CPAG welcomes the rescue package and offers advice for the next urgent steps

Child Poverty Action Group (CPAG) welcomes the COVID-19 stimulus package with its recognition that benefits must be accessible and more generous. Over-crowded damp housing and poor nutrition, along with the onset of winter do not bode well for community containment. Families experiencing financial stress must be well-supported and their children's wellbeing must be a priority.

Susan St John, Economics Spokesperson for CPAG says, "There is much more to do. Let's grasp this unique opportunity to make long-lasting beneficial reforms to ensure all families and their children are adequately supported throughout this crisis and beyond."

"The COVID-19 crisis will show just how ineffective the welfare system has become as a proper safety net. While it is absolutely right to have a $2.8 billion welfare package with promises of more to come, it is vitally important that policies are well-designed and reflect sound principles so that they will endure in the changed circumstances of 21st century."

How the Government should build on this package

The changed 21st century circumstances, now overlaid by the uncertainty of the depth of the imminent recession, include the prevalence of casualised, part-time and insecure work and the diversity of family structure and relationships.

Suitable reform principles should include:

  • individual treatment for benefits just as for tax;

  • non-conditionality;

  • reduced complexity;

  • poverty alleviation - especially child poverty;

  • valuing all forms of work whether paid or unpaid; and

  • proper indexation.

Reducing poverty traps and disincentives in the benefit system are also important, as is cost-effective spending because the total demands on government may outstrip the political willingness to fund what is required.

The first major welfare policy announced so far ($600m per annum for four years) is to raise net core benefits by $25. While many families will get far less, as their accommodation supplement and supplementary payments for hardship will also reduce, it is a step in the right direction. In the crisis, it is important to simplify processes for accessing sufficient assistance. The aim should be to have benefits high enough that supplementary payments are only rarely necessary.

CPAG also says that it is critical the benefit increase is allocated to each beneficiary instead of shared between two beneficiaries who are deemed to be coupled. Couples on core benefits, especially with children, fall under the very lowest poverty line. There is already a large, unfair gap between two persons who share and two persons who are deemed to be 'defacto' or married. The announced policy makes the gap worse. It also intensifies anxieties. Defining who is a couple and who is not is very difficult in today's world.

An increase on a per beneficiary basis is consistent with the principle of individual treatment. Further, CPAG would like to see all married person rates lifted to the single rate, and all benefits given on an individual basis like New Zealand Super.

The second, and very expensive item is the doubling of the Winter Energy Payment for the coming financial year (from $480 million to $ 960 million for 2020). Each beneficiary and superannuitant is entitled to $900 if single, and $700 if married or a sole parent. While CPAG absolutely supports low-resourced pensioners receiving this payment, there are many who do not need it. If superannuitants were required to opt in with no questions asked, in today's circumstances many well-off pensioners would choose not to take it. The payment would then be much more cost-effective, and several hundred million dollars would be released for further poverty alleviation policies to be enacted.

CPAG is particularly interested in the third welfare policy. Workers will be allowed to keep the In-Work Tax Credit for their children when they have too few hours of paid work to qualify for it at a cost of around $32 million. This permanent change is a partial fulfilment of CPAG's own policy recommendations. We very much welcome this as an important first step to remove paid work as a condition of tax-funded children's support. However, when these same workers have to access a benefit or a part benefit to survive, their children will lose this important payment.

CPAG urges an immediate policy extension to allow all low-income families to have the full Working for Families support. It would deliver at least another $72.50 a week to the very worst-off children in low-income families to help parents keep their children safe and well. The cost (around $450m) is about what could be saved from requiring superannuitants to opt-in to the winter energy payment. It would also accord with the principle of valuing the activities of caregiving and volunteering as work, greatly simplify child payments, and importantly reduce the worst child poverty in a highly cost-effective way.

CPAG notes these recommendations are in line with many community groups and the recommendations of the Government's own Welfare Expert Advisory Group. They are also supported by the Council of Trade Unions who want the Government to increase benefit levels. In particular, the Council of Trade Unions have highlighted the importance of the individualisation of entitlements as it is clear "many low and medium income households require two incomes to avoid hardship".