April 1 next year.
  • This would help some 380,000 people in low and modestly paid work with an extra $10 a week.
  • At the same time, the work effort of low-income parents can be better rewarded.

How the poverty trap works

  • When a family’s joint gross income exceeds the (very low) fixed $42,700 threshold, every extra dollar earned denies them 27 cents of WFF assistance.
  • To help explain this, it’s useful to imagine a typical family in those circumstances.
  • Let’s say this family has two children at school, with one parent in full-time employment and the other half-time, both on the minimum wage.
  • Read more:
    Forcing people to repay welfare ‘loans’ traps them in a poverty cycle – where is the policy debate about that?

Letting people work and earn more

  • Delaying the change only decreases the incentive to work, with flow-on effects for productivity.
  • This would also address child poverty, as about half of the country’s poor children are in families in low-paid work.
  • Many slip further into debt every week, waste precious time arguing for means-tested top-ups from Work and Income, or need food parcels from stretched and underfunded foodbanks.

A simple solution

  • This would best be achieved by an immediate increase to the Family Tax Credit, over and above the required inflation adjustment.
  • Here is a counter-intuitive but serious suggestion: reduce the In Work Tax Credit by $25 a week and increase the Family Tax Credit by the same amount.
  • But this basic suggestion could still be a win-win for National’s key objectives at roughly the same eventual annual cost.


Susan St John is affiliated with the Child Poverty Action Group.

NZ election 2023: Labour out, National in – either way, neoliberalism wins again

Retrieved on: 
Tuesday, October 17, 2023

Regardless of the election result, a form of austerity was always going to win.

Key Points: 
  • Regardless of the election result, a form of austerity was always going to win.
  • While National and Labour both offered targeted support for those struggling to get by, such as tax cuts (National) or the removal of GST from fruit and vegetables (Labour), such mitigation seems paltry by comparison.

Radical incrementalism?

    • Many contend Labour has abandoned the free-market fundamentalism associated with “Rogernomics” that it adopted in the 1980s.
    • Under the Labour governments led by Jacinda Ardern and then Chris Hipkins, there was an attempt to ameliorate the worst excesses of market capitalism.
    • Hipkins, for instance, insisted Labour’s policies were not simply about “tinkering around the edges of the neoliberal model”.

The ‘third way’

    • A rough scholarly consensus has emerged that neoliberalism has shown a remarkable ability to evolve.
    • Labour – and to some extent National – have rejected the harsh “vanguard neoliberalism” of the 1980s and ‘90s.
    • For example, the Labour government’s COVID business support and wage subsidy scheme was supposedly undertaken to protect workers from unemployment.
    • Read more:
      With ACT and NZ First promising to overhaul Pharmac, what’s in store for publicly funded medicines?

Intervention for the market

    • In this sense, the various palliative reforms made by the Ardern-Hipkins governments do not represent a fundamental swing away from neoliberalism.
    • She said Labour accepted the need for government intervention in the market.
    • Rather, at its core, it is about imposing a global and state framework that favours business and private property.

The underlying consensus

    • National is more business-friendly and seems poised to make deeper cuts to public services.
    • To differing degrees, National and its probable coalition partner ACT reject the “progressive” aspects of what feminist scholar Nancy Fraser called “progressive neoliberalism”.
    • But beneath those apparent ideological differences there remains an underlying neoliberal consensus.
    • This is especially so with the election success of parties promising to reduce government spending.

Taxing questions: is National glossing over the likely cost of administering its new ‘revenue measures'?

Retrieved on: 
Wednesday, August 30, 2023

Proposing to alleviate the financial pain of this “squeezed middle”, it may be key to determining who forms the next government.

Key Points: 
  • Proposing to alleviate the financial pain of this “squeezed middle”, it may be key to determining who forms the next government.
  • Just what these might cost to set up and administer may be a missing element of the picture.
  • As the tax policy makes clear, short-term concerns about the cost of living trump longer-term considerations about climate change.

