Tuesday, August 12, 2008

Beating up on the poor II

Over on the Hand Mirror, Deborah takes a serious look at what National will need to provide in order to make their policy of forcing solo parents into work the moment their kids are at school actually work. Firstly, greater workplace flexibility on the employee side to provide those 15-hour a week but only in school time jobs. And secondly, a big increase in free childcare and out of school care to ensure that the emphasis on work doesn't come at the cost of children. Is National committed to those policies? Yeah, right. They have no interest in out of school care at all, they view childcare primarily as a profit-making enterprise rather than a necessary social service, and their industrial relations policy is focused on shifting power back to employers. In other words, they're not interested in making this work; instead, its simply about stigmatising and punishing society's most vulnerable members for electoral advantage - just as Don Brash did to Maori in 2005.

Meanwhile, like others, I can't help but notice the interesting intersection of a 15-hour a week work requirement, the minimum wage, and the kick-in point for WINZ's vicious clawback regime. Currently, people on the DPB can earn up to $80 a week, then their benefits are abated at 30 cents for each extra dollar earned up to $180/week, after which the abatement shifts to a staggering 70 cents in the dollar (WINZ also notes that "You may be able to earn up to $20 a week more than these thresholds if you need to pay for childcare because you are working", which makes you wonder if they've ever looked at the cost of childcare). National has said they will raise that lower threshold to $100 a week, so assuming a minimum wage job, those solo parents will get to keep $118 a week after tax (assuming their additional income is taxed at the 21% rate). And if their job pays more than the minimum wage, or they work more than 15 hours a week, they will be paying effective marginal tax rates of 91%, and getting a net $1.08 an hour for their extra work (again, assuming minimum wage). In short, the vicious clawback regime works to discourage the very thing National claims to be trying to promote - paid employment.

I also can't help but notice the glee with which this policy has been greeted by employers groups such as the Retailer's Association. Which suggests strongly that, this is not a welfare policy, but a labour market policy, aimed at providing cheap workers for bad employers.