English won't rule out WFF, loans cuts

Bill English says can't rule out getting rid of Working for Families or interest free student loans. Your view?

1st Mar 11, 3:56pm by Bernard Hickey

Finance Minister Bill English has refused to rule out cutting spending on Working For Families (WFF) or interest free student loans as the government grapples with the task of paying for NZ$20 billion of Christchurch earthquake repairs while keeping public debt under control.

English told a news conference in Wellington that the government would look harder at its priorities.

NZHerald and Stuff reported English had declined to rule out cutting such programmes.

"We're going to test the limits of where we go on government expenditure," he was quoted as saying.

"We need to give ourselves the room to find the cash without increasing vulnerability as an economy too much," he said.

Stuff reported he did not want to loosen the Government's short and long term targets for debt reduction, but that was also not ruled out.

A slower return to surplus than the current forecast 2014 was also possible, but the Treasury was still working on the details.

He said the Government wanted to stick to its framework of reducing debt and returning to surplus "but we will have to be a bit flexible".

"We want to deal with this issue within the fraemwork without being rigid about it," he was quoted as saying.

Meanwhile, Civil Defence Minister John Carter said the national state of emergency had been extended for a further seven days.

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56 Comments

by Boatman | 1st Mar 11, 4:57pm 1298951839

YES, and get rid of this Emmission Trading Scam , which is another unncessary tax.

by Justice | 1st Mar 11, 5:05pm 1298952309

Yes, get rid of both Labour election bribes which were unaffordable from day one.

Anyone hear this quote from Brownlee:

"Quite frankly people have died in this last earthquake trying to save old buildings. We're not going to do that any more. My absolutely strong position is that the old dungas, no matter what their connection, are going under the hammer."

Does that include the Cathedral I wonder?

Where's the journalist to ask; " Any comment Mr Parker?"

by Andy Rodgers | 1st Mar 11, 5:20pm 1298953234

WFF and interest free student loans were only bribes by Helen Clarks Labour Gov't to hang on to power at whatever cost to the future economic wellbeing of NZ. However it will be interesting to see what political fallout there is from this announcement. Will Goofy be our next PM, if so then Qantas will be putting on extra planes for all the Kiwis who decide that Oz will be a better place to live and work rather than the socialist nightmare of another spendthrift Labour Gov't. However if Goofy does get in shorting the NZ$ will be money for old rope as the national debt explodes.

by steven | 1st Mar 11, 5:41pm 1298954473

and were given out in response to Brash's tax bribes....so really Brash started teh race tot he bottom....and here we ahve the WFF mess which will be very hard to remove...

Emergration...pure speculation, OZ is more Labour than here and in fact I think the movement is as bad if not worse than when Labour were in power.

Both parties are socialist in terms of Govn spending supporting society with some re-distribution....simple fact.

regards

by Justice | 1st Mar 11, 5:44pm 1298954679

No one started it, they have ALL done it since day dot! Hence I don't vote for any of em

by Billy | 1st Mar 11, 5:39pm 1298954391

Maybe next, Bill will refuse to rule out Capital Gains tax, which his boss ruled out last year :-)

Come on, why should all that money go to property speculators (oops sorry, investors) instead of to the govt where it can be put to good use to rebuild New Zealand's economy.

by Ricardo | 1st Mar 11, 5:58pm 1298955535

Billy, if you look at John Key's speech this time last year, he ruled out a "comprehensive" capital gains tax..which provides plenty of wriggle room...he can most definitely whack property with a capital gains tax and still say he kept his word...for example, could be second properties, could be a CG tax just on land, maybe a time limit could be applied (e.g. sold before 3 years and you get taxed), or could be a CG on all property but not shares..and on it goes.

by JD | 1st Mar 11, 5:44pm 1298954651

I'd be perfectly happy to see WFF go.

by Anon annoy anono | 1st Mar 11, 5:55pm 1298955306

Master stroke

Get rid of both bribes - Labor cannot criticise it

and make all dole bludgers have to work in christchurch for the minimum wage to help rebuild

by VALENTINA | 1st Mar 11, 7:26pm 1298960793

The property prices are projected to drop in the next 2 years so will second home owners selling at a loss be able to claim a tax loss if the Govt brings in CGT??

