By Bernard Hickey
Labour Leader David Cunliffe has unveiled an election year proposal for more state-funded support for young families in his State of the Nation address in Auckland. Labour estimated the measures would cost NZ$566 million a year by 2020/21.
Cunliffe announced 59,000 families with new borns would receive NZ$60 per week from the Government through to the child's first birthday, while that grant would continue until the child turns three for those on "modest and middle incomes."
A policy document later detailed how the payment would be universal for all families earning up to NZ$150,000 in the first year, covering almost 95% of children under one.
The second and third year payment would go to around 63,000 families, covering 56% of all one and two year olds. It starts reducing for the second and third year for families with incomes over NZ$50,000.
The 'Best Start' payment would replace the existing Parent Tax credit, saving NZ$15 million. Best Start would begin for children born after April 1, 2016 and the cost would ramp up to a peak of NZ$281 million per year by 2019/20
A Labour-led Government would also expand free early childhood education to 25 hours a week from 20 hours a week at a cost of up to NZ$63 million, and paid parental leave would be extended from 14 to 26 weeks, at a cost of NZ$125 million.
“Our Best Start package will focus on the first five years of a child’s life and help families struggling to meet the rising costs of living," Cunliffe said.
Cunliffe announced last week Labour would drop planned exemptions for fruit and vegetables from GST and a tax exemption for the first NZ$5,000 of income. That would save it NZ$1.5 billion a year.
“Sixty dollars will make a real difference to the lives of struggling parents. For example, it will pay for a weekly supply of nappies and baby food," he said.
“There will also be free antenatal classes for all first time mothers and early home visits."
Cunliffe said the Best Start payment was in line with similar schemes in other OECD countries.
“These are tough times for New Zealand families. This package is a first step in Labour's overall programme of reform which includes education, health, housing, and economic development," Cunliffe said.
“With the best start in life, all our kids will do better in school, achieve more and contribute to our country's future," he said.
Political reaction
National's Economic Development Spokesman Steven Joyce described the plan as a bribe.
“Once again, the moment we get a lift in the economy, they want to start bribing people with massive extra spending," Joyce said.
"Mr Cunliffe has to come clean with New Zealanders on where the money is coming from. Is it even more taxes, more borrowing and much higher interest rates; or is he getting out Russel Norman’s printing presses?"
United Future leader Peter Dunne described the plan as a 'crass bribe'.
He said he supported the extension of paid parental levave to 26 weeks, although United Future wanted to extend it to 12 months.
Taxpayers Union Executive Director Jordan Williams described the plan as 'Middle Class Welfare designed to grow votes.
(Updated with more detail, reaction)
48 Comments
Not sure that low income/large family people need more encouragement to produce lots of kids. Can the State really afford this on top of the Working for Families Welfare-ism etc? How about free financial planning for low income potential parents? Why should the taxpayer pay for other individuals' lack of medium/long-term planning? There was a time when young couples planned/saved in anticipation of a family in the future.
Similar to the recent Govt Food Aid programme in India - more food = more population growth without any economic development for people to help themselves.
All well intended - but handouts never really help people in the long term.
What about a programme/incentive to encourage parents to start home-based businesses so they can care for their kids directly while adding some income to the family unit?
Cunliffe is afraid......afraid he cannot win an election.......is this not a method of bribery to obtain votes?
From wikipeadia:
Bribery is an act of giving money or gift giving that alters the behavior of the recipient.
The bribe is the gift bestowed to influence the recipient's conduct. It may be any money, good, right in action, property, preferment, privilege, emolument, object of value, advantage, or merely a promise or undertaking to induce or influence the action, vote, or influence of a person in an official or public capacity.[1]
Best Start working on how you can treat all people equally and fairly Mr Cunliffe.....
Cunliffe is proposing to hand this out to everyone with a new baby so the cracks at beneficiaries are a bit unnecessary. On the other hand if the smartest guy in parliament has had 6 years to hatch appropriate policies you would have thought he would have done better than this. It is not only silly economic and social policy it is politically inept as well. If labour want to do anything to increase the left vote overall he has to come up with policies that will reassure the middle that he is in any way interested in looking after people who are making an effort. This sort of stuff just alienates most voters.
