Analysis by Bryce Edwards.
This week’s Budget is a chance for the Labour Government to take the crisis of poverty and inequality seriously. They can do this by delivering something serious or even transformational for those suffering at the bottom of the heap in New Zealand. In particular, a big increase in core benefit rates would be the most effective way they could tackle the worsening problem.
Of course, Prime Minister Jacinda Ardern has already faced campaigns to increase benefits, and firmly said “no” to these as recently as December – you can see my roundup of this issue then: The Left’s challenge to Labour’s inaction on poverty and inequality.
However, pressure to deliver to those most in need is now just too great for the Government to ignore, and rumours are building that a benefit increase will be announced. Last week, Finance Minister Grant Robertson even signalled the Budget will include measures to deal with inequality and poverty, and Ardern came up with the term “The Compassionate Budget” for what is coming.
Business journalist Liam Dann forecast in the Herald yesterday some big spending to put more money in the pockets of the poorest: “There will undoubtedly be some big, new spending packages in this Budget. They will likely target child poverty and those suffering most from inequity” – see: Budget 2021: Why Grant Robertson won’t match big spending Aussies (paywalled). And Dann outlines how pumping money to the poor will tick both moral and economic boxes.
Arguments for a big “benefit boost”
If the Government ever needed permission to boost benefits, it received this in a landmark survey released in February showing overwhelming public support for increased income support for the poor – see Harry Lock’s Survey finds 69% want income support for those in need increased.
The question was asked whether “the government should increase the amount of income support paid to those on low incomes and not in paid work”. Across all demographics, incomes, and voting alignments, the result was clearly in favour of government action. Even Act Party supporters tended towards an increase in income support.
Responding to the poll, the ActionStation advocacy group said this about benefit increases: “The time for excuses is up. This poll shows the government has a clear social licence and mandate, on top of its moral obligation, to lift inadequate welfare payments to ‘liveable’ levels, and it needs to be done now, in this Budget round.”
Plenty of high-profile voices have also been urging Labour to do the right thing. For example, recently political journalist Andrea Vance highlighted that while Ardern had come to office on a promise to reduce inequality, she hasn’t done so yet – see: The social welfare net is threadbare – can Grant Robertson mend it?. In this, Vance suggests giving beneficiaries a proper payment increase as well as modernising the whole welfare system.
Similarly, writing in February, Branko Marcetic argued that lifting benefits is the “bare minimum” that the Government should be doing to work on fulfilling its promises. But he admits a benefit rise would have a downside for the Government: “Doing this will certainly mean Robertson may have, at first, less impressive debt numbers to show off to business leaders at lunches and breakfasts held in luxury hotels” – see: NZ’s economic “bounce-back” is a myth – but lifting benefits would bring it closer to reality.
Welfare researcher Louise Humpage has more recently argued that benefit increases and other positive welfare reforms are desperately needed, because what few initiatives the Government has already taken have only had a negligible impact – see: If New Zealand can radically reform its health system, why not do the same for welfare?.
Humpage also points out that the Government’s own Welfare Expert Advisory Group made a number of recommendations for reform, which the Government is largely ignoring: “It made 42 key recommendations but only a handful have been addressed. Almost two years on, we are still waiting for real action.”
Latest “grim” poverty statistics out
More evidence of the “grim” situation came out on Thursday, with the release of the Government’s first Annual Report for the Child and Youth Wellbeing Strategy and another report on Child Poverty Indicators. The most significant finding from these reports was that 20 per cent of children live in households where food runs out either sometimes or often. For details, see Rebecca Moore’s Advocacy groups slam ‘racist’, ”discriminatory’ system after Government releases child poverty report.
The article reports the response of Child Poverty Action Group’s Janet McAllister, who says “We should be angry about this” and she admonishes the Labour Government for only taking “small steps to address these big issues”, saying although there are indications of slight improvements in poverty levels, “It’s not okay to be a little bit better than four years ago.” She concludes that “The Government has power to change this terrible situation we’ve been in for far too long.”
Guardian journalist Tess McClure labelled the stats as representing “slow or non-existent progress” on dealing with child poverty – see: Ardern faces calls to boost child poverty spending in budget amid glacial progress. She reports Children’s Commissioner Andrew Becroft’s statement in response, that there was “an inarguable need to increase benefits”, calling “for more spending for children in the upcoming budget”.
The Prime Minister is also quoted defending her record, saying “Many of the issues facing children, young people and their families are complex, stubborn and intergenerational, so we know change will take time, and will require sustained action across government and across our communities”.
Similarly, researcher Max Rashbrooke’s message is to have more patience, because “Child poverty is like a huge oil tanker – it takes a long time to turn around”, “It takes time to convert income into greater wellbeing”, and “Some of the problems are so ingrained, that you spend a lot of money erasing the problems of the past”. But he lamented that the Government are “not willing to commit to the massive increases in benefits that would really see us slashing the rates of child poverty.”
