The Methodist Alliance welcomes the increases to benefits on 1 April 2022 but they still fall far short of meeting the actual costs of living, trapping people receiving benefits in poverty.

Whakamana Tāngata,[1] which was released in February 2019, highlighted the shortfalls between the benefit rates and what was sufficient for an adequate standard of living. At that time, a Jobseeking couple with two children, who received the accommodation supplement and Working for Families, faced a shortfall of $356 a week; and a single person on a supported living payment, who received the accommodation supplement, faced a shortfall of $137 per week.[2]

With significant increases in the cost of living since 2019, these shortfalls have magnified trapping people in poverty and in accommodation unsuitable for their needs.

Benefit rates are so low that many people receive supplementary payments. The most common is the accommodation supplement which helps with the increasing costs of housing. The second is temporary additional support to help with essential living costs. Both these top ups are subject to claw backs and are reduced if the benefit increases. This means that the increases will result in lower supplementary payments , with the net result of what appears to be a significant increase in effect substantially reduced, leaving some people little better off. For some people, it means they will fall to a lower category for social housing eligibility meaning a longer wait for secure, appropriate housing.

The abatement threshold is the amount a person can earn before their benefit is cut, and is currently equivalent to just seven and a half hours at the minimum wage. This is in stark contrast to when the abatement rate was first introduced in 1986, when it amounted to 15 hours per week at the minimum wage.

A single person with no dependent children who accepts part-time work and earns more than the $160 a week may see only a few extra dollars a week in their pocket, once the abatement rate of 70c for every dollar earned has reduced their benefit. They may also have work-related costs such as travel to and from work. In addition, their social housing costs may increase as it is based on their income. The total effect may mean that they are financially worse off accepting the part-time work – a powerful disincentive to seeking independence.

The Methodist Alliance urges the Government to ensure benefit levels provide people with an adequate income to live with dignity, with enough money to buy food and pay for housing without having to go to Work and Income for additional support to meet basic living costs. We also call on Government to index abatement rates to the minimum adult wage and restore them to the original levels of 15 hours per week.

About the Methodist Alliance

The Methodist Alliance is the formal alliance of Methodist Missions, and Methodist trusts and parishes that delivery social services or community led development in Aotearoa New Zealand.

[1] WEAG, Whakamana Tāngata – Restoring Dignity to Social Security in New Zealand, 2019

[2] WEAG, Whakamana Tāngata – Restoring Dignity to Social Security in New Zealand, 2019, P96

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