Nats' rescue package worth $42m

A war of words has erupted over National's rescue package for workers affected by hard times after Labour disputed National's case studies, saying it had its figures wrong.

National leader John Key confirmed today National would top up the Working for Families tax credit and provide a $100-a-week boost to the accommodation supplement for workers laid off as a result of the economic downturn.

But he reminded banks that the government had been equally understanding of the hard times they were facing, and said he expected them to take similar steps to maintain confidence and stability in the economy.

The government has shored up confidence in the banking system by guaranteeing bank deposits, in a package worth up to $150 billion. It is also expected to announce measures over the weekend extending its guarantee to wholesale lending – a move worth an extra $300 billion.

National's package to workers affected by hard-times will be worth about $42 million.

"My expectation is that in light of this, banks will be very careful about the manner in which they deal with customers who may, as a consequence of the global financial crisis, find it hard to meet their obligations," Mr Key said in a speech to Hamilton Chamber of Commerce today.

"I expect the banks to do what they can to show New Zealanders who need it flexibility in the face of tough circumstances, in the same way they have been extended a helping hand by the New Zealand government.

National's package comes as assistance to carry people through hard times becomes the focus of the election campaign in its final days.

Under National's package workers who are laid off will get:

* a boost of up to $100-a-week to the weekly accommodation supplement, to help with the rent or mortgage; and

* a Working for Families top-up equivalent to the in-work tax credit, worth $60-a-week, for those families who were previously receiving it but had become ineligible because of a redundancy.

Both payments would be available for up to 16 weeks for anyone who found themselves out of work after being in the same job for six months.

Mr Key said it was vital that the Government provide New Zealanders with security about the public services they could expect and the support they were entitled to.

"There is absolutely no way I will pull the rug out from New Zealanders when they most need the Government's help.

"For the next two year, while New Zealand navigates its way through this global recession, National will offer extra assistance to Kiwis who are worst hit by redundancy."

National's transitional package would offer assistance to people who were made redundant and who, as a result, either had to be on a benefit of have to rely on the income of a relatively low-paid partner or spouse.

It would give people time to sort out their financial affairs or find a new job.

National provided case studies to illustrate how its package would work, but Labour said its own analysis provided very different figures.

Labour said National had forgotten the availability of Temporary Additional Support (TAS) as a short-term payment that could be granted for up to 13 weeks.

TAS was calculated taking into "allowable costs" such as accommodation, essential household items, medical and disability-related expenses.

National said it had not forgotten about TAS, which was an "absolute last resort scheme", and Labour had not mentioned it in its package either.

Examples provided by National on how its economic transitional relief package would work in practice.

SOLE PARENT WITH CHILD

Louise is a sole parent with one child who earns $35,000 a year. She lives in Christchurch and pays rent of $275 a week. She has little in the way of cash assets.

Louise has a disposable income of $712 a week, made up of:
Earnings after tax and ACC $545
Working for Families $146
Accommodation Supplement $21

Louise is made redundant from her job. Under current rules, she would receive $425 a week from the government, made up of:
Unemployment Benefit $264
Working for Families $86
Accommodation Supplement $75

Under National's relief package, Louise would receive an additional payment for up to 16 weeks of $116 a week, making a total of $541 a week from the government over this period.

The additional $116 a week Louise receives from National's package is made up of $60 Working for Families top-up and $56 additional Accommodation Supplement.

By contrast, under Labour's relief package Louise would receive no additional payments.

Labour's reply: 

The National Party indicate that Louise, a sole parent on unemployment benefit would gain $116 from their proposals.

In fact, as a sole parent, Louise would probably receive domestic purposes benefit.

In addition, Louise would be eligible for up to $79 in TAS, based on her accommodation costs alone she would receive $72 a week and if she had any additional costs such as paying hire purchase on a fridge she could receive $79.

With the additional income provided through National's proposals, Louise would not receive any TAS. This means the real difference is $37 not $116, Labour says.
 
COUPLE WITH KIDS

Keith and Emma have two children. Keith is the sole earner in the family and earns $70,000 a year. They live in Wellington and have a $281,000 mortgage and pay the minimum $500 a week in repayments. Keith and Emma have little in the way of cash assets.

Keith has a disposable income of $1077 a week, made up of:
Earnings after tax and ACC $998
Working for Families $79

Keith is made redundant from his job. Under current rules, he would receive $618 a week from  the government, made up of:
Unemployment Benefit $307
Working for Families $146
Accommodation Supplement $165

Under National's relief package, Keith and his family would receive an additional payment for up to 16 weeks of $160 a week, making a total of $778 a week from the government over this period. The additional $160 a week Keith receives from National's package is made up of $60 Working for Families top-up and $100 additional Accommodation Supplement.

By contrast, under Labour's relief package, Keith and his family would receive no additional payments.

Labour's reply: 

The National party indicate that Keith and his family would gain $160 under their proposals.

Again they have failed to take account of Temporary Additional Support which would provide Keith's family with an extra $92.08 a week.

CHILDLESS COUPLE

Jane and Duncan are a couple who both earn $100,000, live in Auckland, and have no children. They own their own apartment mortgage-free and have a lot of cash assets. Jane and Duncan have a disposable income of $2684 a week.

Duncan is made redundant from his job but Jane continues to earn $100,000. Under current rules, Jane and Duncan would receive no assistance from the government.

Under National's relief package they would also receive no assistance from the government.

By contrast, under Labour's relief package, Duncan would receive $307 a week from the government through the Job Search Allowance, for up to 13 weeks - a total of almost $4000.

Labour says the figure of $307 is incorrect as Duncan would only qualify for the single person's benefit of $153 a week.

- © Fairfax NZ News