Revenue neutral means new taxes

    • To ensure the package is revenue neutral, four new taxes will be introduced.
    • If the policy is aimed at those who vote, then three of the new taxes are aimed at shifting the tax burden to those who cannot vote.
    • A second stream of revenue will come from a tax on offshore gambling.
    • Generally, two of the new proposals appear to gloss over the massive IT costs that tend to accompany new taxes.

Safeguarding the ‘un-squeezed top’

    • What the package does not do is engage with the problem of tax-free wealth.
    • Just this week the International Monetary Fund once again urged New Zealand to introduce a comprehensive capital gains tax.
    • National’s package favours “the un-squeezed top” by reinstating tax deductions for rental properties, reducing the brightline test to two years, and leaving capital gains untaxed.
    • Read more:
      How to read the political polls: 10 things you need to know ahead of the NZ election

      And the bottom?

Making NZ's tax system fairer is a good idea – but this proposed new law isn't the answer

Retrieved on: 
Thursday, June 1, 2023

In 2022, he announced plans for legislation requiring future tax policy changes to be measured against a set of tax principles, notably fairness.

Key Points: 
  • In 2022, he announced plans for legislation requiring future tax policy changes to be measured against a set of tax principles, notably fairness.
  • But while it is reasonable to support a tax system that is fairer than the current system, I believe the bill is confusing, unnecessary and pointless.
  • Unlike the Tax Working Group, which clearly and adequately stated tax principles that most people could understand, the bill introduces highly technical ideas that could exclude ordinary people from the debate.

Horizontal equity

    • But a more accurate way to explain horizontal equity would be to say “people who are in similar situations should be treated similarly”.
    • The principle of horizontal equity as outlined in the bill is incompatible with the Income Tax Act because people with similar levels of income won’t pay similar levels of tax due to programmes like WFF.
    • If the principle of horizontal equity needs to be stated, it should be that “taxpayers in similar circumstances should pay a similar amount of tax”.

Time and money

    • A standard tax textbook distinguishes between legal, accounting and economic conceptions of income.
    • According to the bill, “the time value of money matters when considering horizontal equity”.
    • This means there would be a significant gap between the ideas set down in the principles and how most people think of income.

Vertical equity

    • It is not uncommon for countries to lock in the ability to pay tax, which traditionally includes both horizontal and vertical equity, within their constitutions.
    • Read more:
      Forget a capital gains tax – what New Zealand needs is a tax on inherited wealth

      Using the word “economic” in the explanation of vertical equity is unnecessary.

    • The OECD defines progression as meaning “an increasing proportion of income must be paid in tax as the income increases”.

The bill doesn’t solve our tax problems

    • The bill then states: “A progressive tax system does not mean that every tax should be progressive (e.g.
    • The income of so-called “middle-income New Zealanders” is most likely fully taxed under the current provisions of the Income Tax Act.
    • But most don’t pay “enough” tax because successive governments have lacked the courage to tax capital gains, wealth, and gifts and inheritances.

EQS-News: Encavis Asset Management AG:

Retrieved on: 
Thursday, March 23, 2023

Encavis Asset Management AG (Encavis AM), a subsidiary of the MDAX-listed wind and solar park operator Encavis AG, advises the Versicherungskammer Group on the acquisition of a German wind farm with a total capacity of 23.6 megawatts (MW).

Key Points: 
  • Encavis Asset Management AG (Encavis AM), a subsidiary of the MDAX-listed wind and solar park operator Encavis AG, advises the Versicherungskammer Group on the acquisition of a German wind farm with a total capacity of 23.6 megawatts (MW).
  • Encavis Asset Management AG is responsible for the structuring of the entire project and will take over the commercial management, energy management, accounting and controlling of the wind farm.
  • Encavis Asset Management AG offers institutional investors tailor-made portfolios and fund solutions for investments in the growth market of Renewable Energies.
  • Encavis Asset Management AG is a wholly owned subsidiary of MDAX-listed Encavis AG (ISIN: DE0006095003, Prime Standard, Ticker symbol: ECV) and, as part of the Encavis Group, benefits from their many years of experience and broad industry network.