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Families relying on a benefit simply don't have enough money

In 1991 benefits were cut significantly, in some instances by up to 20%. It is no coincidence that child poverty has worsened significantly since that time. While poverty is not limited to beneficiaries (37% of children below the poverty line are in families in paid work), low benefit levels are a major cause of poverty. Put simply, families relying on a benefit for their standard of living don’t have enough money. Whatever else might be associated with poverty, money is required to buy and cook food, meet education costs, visit the doctor, enable children to take part in sport, heat the house, ensure that children have enough warm clothing.

The growing gap between benefit levels and wages is shown clearly in the graph below. The gap between wages and benefits has become wider and wider since 1990.

 

This graph only shows the difference between wages and benefits. It doesn’t take into account the additional assistance for families in paid work which is denied to benefit families. This is $60 per week. When that is added, the gap becomes even wider.

Another way of looking at how inadequate benefits are is to compare basic benefits with superannuation payments. The net benefit for a single adult receiving job seeker support is $262.24 per week and a sole parent with one child receives $300.98 while a person living alone receiving NZl superannuation gets $355.68. There has been considerable discussion in recent weeks about poverty among older people receiving national super as their only income. How much worse is poverty likely to be for other beneficiaries.

One of the reasons why benefits are so much lower than super is that super is linked to the average after tax wage and is increased as wages rise. Benefits are not – they are adjusted as the Minster sees fit and usually only change as the cost of living changes. In 1972 the Royal Commission on Social Security said that benefits should reflect the standard of living in the community and allow beneficiaries to belong and participate in New Zealand society. That principle should be equally  valid today and, if applied, would mean a significant increase in current benefit rates. Statistics New Zealand data shows that the current average wage is $28.77 per hour or $1079 per 37.5 hour week week. After tax and ACC this would mean $871. The adult benefit rate is approximately 30% of this figure, well below what is needed for a beneficiary to belong and participate. Indeed, for many barely enough to survive.  Worse still, the married person rate of benefit is lower than for a single person. Certainly families relying on a benefit do not have enough to have the lives and opportunities which all New Zealand children should enjoy. Yes, there is housing assistance, but that simply reflects the cost of housing and doesn’t cover all the cost of rental or a mortgage.

New Zealand children deserve better. We can do better. New Zealand has the resources to give every child the opportunities and experiences they need and deserve in order for their lives to be as rich as possible and their futures to be the best they can be. What is missing is political will to make this happen. To take a figure, a 10% lift in benefit levels now would make a big difference for more than 120,000 New Zealand children.  

It is time to raise benefit levels significantly, say 10% and indexing to wages. This, along with making Working for Families work properly for the poorest children by including them instead of excluding them, will have a significant impact on the poverty of those 200,000 children who are the worst off.