Introduction

Most families with dependent children will qualify for additional family, childcare or housing assistance under the government's Working For Families (WFF) policy which was announced in the 2004 budget. WFF is being introduced in stages between October 2004 and April 2007, and will cost an estimated $1.1 billion a year or 0.7 percent of forecast GDP when fully implemented.

The analysis that follows draws on published information, including papers released under the Official Information Act and answers to parliamentary questions. The data are not always consistent. Joint family income, for instance, comprises taxable income in some cases and includes certain non-taxable income, such as child support, in other instances. Similarly, some data are based on after-tax income whereas most are gross of tax. Official data are also incomplete. Some policy measures, such as changes in the Accommodation Supplement, were often omitted from analyses prepared in response to parliamentary questions, apparently because of the complexity involved.

The structure of the paper is as follows. The objectives of WFF and its components and cost are summarised. An international comparison of family income assistance is presented. The implications for economic efficiency of WFF are then examined. The impact on child poverty and the distribution of income of WFF are discussed. The paper concludes by outlining an alternative and more desirable direction for policy.