Hard News by Russell Brown

The Breeder Bounty

I'm not sure how much longer Labour's opponents can continue to call it "anti family" with a straight face. I mean, they let those gay folks get married and everything, but the breeder bounty has flowed like a river since then. What is it going to do for its non-breeding Rainbow base? Some sort of d├ęcor allowance?

Back on Budget day - which seems so long ago - I wondered whether the government was starting to look unreasonably biased towards families.

Now, well, take a look at Frogblog's swiftly-assembled tax comparison table, taking into account yesterday's announcement of a $400m programme of targeted tax relief for families via Working for Families.

It makes a guess about National's policy (and a generous one, given that I think Brash has ruled out scrapping the 39 cent top tax rate), and you could quibble with one or two other assumptions, but its sample family is, as the missing-in-action campaign slogan had it, "better off with Labour" all the way up to an annual household income of $75,000. A $50,000 household with two children under 12 reaps an additional $141 and is $113 a week better than under National's policy. But at the $90,000 mark, Working for Families cuts out altogether, and you're $52 a week better under National.

There are philosophical problems here which probably had heads scratching at Treasury, most notably that relief abates as income rises: you lose a little more of any extra money you earn. The effect is one of a higher marginal tax rate which may act as a disincentive to financial improvement. The effect would seem modest to anyone (eg, me with a young family, actually) who tried to work their way off a benefit in the 1990s and faced a marginal tax rate of 97 cents in the dollar. The effective marginal tax rates here get nowhere near that mark (more like about half of it), but it's fair to say that they are far and away the major problem with this scheme. (On the other hand, I noticed one blog commenter yesterday decrying it as creeping socialism because, um, you had to fill in a form to get it. For $113 a week, I really don't think that's going to be a problem.)

The thing is, about this time last year, Labour was under the gun specifically for failing to deliver for $50,000 middle New Zealand households. The Star Times had that woman who went to Wellington to deliver a message and all. Perhaps they should give her a call again?

There's also the issue of Dr Cullen's pronouncements in May about there being no room for tax cuts. Well, at $400m annually, this is going to be a smaller fiscal hit - by a factor of between four and seven times - than any across-the-board tax cut from National. And it fits with Cullen's consistent view of tax relief as a social policy instrument rather than an end in itself.

I note that Jordan Carter has been hinting that perhaps this was always in the campaign goodie bag; that the Budget was a feint, and they're just much more clever than anyone thought. I'm not so sure. But never doubt the Clark government's ability to rush into a cavity in the public mood.

UPDATE: A new post by Jordan, and its accompanying thread, notes a couple of things I hadn't picked up about the new policy package: one is that the abatement rate falls from 30 cents in the dollar to 20 cents, which goes some way towards mollifying my concern about marginal tax rates. The other is that according to one of the commenters, a two-child family earning under $40k will pay not tax at all. Crumbs.

Some more audio: my Wire interview from Wednesday with Phil Twyford, the former director of global advocacy for Oxfam and now Labour candidate for North Shore (his website is here). And an enjoyable conversation on drug policy with Dr Richard Goode of the Libertarianz and Nandor Tanczos of the Green Party.

A New Zealander who works for Apple Computer at Cupertino sent me a copy of Steve Jobs' June commencement speech at Stanford. It's pretty cool. The text of the speech is here, and there's audio here and video here. For all that he is capable of being a prime-grade prick, he's still one of my heroes.

The audio of the David Lange Oxford Union debate speech is still here, of course. The 1500-odd listens so far account for 82% of this month's bandwidth. Thanks again, CactusLab. And thanks to the person who added the link to Wikipedia's David Lange page. And there is now also what must be one of the best Wikiquote pages ever.