by steven | 1st Mar 11, 7:36pm 1298961410

Nope....

regards

by speckles | 1st Mar 11, 7:41pm 1298961674

no to captal losses been tax deductible, also it all depends when you orginally purchased and finally sell if you make a capital gain or loss...

by Number 6 | 1st Mar 11, 8:11pm 1298963497

It will be as its acronym indicates, VALENTINA. It won't be a feline ( Capital Adjustment Tax! ) The 'G' will apply to CPI adjusted gains. Losses will remain wholly with the speculator.

by MartynC | 1st Mar 11, 8:57pm 1298966234

Joyce could give up his 'holiday highway'??? no wait, hell hasn't frozen over, so sorry Canterbury :-(

by MartynC | 1st Mar 11, 9:00pm 1298966420

Student loans should only be Int free when studying, if at all.

by steven | 1st Mar 11, 9:05pm 1298966701

and if the student cant get a job?

The idea is that keeping the rate at zero encourages students to stay in NZ where the Govn will get its interest in PAYE and GST via spending etc....so its not really interest free....

regards

by Elley | 1st Mar 11, 10:19pm 1298971184

Seeing the number of people leaving, this system doesn't seem to work that well. Maybe there should be more incentive for young graduates to find a job and stay in NZ, ie lower tax rates for the first [x = 2,3 even 5?] years after graduation.

I have also heard of people not wanting to come back to NZ due to their student loan accruing interest while overseas and ballooning, and as a result NZ is not getting back its skilled (and by now experienced) former graduates. Maybe if they'd stayed during those first few years they'd have paid back a good chunk of the loan and we wouldn't run into this issue.

by Wolly | 2nd Mar 11, 5:25am 1298996700

"High-income earners face a cut to their Working for Families payments as the Government looks for ways to meet the cost of the Christchurch earthquakes.Finance Minister Bill English signalled a major review of spending plans and debt levels yesterday, including possible cuts to Working for Families payments and interest-free student loans.

"We are just not ruling stuff in or out. We are in day six," he said."

http://www.stuff.co.nz/national/politics/4719932/High-income-benefit-cut-hint-after-Christchurch-earthquakes

No Bill........................ we are not in day 6..we are in month 27!

The disaster in Chch has been a bloody good boot up your bum...and with a bit of good luck we might see you and John Key tell it to the Cabinet...either they make a serious ongoing policy move to rid this economy of the bloody benefits for votes scams run by both main parties..and a solid move to rid the place of the property speculation .....or they can be sure that this economic turd will land on their heads.

by kane02 | 2nd Mar 11, 8:27am 1299007650

there are too many people on state assistance n NZ. Is it 300,000? or 400,000? whatever it's a bloody disgrace for a small country. We have been living beyond our means for 30 years and as a result in times of need - we do not have the slack in the system or flexibility that we should. Welfare needs to be slashed, infrastructure spending ramped up big time and tax rates cut further especially for those low income earners. We have got to start toughening up and those that can't deal with it - tough!

by kane02 | 2nd Mar 11, 11:43am 1299019383

Sorry, after reading the links below I see that the correct figure for the number of beneficiaries is 930,000!!!! and the working age population is around 2.2m ppl.

Having said that this doesn't surprise me as I am in finance and I regularly see applicants earning net over $1k per week on state assistance, with cheap HNZ rent subsidies thown in. It embarasses me as I know for a fact most of our staff earn less than this. Fantastic for moral eh!

WAFD!

by stp | 2nd Mar 11, 8:43am 1299008580

Bernard,

I see plenty of crazy numbers here. The number 400000 requiring assistance for example.

Can you add the statistics of unemployed, DPB and other beneficiaries into this site?

Maybe within these 400000 are 390000 of super-annuitants or unemployed?