How unkind, he has their best interests at heart....I think.
But, I never knew that Mr Cunliffe had so much un-declared income.
I had heard rumours that he was well off, but 566million must be a trifle hard to account for, based on previous work studies, undertaken.
Stiill, loves Labours lost and all that. What the hell would Shakespear know??.
Family Planning is so easy, according to some. I thought there was a pill for it, not a majic wand.
And if 150K limit is anything to go buy, so must all of his constituents, favour him above all else, as they contemplate Labour without him.
This not working for families, is not working for me.
And when they split up, will he also provide a State House, or will he enjoy paying for another with State Funded liberties, or will he still be using his own, half billion.
This saving oneself, until after marriage, after saving for years on a planned engagement is old hat, these days.
Borrow and be damned, he says.
I wonder where I went so wrong.?
Ah Happy Families.eh...!!
The "Game" Politicians, can play, with your taxpayers money....or am I wrong, or am I right.
What desperate and derilect politicians are debated here. The "great economic year" has yet to occur and the money is already twice or more spent... if times are so good, whay not pay down the national debt? Another 3K to the breeders, unbeliebable. Where is the governments pledge for a better life for "individuals"? Why must we subscibe to their defined family units in order to receive the fools gold?
What a novel way to entice specific voters whom would broadly not bother voting Mr Cunliffe! I'm surprised that no other left winger throughout the western world has ever thought of that idea before!........Dream on.
One only has to look at the state of the UK due to thier various Labour Governments adopting similar welfare policies down the years.
.... low grade pork barrel politics .... a baby bonus to bribe the votes of a minority in our community ....
What of the multitude in NZ on low to middle incomes , who don't qualify for WFF or for the new BB ? ...... Cunny stripped away your $0 - 5400 tax free threshold , and left you with nought .... as his predecessors Helen Clark & Micky Cullen did ....they taught the boy well ...
.... wish Wolly was here to have a crack at this !
Where did a lot of people go.??
Wolly himself, would always have a lot to say, on a lot of subjects.
Like, where did Hone disappear to, as well.
Some say Hone, is a figment of the electorates imagination.
Some say Hone is another Wolly.? Some say Wolly is Wally, but in my opinion, who knows.
Both have dissappeared from view, no sign of life.
Some say that taxpayers paying for services out of our control is tantamount to insanity.
Some say that having a crack at politics is an easy ride.
Some say that once an MP, always on the gravy train.
But not our Wolly. He was made of sterner stuff.
Maybe Wolly will return one day and take up the cudgels again.
Some say he should have run for Parliament this next term. (I would vote for him).
Some say he would have made a fine Prime Minister, a fine Leader.
Some say Hellen will have his UN divided attention soon, when he wakes up.
I say, he could not have done a worse job than all the past and present ones, Hellen included.
Some say the presents are getting larger.
I think Wolly will have a crack at anything.
Maybe he could reduce the deficit as well as the presents.
Wolly had more common sense than all the MP's laid from end to end.
Maybe he could be a beneveolent dictator, then we could get rid of all these wastrel politicians.
Maybe we should beg Wolly to return for a couple of terms.
Maybe Wolly would urge Hone, never to return, on any terms.
For all our godamn sakes....where's Wolly..??
This is just a repeat of the Labour Governments bribe during the 1975 election when the then Prime Minister Bill Rowling (backed by Roger Douglas) tried to stay in power by offering a " Baby Bonus" along very similar lines.
The electorate didn't buy it and saw it for what it was - a crude bribe with the tax payers own money.
It became a focus of semi-hysterical derision and mirth by the elite and workers alike, and Labour was thrown out of office by one of the biggest margins ever.
Cuniliffe should have studied history a bit more.
"You can fool some of the people all of the time, and all of the people some of the time, but you can't fool all of the people all of the time"
Oliver Hartwich described Cunnliffe's policy as " churning money " , in that the same people who have money pinched from them in taxes by the government , then have some of it returned to them .... minus a chunk lost to government adminstrators , more IRD staff , and so forth ....
.... whereas the dumped tax-free ( up to $ 5400 ) policy directly allowed all income earners to keep a little more of their productive effort .... simple , cheap , and direct ....
