Some active listening to constituents, advocacy groups and the general public was evident in Budget 2015. This, despite earlier statements not to expect much relief for children in hardship that one can only assume was playing for full effect on the stage that is Parliament. Children living in material hardship is however not political sport; it damages children’s health and development and should transcend politics to a higher ethical height.
The announcement of a child hardship package worth $790 million (over the coming four years) as their centrepiece, was then a surprise to many people, and while it may have received mixed reviews in the days after, what is crystal clear is that government understood the most effective way to lift children out of poverty is to increase family income. Mike O’Brien, spokesperson for Child Poverty Acton Group and Convenor of NZCCSS Policy Group puts this very well:
“This budget signals an important change in the approach to child poverty in New Zealand, as it recognises that the best way to help children in poverty is to give more income to low income families. Even a small increase in family income will make an enormous difference to the food.”
Money of course matters as much as the nature and spread of policy initiatives. While the sums on offer to poor families make “compassionate conservatism” a bit of a stretch to the imagination, nevertheless there are signals of some humanity towards a group of children going without pretty basic necessities through no fault of their own. As Trevor McGlinchey, Executive Officer, NZCCSS put it “From small beginnings we hope to see considerably more growth.”
The measures in this Budget will do little to reduce the 30 year structural problem of high inequality that is holding back economic growth and bringing with it high social costs. The small increases in benefits for families will have some impact on incomes but the cancellation of the Kiwisaver kickstart of $1,000 takes away an opportunity for people to begin accumulating wealth who might not otherwise have saved. It is not clear if the new taxation rules on capital gains from property will have any impact to redistributing income from wealth or dampening property speculation.
The fundamental tax and social support settings that contribute to this inequality remain largely unchanged. While highest 10% of income earners reap continuing huge benefits from lower income taxes, people on low and middle incomes try to manage on incomes that are not increasing or barely increasing. The opportunity has been missed to introduce modest additional income and wealth taxes on the higher income earners and those with higher wealth. This would have offered more scope to invest directly in the support that people need in benefit incomes as well as health, education and housing. Such moves would begin the path to a more inclusive society by starting to close the income and wealth gaps that divide our communities and contribute to the social problems such as poor health and high imprisonment.
Budget 2015: Brief Analysis
Children and families
Strengthening work obligations for beneficiary parents to work
The trade off for raising benefit rates for families with children is a new requirement for ‘most’ sole parents and partners of beneficiaries to be available for part time work when their youngest child turns three rather than five as is the current requirement. The panacea to lifting children out of material hardship (note the government avoids the term poverty) is ‘strengthening work expectations’. NZCCSS members consistently report that mother’s experiences of returning to work is not the same for everyone and for those mothers who are isolated from family networks returning to work can do more harm than good. Read more about this in the Vulnerability Report Nr.20. Much more research is needed to demonstrate the effectiveness of working your way out of poverty for these families.
Increasing Childcare Assistance
The following increases to childcare assistance is intended to support parents returning to work. The reality of early childcare costs is that even with a small increase to childcare assistance for an increased number of hours, there are still barriers to accessing early childhood education which include additional costs required for travel to and from centres, along with suitable lunches, lunch boxes and clothes and shoes. For many families the total cost makes early childhood education out of their reach.
- Childcare Assistance for low-income families will increase from $4 an hour to $5 an hour, for up to 50 hours of childcare a week per child.
- This new rate will apply to both Childcare Subsidy for pre-schoolers and OSCAR subsidy for out-of school care and school holiday programmes.
- Lower the cost of childcare for around 40,000 low-income working families and reduce barriers for parents moving off welfare and into work.
Raising benefit rates for families
It is a milestone that benefit rates for families with children will rise $25 a week after tax, and that this is the first time since 1972 that core benefit rates have increased by more than inflation. What the announcement doesn’t say is that this is also the first benefit increase since 1991 when benefits were cut by 20% and from which structural inequality has soared. The catch to the $25 rise is that sole parents are required to reapply for their benefit every year, matching the current process for job seeker. What we know from our member agencies is that re-applying for benefits at a Work and Income Office requires time, energy, transport and often additional costs associated with identification, GP letters, photocopied documents. For those with good family supports this relationship with work and income can be managed, but for those who are isolated and without any family support this constant back and forth to Work and Income offices, each time with someone new, exacerbates their stress rather than empowers them into work.