This way will be easier to refer to something more solid.

by David Chaston | 2nd Mar 11, 9:16am 1299010594

Here are links to this data ...

http://www.interest.co.nz/charts/labour/benefits-numbers

http://www.interest.co.nz/charts/labour/beneficiaries

by Elley | 2nd Mar 11, 9:58am 1299013128

So there are nearly 355,000 working-age beneficiaries, receiving benefits that don't seem to include WFF or interest-free student loans. Yet, there's talk of cutting WFF which is paid to people who do work and pay taxes and student loans which are (or should be) an investment in our future work force, and no talk of cutting those other benefits down. Interesting.

by Justice | 2nd Mar 11, 10:08am 1299013723

I see your point Elley but governments always do this. No point pouring on more taxes/levies to those that pay none. The true worker (or "mug" as public servants call them) always get the bill

by powerdownkiwi | 2nd Mar 11, 8:43am 1299008587

Key and English resemble the first-class passengers, advocating more locks on the rabble down in steerage.

Whether they realise that the sinking threatens ther own relative security, is the moot point.

This is against the global backdrop, where energy scarcity will now alternately raise the prices of everything, then collapse, then repeat the cycle.

No point in rebuilding a BAU CBD - they'll be of no (or limited) use. Better ascertain what the future may hold (which may be better addressed by asking what we don't want/can't have) and design for that.

Same goes for motorway projects.....

Don't worry about the current crop of unemployed - they've been displaced by cheap energy, and as it gets more expensive/unobtainably, they'll be back in contention. Indeed, they may be more use than a corpulent middle-manager.......

by raf | 2nd Mar 11, 8:58am 1299009492

PDK, talking about the rebuild, any thoughts on this?

http://sustento.org.nz/a-green-dream-rebuilding-christchurch-as-a-susta…

by powerdownkiwi | 2nd Mar 11, 9:53am 1299012799

Good link - he speaks my language.

Brownlee and Co are the tail-end of a doomed era / mindset.

They'll attempt to rebuild what they had, with a nod to safety, and they'll tread a political path between their 'no rules/free market' supporters, and the need to regulate to placate the real folk.

I doubt they're capable of acknowledging that times are about to change irrevocably, and I doubt they're capable of addressing that change.

As with all changes, it will have to be bottom-up.

by Sepherial | 2nd Mar 11, 9:27am 1299011254

It's more likely Brownlee has mates and vested interests in building more of what we dont need, steel and glass towers and concrete box's of the Stalinist era and call them modern, few more motorways few of us will be using...

The first thing would be to get back to human scale building's with some town planning as our fore fathers did. I doubt the current crop of architects and there modernist stuff even know what that is. Especially when you look at how most new buildings, subdivisions etc are deployed in the landscape ...

TePaPa in Wellington is great example of a WWII german flak tower or u-boat pen circa French Coast 1942 with 1960's glass and a dark showdow eminating over the parking lagoon whilst you're welcomed at the front door by the madatory impersonal steel and glass doors of the Umbrella corporation. most new stuff fits this criteria, soul destroying!

by MartynC | 2nd Mar 11, 11:04am 1299017078

if they cut WfF, millions & millions & millions & millions & millions etc etc a week will be sucked out of the economy. apart from real 'rich' ppl who run their affiars to get the WfF, the rest of them spend their money.

Do ppl not remember what happened after the benefit cuts of 1991 did to help extend the recession?

by Justice | 2nd Mar 11, 11:18am 1299017910

Where do you think the money comes from for WFF? We borrow millions and millions that then has interest attached for future gen's. Having children should not entitle anyone to politically blackmail our MP's & our economy and bankrupt a nation for the sake of keeping power.

People make a choice to have children and MUST be held accountable to that decision.

Surely the 'longterm' incentive should be to be independent of government handouts? Who really wants to be grovelling to government for anything?

We are facing dire consequences if we fail to address our poor economic output and borrowing.

Yes it's sounds harsh.........but

by Elley | 2nd Mar 11, 1:55pm 1299027323

I agree with your post but I thought that the money for WFF came from the taxes paid by the people who actually receive WFF (in order words, they pay less/no tax but the money is there, not borrowed). On the other hand, money paid out for other types of benefits is probably borrowed.

