Latest income and welfare changes fall short of addressing need

Child Poverty Action Group (CPAG) says that although the Government has increased the minimum wage and benefits yearly, the latest increases are a poor reflection of the actual increased costs of living faced by low-income families.

The new adult minimum wage went up just 50 cents to $15.75 per hour on April 1, falling far short of making a real difference for families who receive very low wages.

Furthermore the small inflation adjustment of 1.1 % to benefits will have little to no impact on the high levels of material hardship experienced by low-income families.

Children’s tax credits continue to be left out of any adjustments, as there is no regular inflation adjustment for Working for Families (WFF).

WFF was last adjusted for inflation 2012 and will not be adjusted again until cumulative inflation is five per cent, which won’t occur until 2018. In spite of evidence of real hardship experienced by low-income families, real spending on WFF has fallen 22% since 2010.

“NZ Super is adjusted every year for growth in average wages,” says Dr Emily Keddell, CPAG welfare spokesperson.

“That has resulted in low levels of poverty amongst older people, but instead of applying the same logic to families with children, we use different rules, ones that continue to drive an ever-thickening wedge between income and living costs. We need to start treating our children as well as we treat our retirees.”

The only part of WFF that has been increased at all since 2012 is the In-Work Tax Credit (IWTC) which had its maximum raised as a one-off from $60 to $72.50 on April 1, 2016, the first increase since 2006.

“WFF tax credits and the household income threshold from which they reduce need urgent upgrading, as automatic changes to the WFF threshold and abatement rate are making things worse as it currently stands,” says Dr Keddell.

"Even when there is finally an inflation adjustment in 2018, this means that any increases will be worth less, and government spending will remain the same.

“It is no wonder we are seeing more low-income working parents depend on food banks and other charities for survival.”