Increasing Working for Families payment
- Low-income working families earning $36,350 or less a year, before tax, will get $12.50 extra a week from Working for Families, and some very low-income families will get $24.50 extra.
- Working families earning more than $36,350 will get extra from Working for Families, but it will be less than $12.50 a week, with the exact amount dependent on their family income.
- Families earning more than $88,000 a year will get slightly lower Working for Families payments, with the average reduction being around $3 a week.
The above changes will benefit around 200,000 lower-income working families who are not dependent on benefits. Around 50,000 of these families earn $36,350 or less a year, and will therefore get the full $12.50 a week increase.
Children’s Teams and Vulnerable Children
New operating fund of $36 million over four years to support the Children’s Action Plan for vulnerable children
- Extra $23 million over four years to support the work of Child Youth and Family.
- $8 million over four years for initiatives to help vulnerable students participate in education or training and lift achievement.
Whanau Ora
Budget 2015 continues to support Whanau Ora with $50 million over four years. The budget also provides $2 million over four years for rangatahi Maori suicide prevention.
Reducing welfare dependency
32.5 million over four years to reduce welfare dependency. This includes for up to 10,000 extra places next year for intensive, work-focused case management, particularly for beneficiaries with health conditions and disabilities.
Housing
The Budget has re-affirmed the government’s housing reform course but the deep concern is that there is too little investment in delivering the thousands of low cost social rental properties that people on the lowest incomes need.Strong measures to improve housing quality such as a compulsory housing warrant of fitness and rapid increase in the supply of social housing are needed. Indeed, Community Housing Aotearoa has pointed to the lack of a guiding strategy and plan to the government’s work and is calling for support from the sector to develop its strategy Our Place.
Plans to free up government owned land in Auckland offer an opportunity to deliver significantly more social housing in an area where it is needed but the government is not making any firm commitments to how much social housing or even how affordable any housing would be for those on low incomes. Such plans to transfer government-owned land out of state ownership risks missing a once in a lifetime chance to do the right thing for the poorest New Zealanders. If all the additional houses are sold into private ownership and no significant increase in social housing occurs, then once again it is the poorest who miss out while the property investors flourish.
Changes to the income related rent subsidy are being through Parliament under urgency and are aimed at making the subsidy a more flexible way of supporting social housing tenancies. Additional investment to fund the implementation of the Māori Housing Strategy is welcome news and a recognition the need for more investment but the absence of any commitment to significant capital funding to accelerate social housing development means that people who are homeless or in unaffordable and/or sub-standard housing have little prospect for improvement in the near future.
Older people
There was little in the Budget that directly impacts on the support and services for older people. As the CTU analysis shows, the $320 million baseline funding increase for DHBs to provide health services including the home based support, aged residential care and primary care that may older people rely on, is around between $100 – 200 million below what is needed to simply maintain current service levels. This means DHBs have less funding to cover even the cost increases underlying service provision, such as increasing need for aged care, increasing levels of need in those receiving aged care and the need to build the skills and qualification levels of workers. There is little room in all this to meet the urgent need to lift wages for care workers.
The additional funding for palliative care of $76.1 million over four years, includes $13 million per year to help hospices expand the community palliative care to include terminally ill people in aged care and in their own homes. There is further $24.1 million over next four years to add 60 new palliative care nursing and palliative care educators to help train, mentor and support staff in aged care, home-based support and general practice. This is welcome support for a sector facing increasing challenges in responding to the palliative care needs of terminally ill older people.
Links to full information on the budget and commentary
UNICEF NZ says Budget delivers small change not real change for children.
CPAG says 2015 Budget signals important change in approach to child poverty.
Children’s Commissioner says budget is “a surprise but not a plan.”
Brent Edwards says “It Looks like Good Politics.”