Stance of F.O.L. staggers M.P.s

Press, 26 February 1986, Page 3

Stance of F.O.L. staggers M.P.s

By

PATRICIA HERBERT

In Wellington The Federation of Labour staggered Parliament’s finance and expenditure committee yesterday by arguing that child benefits and superannuation be paid regardless of income.

Only after subjecting the F.O.L. witness to rigorous cross-examined was the committee chairman, Mr Trevor de Cleene, able to convince himself that this was indeed the F.O.L.’s position. "Marx and Engels and the others would rock in their graves,” he said.

An economic researcher for the F.O.L. Mr Michael Fletcher, was presenting the federation’s submission on the family support schemes announced in the 1985 Budget. Essentially those are:

• A payment of $36 a week for the first child and $l6 a week for each subsequent child, reducing at a rate of 18c in the dollar on joint incomes above $14,000 a year.

• A guaranteed minimum family income for all full-time earners with dependent children of $250 net a week, rising by $22 a week for the second child by $22 again for the third and so on.

The F.O.L.’s objections

to the proposals were many and were based on their alleged failure to recognise the principles of equity, of taxation according to ability to pay and of universal access to benefits.

“Child assistance should be universal not targeted, and this can practically be achieved if the basic tax scales are genuinely progressive and the definition of taxable income is widened to cover all forms of wealth,” Mr Fletcher said.

He said the package would not achieve its objective in that it would not adequately compensate low and middle-income families for the effects of the Goods and Services Tax. This was because GST would impact more heavily on the poor than the rich, representing in some cases a 9 per cent tax on disposable income, he said.

To maintain the effectiveness of the support and its value, he recommended that the eligibility limit (now $10,816 net a year) he indexed to wages and the payments to the Consumer Price Index. He said that when the guaranteed minimum income scheme had first been announced, about 13,500 families would have qualified but that the

wages round had since reduced the number by about 2000. He also said all families should qualify for child allowance regardless of wealth and that the Governent could afford this firs by introducing steep tax scales and second, by using them to claw the benefit payments back.

The committee was non-plused, Mr Jim Gerard, (Nat., Rangiora), asked Mr Fletcher if the F.O.L. supported people earning more than $lOO,OOO getting assistance and was told it did.

Mr de Cleene asked what would happen in the case of a man earning $1 million a year whose wife was paid the beneift but earned nothing and therefore paid no tax.

Mr Fletcher said it would probably be necessary under those circumstances to aggregate the household income.

“So the federation supports aggregation,” Mr de Cleene said. “Your women out there in the work-force will complain about that.” Then he returned to the F.O.L’s support for the concept of universality — a position he though “novel” and "unique" for the trade union movement.