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But the bill, sponsored by Green Party co-leader Metiria Turei, is expected to be defeated when it is voted on at its first reading, most likely on November 5.
The in-work tax credit is part of the Working for Families package and is worth $60 a week for poor families with up to three children but it is not available to those whose parents don't work a required number of hours or who receive an income-tested benefit or student allowance.
Mrs Turei said her bill, the Income Tax (Universalisation of In-work Tax Credit) Amendment Bill, was an opportunity to lift 100,000 children out of poverty and has argued that the denial of the credit to beneficiary families amounts to discrimination against New Zealand's poorest children "on the basis of parental work status".
Labour is supporting the bill, consistent with policy it announced before the last election, although it is not certain it will stick with the policy for the 2014 election.
Yesterday in Parliament, Prime Minister John Key said the in-work credit had been designed by the previous Labour government "to make sure that there was always a differential between working and welfare".
"And the reason for that, and rightfully so, when Michael Cullen put that scheme together was that he wanted to make sure there was an incentive for people to move off benefits into work.
"He was right to do that, because quite a lot of research indicates that the fastest way to lift poor households that have children in poverty out of that poverty situation is through work."
- Adam Bennett of the New Zealand Herald