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Several letters to the editor are presented in response to articles including one on the inherent racism of immigrants by Kate Hanna, another one the household income data by Brian Easton and "Flo never said no" by Florence Radcliffe, all appeared in the March 22, 2014 issue.

New Zealand has gone further than most European countries in the use of child-based tax credits that emphasise work as the way out of poverty, especially for lone parents. From a background of neglect, as outlined in St John's ‘New Zealand's Financial Assistance for Poor Children: Are Work Incentives the Answer?’ published in the European Journal of Social Security (2006), family financial assistance was substantially boosted between 2005 and 2007 when the Working for Families package was introduced. The In Work Tax Credit (IWTC) is a major part of Working for Families. It is a dual-purpose tool, aiming to both improve labour market participation of lone parents and to reduce child poverty. Holding to the two objectives has however been problematic, and the IWTC has proved to be a costly experiment. It has also raised human rights concerns; necessitated other complex adjustments in the tax system; and proved to be poorly designed in times of recession with unintended consequences for children. Official evaluations have not established that the small work incentive effects justify the selective achievement of the child poverty objective. European countries may find the New Zealand experience interesting as they also grapple with the seemingly intractable problems of child poverty and look to paid work as the solution.

In the light of the financial consequences of longevity, the potential for widening living standards as the population ages, and the perception of an increased burden by the working age population, recent policy changes in New Zealand appear far from ideal. For nearly twenty years, the retirement system has comprised just a universal state pension, called New Zealand Superannuation, and voluntary unsubsidised private saving. The decision in the late 1980s to promote tax neutrality for saving was critical to attaining a cost-effective, adequate, equitable and sustainable retirement income for all in an uncertain future. Nevertheless, a level playing field was only partially achieved and by the early 2000s, large imbalances in the economy were apparent. Strident calls to promote saving gradually undermined the accord around tax neutrality for retirement saving leading in 2007 to the re-introduction of tax incentives for certain types of saving, and other types of state intervention in private provision. This paper examines how the twenty year experiment with tax neutrality is coming to an end and the implications this has for the support of an aging population experiencing increased longevity.

European countries have been concerned with reforming the labour market and promoting ‘employability’ and are now being asked to set out plans to eliminate child poverty and social exclusion. The experience of New Zealand might well provide an interesting case study. Labour market flexibility was promoted in the early 1990s, assisted by welfare benefit cuts. Family assistance was allowed to fall in real terms, while becoming more tightly targeted and more selective. New Zealand's child poverty rate rose to unprecedented levels in the mid 1990s from which it abated only slowly as the economy improved. Under the Labour government from 1999, child poverty was at last acknowledged with promises to eliminate it, but spending on families was not increased significantly until 2005. Even then, work incentives were prioritised as the best way to address child poverty. Rather than treating all low income children the same, a significant part of child-related assistance depends on the work status of the parents, and none of the assistance is universal. Thus while the new spending will eventually significantly reduce the incidence of child poverty in working families, those children whose parents fail the qualifying criteria can be expected to slip further below the relative poverty line and experience increasing rather than decreasing social exclusion. Work-related child payments may prove difficult to administer and have low take-up rates, but in a conservative political climate they appear to be the preferred way to augment family incomes.

New Zealand has a unique approach to retirement income provision. The state pension arrangements have the advantage of being very simple and easy to understand and administer. While there are numerous issues associated with the ageing of the population that may require modification to the parameters of state provision in the future, there is little political disagreement about the basic design of the state pension. In ensuring universal coverage with a flat rate taxable pension for everyone without the need for a contributions record, New Zealand has prevented elderly poverty to date. Supplementary private provision has been unsubsidised and recent debate has focused on the need to encourage more private saving particularly through work-based schemes. Nevertheless there are numerous advantages to New Zealand's tax neutral approach, which may offer lessons to reformers in other countries. With some caveats, New Zealand appears well placed to weather the increased expenditures associated with the retirement of the baby boomers.