Looking at the graphs linked to above, I wonder how there can be 113,000 on the DPB alone. That's as many people as those on unemployment benefit + sickness benefit put together. And according to the WINZ website it's paid to "sole parents" who "do not have a partner or have lost the support of their partner". Reading this article from last year http://www.stuff.co.nz/national/3882606/Absent-dads-owe-billions-in-unpaid-child-support, I find it amazing that so many dads think they can just walk away from their obligations and let other people pay child support for their kids. Not to mention that except where one partner has died, one doesn't usually become a single parent by accident. I know that many people here want WFF scrapped and that's fair enough because clearly, living above our means as a country isn't sustainable but that sounds much worse than WFF to me.

by Justice | 2nd Mar 11, 2:43pm 1299030226

"but I thought that the money for WFF came from the taxes paid by the people who actually receive WFF"

Not the majority of it Elley, and why tax people and then waste all that money on bureaucracy, on hoop jumping just to give it back?

A great deal of the 300 million we are borrowing every week goes to these kinds of bribes because National are now too scared to take Labours bribes away for fear of losing the next election. Most probably would too! BUT not if they REALLY educate the people on what we are facing now particularly post current events.

Also how about every childless taxpaying couple or all those singles taxpayers out there that receive nothing?

by Elley | 2nd Mar 11, 3:04pm 1299031466

You are right that taxing to then give the money back doesn't make sense. As for educating people, many might prefer to not be educated or to put their heads in the sand so long as they receive something. Obviously, it can't go on but I doubt that the majority of people will happily suggest scrapping those kinds of schemes.

Regarding your last comment, well, most people do have children at some point in their lives so may potentially benefit from WFF in the future (if it still exists). As for those who choose to never have children, I don't think they are doing us a favour actually. I suppose they count on the children of those who did make the effort to raise a family to pay for their benefits/give them care/provide money for infrastructure etc once they are retired because it sure won't be their kids paying taxes!

by Kate | 2nd Mar 11, 11:19am 1299017984

MartynC, NZ Inc. is borrowing those millions as a means to pay the wage subsidy that WFF is. If WFF were not there - then employers will need to pay higher wages to keep their staff - and people will (within a relatively short period of time) return to the same level of disposable income that they had previously enjoyed from that wage subsidy.

With wage levels rising, higher prices may result in some areas - particularly the labour-intensive/skilled trades and manufacturing areas where wages are presently stagnating or going backwards.

WFF as a policy interferes with the labour market. If we really want to catch up to Aus someday on wages - we need to get rid of these sorts of distortions by government.

by Sepherial | 2nd Mar 11, 12:31pm 1299022265

If you need WFF that could also mean the tax on what they do actually earn and the spiraling costs of everyday survival is way to high to function as citizens.

Oh thats right there are no citizens just consumers.

by Justice | 2nd Mar 11, 12:07pm 1299020848

Damn right!

by JD | 2nd Mar 11, 1:32pm 1299025920

Well said, Kate!

by steven | 2nd Mar 11, 2:03pm 1299027794

Given that WFF is a subsidy for the wage bracket $40k to $70k.....what happens to those workers when WFF stops? the exit to OZ would accelerate I suspect...is this a loss? If there is a shortage of workers then the ones remaining see thier wages increase.

Interesting point on its a subsidy for employers, its hard not to agree that is probable...

regards

by Max the Kiwi | 2nd Mar 11, 12:43pm 1299022997

While the govt is looking at WFF and student loans to fund Chch isn't this also an opportunity to look at NZ Super? Surely some form of means testing for those with other income over say $60k would be a starting point. It would be a brave wealthy superannuitant to come out swinging against such a move.