*/
Yes what happened to Wolly always enjoyed his comments.
Quite disappointed in Cunny, had high hopes for him.
Incentivising people to be poor is bad, incentivising poor people to have children just crates child poverty. I know there idea was to stop children making there parents (financially) poor, but children just turn into a meal ticket. (this is social engineering even if at best, it only creates labour voters)
Would Cunny not gain a lot more votes spending his half billion a year on creating a social safety net of a guaranteed job for all those that want one?
$60 per week isn't going to break the country, plus this money will be spent back in the economy perhaps saved for higher income earners towards their mortgage and other HH debt. As for some parents staying home and having more kids...well, that happens already and will regardless of money.
If you want to bash the solo mums, then go for it. Though at least most of them spend adequate time with their children rather than dropping them off with the nanny and sending them off to boarding school for a private education. Don't be so quick to judge a parent by their financial circumstances.
Bribe or not, that's all political parties do, attempt to swing voters.
National's ridiculous and pointless spend on a few teachers (and probably ministerial employees) is simply a plee for forgiveness to the teaching profession.
I'm with Big Daddy on this. This is Bill Rowlings stupid 'baby bonus'. Labour clearly have learned exactly nothing, in 40 years.
Which makes them irrelevant.
Which was inevitable, when you think it through logically. We grew on the basisi of extracted/processed resources. There were an initially-advantaged group, and an initially-disadvantaged group. The latter got organised, argued for a bigger share.
Share of what? And how much of it remains? To be divided among how many again? And how do we address the depletion phase?
They may have a point re equality and th 1%, but that's it. Period. For the rest, Labour are irrelevant, as they had to be - same way Forest and Bird had to either win or lose, but couldn't go on forever. Why do so many not think logically? Or is that the reason Cunliffe has to spout such crap? Because he need the votes of an illogical mass?
...I know of many who are receiving National Super, private super (eg teachers/police/fireman) and still working as well, some back in the public sector - that is in some cases up to three state sources of income.
So in some respects I don't mind supporting the young family with student debt, mortgaged and trying to raise a family. Though I beleive all child related benefits should be restricted to say first 2 x children.
Give some credit to the politicians.
They know and we know that the pot is not bottomless. A real difference between Key and Cunliffe maybe in the longer term view.
The Key short termism is to back a dying smelter, cram a casino with more gamblers and salvage broadband with some largess to his mates. All of these befit the day trader brain with no thought to the future results other than his cut .
Maybe Cunliffe should be given some credit for thinking of the future. If the slightly richer taxpayers have to front up with more, then only their new BMW may get put off until next month.
Big Daddy should not complan. He will be there like a robbers dog with hands out for a rent increase.
BB3
Cunliffe must think it's a bottomless pit .. it has to be .. what Cunliffe isn't telling you about is the crocodile in the swamp .. not mentioned or discussed .. or he is being negligent .. The people who will be most influenced will be young couples starting families or contemplating a second child .. most young wives or partners who have bought a house and are mortgaged to eyeballs are dependent on the second income, and they will be, or will become working mothers and that leads to increased applications for childcare subsidy as the mothers seek to return to work at 6 months .. the childcare subsidy appears to be $196.00 per week
So $60 per week is really $256 per week, or a very large percentage
Alternatively, it is a cunning plan to get partnered mothers out of the workforce and so "create" jobs and reduce un-employment
Cunliffe admits there is a rising cost in living.
“Our Best Start package will focus on the first five years of a child’s life and help families struggling to meet the rising costs of living," Cunliffe said.
Well Mr Cunliffe - how about addressing the costs and inflationary effects that all Government (both local and State) contribute to the cost of living. Start with the exhorbitant Council costs for building, the restrictive land supply etc.
“These are tough times for New Zealand families. This package is a first step in Labour's overall programme of reform which includes education, health, housing, and economic development," Cunliffe said.
I would suggest that if you really desire to address tough times for those struggling NZ families that you address the core issues of Government interference in every area of an individuals life but as you state Mr Cunliffe that is not what your REFORM is about.
“With the best start in life, all our kids will do better in school, achieve more and contribute to our country's future," he said.
