Child Hardship Bill: Flawed policy fails to remove discrimination

Oral submissions on the Child Hardship Bill

CPAG has urged the Social Services Select Committee to remember New Zealand’s obligations under UNCROC to look after the best interests of the child ahead of other objectives like incentivising work.

In its oral submission on the Child Hardship Bill, CPAG reminded the Committee that the Human Rights Review Tribunal and the Court of Appeal found that the In Work Tax Credit part of the Working for Families package constitutes discrimination against the poorest children in New Zealand.

CPAG spokesperson Susan St John said, "With the Courts judgements in mind, the committee should feel very uncomfortable that the ONLY increases made to Working for Families in the Child Hardship Bill were to the discriminatory parts."

CPAG said the courts were ill-equipped to weigh up the serious harm to those 230,000 poorest children whose child poverty was not alleviated by Working for Families, against the assumed benefits of the flimsy work incentive aspects. Susan St John said, "The Child Hardship Bill was a chance to put this right by adding the In Work Tax Credit to the Family Tax Credit thereby making a serious attempt to reduce child poverty and simplify the system."

While some families will be somewhat better-off in 2016, there are serious questions about the policy making process behind this bill. "For all the effort, time and money that went into the hardship package, there has been no fundamental changes to the broken system that families endure," said St John

Working for Families is complex and based on outmoded concepts of how the labour market works in the 21st century.

Susan St John said, "If people do not meet strict requirements on the hours they work each week, their children can miss out on vital child-related payments made to their caregiver. This does not make sense in the emerging recession when many parents are losing hours of work. The loss of $72.50 of the In Work Tax Credit which is supposed to address child poverty for a low income family is unacceptable and unnecessary."

A 15 minute oral submission is not enough to cover all the issues of this Bill. Members were referred to Policy Reflections on the Budget 2015 Child Hardship Bill Package, by Susan St John in The August Policy Quarterly.

St John noted serious problems with uneven and inadequate indexation of Working for Families. Apart from the one-off adjustment to the In Work Tax Credit in 2016, the bulk of Working for Families has not been adjusted since 2012. The threshold has been frozen and will reduce to a vey low $35,000 over time. Had it been properly adjusted as it is in Australia, it would be $44,000 and as much as $50,000 if it had been indexed to wages as is New Zealand Superannuation.

CPAG noted with dismay that the Parental Tax Credit for newborns has been ignored in this bill.

The Budget appropriations for this tax credit say:

"This permanent appropriation provides for payments to families with a newborn baby for the first 56 days (eight weeks) after the birth to help with day-to-day living costs. " Budget 2015

"Around 15,000 babies still get nothing extra. Yet babies in families that must survive on inadequate welfare benefits also need help with day-to-day living costs," said Susan St John.

She said the increases to some welfare benefits by a flat $25 will be better than nothing. "However this change overturns the important principle of adult benefits for adults and tax credits to help with the needs of children, which was carefully constructed in 2005 with the introduction of Working for Families. This introduces an unfortunate element of muddle into the benefit system."

Written Submission: Support for Children in Hardship Bill