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Adequate Incomes to address Child Poverty

Our Children, Our Choice: Priorities for Policy - Adequate incomes to address child poverty

Part Five of the Child Poverty Action Group policy series Our children, our choice focuses on family incomes. As with other policy areas, the issues are complex and require long-term solutions, which is why CPAG recommends a cross-party agreement on a child-focused policy framework for the future of family incomes.

Download the full report here: Adequate incomes to address child poverty

Summary

Adequate incomes to address child poverty is the fifth and last in a series of CPAG policy papers released in the lead up to the 2014 election with recommendations for policy change to alleviate child poverty. 

CPAG says it is unacceptable that families live in poverty because the social assistance system that is supposed to support them is not doing its job properly.  The current debate tends to focus on other aspects of poverty as if cash income is not relevant.  Improvements to health services, quality education, affordable and appropriate housing are important, but families must also have enough weekly income to meet the needs of their children. 

Current benefit policy is focused on moving people from a benefit into paid work, without considering the impact on children's health and well-being.  Paid work is only part of the strategy to reduce poverty. Beneficiaries with children often cannot take on paid work because of their personal circumstances, while others cannot find work that allows them to meet their parenting obligations satisfactorily.  Furthermore, paid work does not guarantee that families with children will move above the poverty line. 40% of children living in poverty are in working families.

CPAG also argues social assistance for families with children is far too complicated and needs to be overhauled.  Navigating the maze of benefits, supplementary payments, family tax credits, abatements, shared care rules, hours of paid work requirements, reassessments, demands for payments, and penalties, is demanding even for experts. The In Work Tax Credit, Family Tax Credit and others all have different rules.  The required fixed weekly hours of work are difficult to police and monitor consistently in a modern, casualised labour market. Furthermore, parents at home looking after young children are already working but their contribution is devalued and their children side-lined." 

CPAG has made ten recommendations to improve income support for families and address child poverty,

Policy Recommendations

1. Increase the minimum wage and address the extra needs of children in low income families through well-supported benefits and tax credits.

2. Review social welfare benefits for adequacy then, in future, adjust on the basis of relationship to the average wage, as is done for the age pension, New Zealand Superannuation. 

3. Abolish sanctions which reduce the income of beneficiary families with dependent children.

4. Undertake and publish independent research on the extent of sanctions and their effects on children.

5. Adjust all parts of Working for Families annually for inflation, and introduce a link to wages. Immediately reverse policies that reduce the threshold and increase the rate of abatement.

6. Abolish the Minimum Family Tax Credit and establish an adequate sole parent payment with better abatement provisions.

7. Overhaul the treatment of couples on benefits so that their children have a better chance to enjoy adequate income.

8. Restore the principle of equal treatment for all low income children: add the In Work Tax Credit to the first child Family Tax Credit and make adjustments for larger families.

9. Increase the Parental Tax Credit and extend it to all low-income families with newborns that do not benefit from Paid Parental Leave.

10. Act with urgency to gain cross party support for an overhaul of all parts of the welfare and tax credit system that affect families with children.