Can you prove this Mr Cunliffe? This is nothing more than a sermon at the pulpit from Labour that they know what is best for kids.
People rise because they overcome adversity and problems. They need faith in themselves that they can achieve. Why would you want to undermine parents and make them doubt their capabilities to provide for their kids?
Best Start packing your office.........all the kids, parents and taxpayers will achieve more and contribute to our countries future without you.
Has the idea of a Basic Income been discussed on this site, already?
http://en.wikipedia.org/wiki/Basic_income
- Wealth redistribution is the best possible economic development program because the wealthy don't spend as great a portion of their income as the poor do.
- Wealth redistribution does not harm the wealthy, because all money is spent until it ends up with a saver. So, taxes paid eventually return to the tax payer.
- Basic income is the most efficient possible form of wealth redistribution because there is no bureaucratic overhead needed to filter recipients, or find and punish abusers.
- Basic income as an alternative to public retirement pensions (such as social security in the US) is the only possible prevention of generational theft that will occur if the funding sustainability of future retiree pensions and care is threatened
- Reduced crime as a result of lower levels of desperation.
- Balanced power in the labour market as a result of not needing work out of desperation, and better competitive position of workers if some people choose not to work.
- Better work opportunities as a result of people better able to afford an education or business start up.
- Smaller government made possible and attractive by the alternative of increased basic income to offset any program cost reduction. Viewed this way, the cost of every government program is paid for equally by each citizen, even if the source of government revenue is progressive income taxation.
- Social justice is achieved efficiently and automatically, with less requirement on charity and welfare.
- It is easier for volunteer home owners to help the poor and secluded through group homes by being able to rely on their certain income. Its possible and easier for the disadvantaged to group up and help themselves in the same manner.
- Natural finance's definition of social dividends (variable basic income: tax revenue surplus over social program expenses) essentially allows the level of basic income paid to citizens to rise with economic, productivity, and automation growth. The affordability of basic income adjusts automatically to the performance of the economy.
I believe the full statement is " the wealthy don't spend as great a portion of their income as the poor do".
I think the idea is that if more people had more money, mor emoney would get spent. This includes 'investing' and 're-investing'.
I also think the idea behind this idea is not for everybody to get wealthy - merely for everybody to have enough money to live a decent life.
And finally, I think this idea tackles the problem that redistribution of wealth in today's society:
a) doesn't happen (increasing gap between the super wealthy and the poor, while the middle class is getting eroded as they, and not the wealthy, bear the biggest tax burden)
b) when, where it is attempted, it focuses too much on making sure the correct beneficiaries benefit, and wastes energy on finding and punishing those that abuse the system
c) item b) requires a huge and inefficient civil service bulwark which could therefore be abolished
So, you never know. Redistribution might actually work, if it was ever done properly.
I don't think that UBI (Universal Basic Income) would mean taxing the wealthy up to 75% of some of their income. Did you read the Wiki article? Item 6 says this:
"Affordability studies
Affordability of a basic income proposal is a function of the social/government services it replaces, any tax increases, and the less tangible positive effects on spending and tax receipts associated with wealth redistribution towards the poor, and any social savings as a result of less crime, or fewer incarcerable offenses.
Specific, though informal, measurements were made by Pascal J. for Canada.[129] A 2004 taxable basic income benefit of $7800 per adult could be afforded without any tax increases by replacing welfare, unemployment, and core Old age services. (Canada has supplemental poverty old age programs and pension system). The number excludes any intangible benefits of tax revenue increases due to higher spending and lower personal savings, and any expenditure savings on criminal enforcement.
To estimate affordability of basic income in the US, the starting point of 265M adult citizens and $6.3 Trillion in estimated federal, state, and local government spending means that replacing all US government spending can provide nearly $25k per citizen in basic income. Several people have used the simplicity of a flat tax to demonstrate affordability. Someone has even hosted a UBI calculator.
Naturalfinance.net estimates that by cutting the $1.85T spent on social security and welfare in the US, $9905 can be given to each adult American citizen as a taxable basic income benefit[130] From the same paper, it is noted that basic income can also be funded through monetary policy. Instead of printing money for direct bank funding, money is printed to give directly to citizens who then spend it in the economy and fund banks indirectly through deposits. Monetary policy has never been used in this manner, but the paper claims there is no underlying economic reason it cannot be used as a partial or full basis for funding basic income."