by Wolly | 2nd Mar 11, 1:13pm 1299024839

Put the little white ball on the wee wooden thing...now swing like %$#@ and smack the skin off the sucker....Good idea max the kiwi..not enough jobs for bureaucrats these days...should be able to fashion a whole new department of state on that idea....Soon as it gets suggested as policy look to see a stonking amount of capital exit the bank deposit rorts and head for capital gains on equities...leading to the banks having to pay more for their loot and so up goes the interest rates with heaps of consequences all round...mostly bad. What's your 'other income minimum' Max....$60ooo...no worries sport...stay below that and collect the pension plus the tax free capital gains...good one.

by steven | 2nd Mar 11, 1:28pm 1299025684

Not very many OAPs on >$60k I would think...

regards

by Wolly | 2nd Mar 11, 2:15pm 1299028509

Quite right Steven so why fatten up the already bloated bureaucracy to chase a few million most of which will slip through the holes......knowing dam well the Sir Humphreys in wgtn will collect every penny of their pension anyway!

by Ms de Meanour | 2nd Mar 11, 2:55pm 1299030906

Indeed, but there are many over-65s who have a lot of wealth (as opposed to income); and while it's true that means-testing for NZS would involve a lot of administrative complexity, intrusive bureaucracy and perverse incentivisation - are we really, truly comfortable with the situation that all over-65s (and there are increasing numbers of them, relative to the numbers at working age) get the same pension payment, regardless of how much they're earning or how much wealth they have, at the expense of taxpayers - many of whom are less well-off than those they are supporting?

by 28_29 yr old | 2nd Mar 11, 12:57pm 1299023831

Be careful max the kiwi, Wolly and Justice will def take a swing at you :)

by Justice | 2nd Mar 11, 2:49pm 1299030554

WTF? I haven't even turned 40 yet..I'm all for "asset" testing for Super, particularly if owning 2+ properties.

by Max the Kiwi | 2nd Mar 11, 4:35pm 1299036957

I was being genrous at $60k Wolly. Above average wage would be better.

And yes, let's asset test them as well and bring assets in trust into the mix. Simply following good trust practice should see plenty of them overturned in the coming years anyway.

NZ Super makes up roughly half of all welfare spending and therefore I would suggest offers the greatest opportunity for gains. It's only vote buying that keeps the politicians away from it. Let's put it on the table for a look at least.

by Ms de Meanour | 2nd Mar 11, 4:49pm 1299037751

Why do we talk of vote buying by politicians and never vote selling by voters? There's always two sides to a transaction and arguably politicians are only responding to market signals which make it clear that people will vote in droves for candidates who promise them lots of other people's - or even their own - money

by Justice | 2nd Mar 11, 4:51pm 1299037867

Good point. It does go on

by meh | 2nd Mar 11, 5:02pm 1299038522

The difference is, the pollies know the rules of the game and have the correct playing pieces. The voters are uneducated, ignorant and don't understand the game yet they are forced to play because they assume/believe the govt are going to act in their best interests and in the best interests of the country.

by Justice | 2nd Mar 11, 5:09pm 1299038972

Yes, they 'know' the rules and more so they 'make' the rules. But.............hidden in the corner of every little sheeples brain is a little voice dying to get out and yell " I WANT CIBR's! "

by Ms de Meanour | 2nd Mar 11, 5:25pm 1299039900

Only educated, intelligent people should be allowed to vote! I feel a new political party coming on ...

NO REPRESENTATION WITHOUT EDUCATION.

by Justice | 2nd Mar 11, 5:48pm 1299041312

Bank Economists think they are educated so...........I still see problems ;-)

by powerdownkiwi | 2nd Mar 11, 6:00pm 1299042006

NO REPRESENTATION WITHOUT EDUCATION.

That rules Tolley out.

by Justice | 2nd Mar 11, 6:04pm 1299042244

LOL

by Malarkey | 2nd Mar 11, 6:21pm 1299043281

"The best argument against democracy is a five minute conversation with the average voter."

Winston Churchill.

by Roger Witherspoon | 15th Apr 11, 6:02pm 1302847336

Yes, time to do away with working for families - the kids should be at school.

Why should students be expected to take any interest in their loans anyway?

Also i do not think students should receive interest on their loans although it would be nice for them.

Hope this helps clarify the underlying issues.