Why is the Labour led government being so tardy about increasing main benefits to a reasonable standard of living? says Peter Malcolm spokesperson of Income Equality Aotearoa NZ Inc—“Closing the Gap”

Michael Joseph Savage must be spinning in his grave at the current Labour led Government’s puzzling tardiness in raising main benefit rates says Closing the Gaps. As the first Labour Government architect of the Social Security Act 1938, he deplored the misery he saw under the Great Depression and guided the successful introduction of a world first welfare system, which recognised every citizen had a right to a reasonable standard of living.

In his words “citizens of the Dominion are insuring themselves against the economic hardships that would otherwise follow those natural misfortunes from which no one is immune.” (Ref Almon Rockwell, The New Zealand Social Security Act, Bulletin, May 1939).

But eighty years later Michael Joseph Savage’s compassionate and far-sighted welfare system is now out of sorts with its citizens. It’s become a very complicated system. The large number of benefits, abatements and conditions on whether someone is entitled (read ‘allowed’) to receive income make it hard for staff to administer or for citizens to identify if they are getting what they are entitled to. Mistakes and different interpretations are commonplace.

The benefit amounts provided are substantially below what people need to rise above the bread line. For example, the Jobseeker amount for a single adult over 25 is $281 a week (before tax), that’s just over $7.02 an hour, compared to $756 a week for someone on the minimum wage who gets $18.90 an hour.

And now we have a two tier system where people who have lost their job because of Covid-19 have access to a greater weekly amount of $490 a week with no tax. Yes it is only for three months, but there are less stringent conditions on whether you are ‘entitled’ to be helped than for Jobseeker. Why is that? Why should people who have lost their jobs through non-Covid redundancies, receiverships or other reasons be financially punished?

Yes the government did raise benefits by $25 a week. But it is simply not enough. Nowhere near enough to avoid members of our team of five million having to make daily choices between food or medication; rent or children’s lunches. Especially not when rents and other housing costs take such a proportion of people’s incomes.

All of this has been pointed out many times, not the least by the government’s own Welfare Expert Advisory Group (WEAG), set up to decide whether the social welfare system was fit for purpose.

Unsurprisingly it reported that no, it isn’t. That was over 18 months ago. So far we have had 4 recommendations of 47 accepted and promises of other action ‘soon’.

The WEAG looked into the basic budget costs of six example families with adults of working age and on low incomes. It got experienced budget advisors to test its budgets which covered rent, food, power, clothes, medical costs, transport, school costs. The budget advisors considered them ‘tight’. (Ref See Welfare Expert Advisory Group, Example Families and Budgets: Investigating the Adequacy of Incomes, Background Paper, February 209,Wellington http://www.weag.govt.nz/assets/documents/WEAG-report/background-documents/5269349623/Example-families-010419.pdf).

What did they find?
• For a single person receiving a benefit and renting privately, the deficit is around $130 to $170 a week.
• For a sole parent receiving a benefit and renting privately with one child aged under 2 years, the deficit was is around $110 a week, and with three children rises to around $250 a week.
• For a couple receiving a benefit each and renting privately with two children, the deficit is around $350 a week.

Based on those figures, at best $25 is not even a quarter of what is needed a week for people to meet basic costs.

Peter Malcolm of “Closing the Gap” urges the sixth Labour Government to do the right and decent thing, like your Labour forbears did in 1938 and provide for a reasonable standard of living for all citizens.

References
Almon Rockwell, The New Zealand Social Security Act, Bulletin, May 1939).
Welfare Expert Advisory Group, Example Families and Budgets: Investigating the Adequacy of Incomes, Background Paper, February 209,Wellington http://www.weag.govt.nz/assets/documents/WEAG-report/background-documents/5269349623/Example-families-010419.pdf).

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