I think this is what the whole point it: not more taxes, but abolishing whatever welfare payouts there are - all of them, including superannuation - and replacing it with a flat income for everybody, regardless of wealth or age or employment status.
What's not to like?
DFTBA, you might be interested in this round up of more recent studies:
http://offsettingbehaviour.blogspot.co.nz/search/label/guaranteed%20minimum%20income
The articl attsli talks about guaranteed minimum income. The WIKI article makes a disticntion between Guaranteed Minimum Income and Universal Basic Income.
from WIKI: (my emphasis at the bottom)
Supposed deficiencies of guaranteed or minimum income- Workers employed for part of the year would be uncompensated.
- Part-time work would be unlikely to be compensated.
- Those unemployed at the beginning of the year would be unlikely to find compensated work until the beginning of the following year.
- Strong incentives to form unofficial untaxed cash arrangements with employers, or pay someone in the family who is ineligible for minincome
- Business owners and others would prefer to be paid every 3 years instead of every year.
- Where the tax code allows losses, it may be abused to collect minincome grants.
- Because it is completely unpredictable what individual manipulations society's members might make to collect guaranteed income, its total cost is completely unpredictable compared to basic income.
- Having guaranteed income requires a staff of paid professional means testers, meaning that much of its budget actually goes to the employed.
Some speculate that misunderstanding basic income and guaranteed income as essentially similar concepts may be an intentional misunderstanding, defensively positing that if basic income can be misunderstood as something with major flaws, then it can be forever avoided.[3]
hi DFTBA... I was being a little bit tongue in cheek... sorry
I very much like the idea of a Universal Basic Income. ( a bit like Morgans "Big Kahuna" )
My own interest is in learning about Monetary systems and the nature of Money Supply growth.
Rather than allowing the Banking System to be the ones' that have the licence to create money in the form of credit.... a better alternative would be to inrease the money supply as part of a Universal Income.... The Universal Income could also be used as a monetary policy transmission tool.... ie. in times of a liquidity crisis the Govt could increase the amount of UBI.
Together with a coordinated fiscal policy it would result in a really great set of tools to manage Monetary policy.
In regards to money supply growth, ....this would be the fairest and most equitable way to increase money supply. ( as part of UBI )
So ... yes ...I agree with what u say.
I think a UBI is a wonderful idea.... thks for the links... I will study.
There is nothing to stop people saving and investing right now but the fact is the majority of the poor and lower middle class do not take this opportunity.
The wealthy get wealthy because they take risks, they educate themselves, and they read.
Redistribution is nothing more than legalised theft and creates people who give up at the first hurdle, It takes drive and determination to be successful - redstribution does not address that issue.
If I was able to counterfeit Money and thereby accumulate wealth what would you say.???
And if I gave my best friend some of that money to invest what would you say..???
Hard work..risk taking determination..???
Increasing the Money supply thru the Banking system enriches a few .... in the same way counterfeiting does.
Its' got nothing to do with drive and determination.
Explain how increasing the money supply from $45billion to $250 billion ( NZ ) is not a redistribution of wealth....
In my view it is largely how the trend of more and more wealth in fewer and fewer hands has been able to happen.
Wealth created thru hard work and entrepreneurship is to be admired... but in todays form of Capitalism , much wealth accumulation is more like a form of counterfeiting in my view.
"Counterfeiting " being a metaphor for how our Fiat Money system works and the primary beneficaries of that..
Well you could always go and buy some shares in those Business's you mention above.
Most of the tax paid in NZ is generated by small and medium sized business and I'm pretty sure they are not printing their own dosh. They are using drive and determination to create products and services which are keeping this whole country afloat.
Most business would not survive or even get established if it wasn't for banks.
Why even worry about this? it's not like Labour is going to get in this year anyway, not a hope.
The propaganda machine may be in full swing but everone is talking about a cracker of a year in 2014 and if interest rates don't end up moving then its another term for National.
Funny that no parties offer to help the single person trying to pay a mortgage and all the bills on thier own so therfore why should I be paying for other peoples kids when I cannot afford to have my own!
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