Rashbrooke has also written recently about his attempt to track down planning for how the Government is going to deal with the poverty crisis, coming up empty-handed – see: Plan and budget both AWOL in child poverty fight. He says: “we need Ardern to tell us exactly how she will meet her long-term targets, how much it will cost, and where those funds will be found. The issue also cuts to the heart of her Government’s credibility.”
This article follows on from an earlier one by Rashbrooke in which he argues that the Government’s lack of a plan on poverty is troubling, and that making inroads will require much more boldness than is currently on offer – see: Tackling child poverty a mountain that keeps getting steeper.
Economist Brian Easton also responded critically yesterday to the latest poverty stats, suggesting that any purported improvements are just “statistical noise”, but that this shouldn’t be surprising “because the policy changes have been small, if trumpeted loudly. Therein lies the challenge. The assumption seems to have been that small incremental policy measures can eliminate child poverty. But they will give only small incremental gains” – see: Are we really serious about child poverty?.
Easton is very critical about Ardern’s vague attempt to find a moderate path to fulfil the radical targets set under law to fix child poverty: “Can it be done incrementally? I am sceptical unless the increments are larger and more focused than what has occurred so far. The statute says where we are to end up, but it does not provide a path to get there. So we are gingerly navigating our way; there is no map.”
The lack of a plan for dealing with poverty was also criticised earlier in the year by a Stuff editorial that said “we’re on a track that remains only half-built and the path ahead is anything but clear and, even now, we don’t really know where we stand” – see: Limited progress in child poverty, but it’s not on track yet.
The newspaper cites the arguments to increase benefits by between 12 and 47 per cent as the official advice dictates, and adds that the Government has a mandate to be much more radical: “the result of the previous election was nothing if not a mandate for boldness on fronts such as this.”
Also writing about this time, leftwing columnist Gordon Campbell said: “Voters gave Labour a sweeping mandate to pursue transformational solutions for this country’s most serious problems”, but that they’re taking “tiny, barely discernible steps to reduce poverty” – see: On Labour’s fudging on child poverty. He asked: “Is this really the transformational change we expect to see from the Ardern government, given how much political mileage it has got from claiming to care? Hardly.”
How much should benefits be boosted?
If a benefit boost does eventuate in Grant Robertson’s Budget on Thursday, the crucial issue will be how much they rise by. There seems to be a near-consensus amongst progressives and welfare advocates that such an increase would need to be in the range recommended by the Government’s Welfare Expert Advisory Group of 12-47 per cent. Anything less than a $100/week increase for single jobseekers, as recommended, will leave many on the left disappointed.
Some would even like to see benefit rates doubled. Writing in the Herald last week, the Auckland City Missioner, Helen Robinson, looked at this issue of how much benefits needed to rise by, and suggested: “The $490 weekly Covid Income Relief Payment for full-time workers who lost their job during the pandemic is a good starting point. That level of investment, compared to the little over $250 a week received by a single person over the age of 25 on Jobseeker Support, is a more realistic weekly income. Economically this is possible” – see: Impossible choices deprive our people of hope (paywalled).
Robinson commented further on this yesterday, saying to break the poverty cycle “the benefit needs to increase by around $200 each week” – see RNZ’s Major rise in benefits needed to get children out of poverty – Auckland City Missioner.
The City Missioner also points out that official statistics released last week on child poverty are out of date, and that things have got much worse due to the impact of Covid. As an example, she says “the mission before Covid was doing about 25,000 food parcels a year and this year we’ll get to somewhere between 45 to 50,000 food parcels – so the need has significantly increased.”
What else could the Government do?
If not a significant rise in benefit rates, what else could the Government do to help those at the bottom? According to the Child Poverty Action Group, they could start indexing Working for Families payments in line with the wage index, as is done for Superannuation and benefits – see Melanie Carroll’s Working for Families falls behind wage rises: Child Poverty Action Group.
According to this article, the “Government had not increased payment rates for Working for Families since 2018”, and research shows that the lack of indexation has left “some families up to $1900 worse off over two years”.
Additionally, Working for Families could be reformed, to provide the “In-Work Tax Credit” to the families of beneficiaries, as recommended by the Child Poverty Action Group – see Janet McAllister’s What the annual child poverty stats tell us.
In this piece McAllister also complains about the low rates of benefits, suggesting that Labour’s approach is still too rightwing: “Ruth Richardson’s Mother of All Budgets still has more influence on the miserly social welfare system than Jacinda Ardern does. In fact, net benefits and child assistance (Working for Families) combined are still lower now that they were immediately after Richardson’s social welfare cuts, as a percentage of net average wages.”
The free school lunch programme could be extended, as it is currently only funded for about a quarter of students. This is a call backed by the Children’s Commissioner, who says “free lunches for schoolchildren should be ‘a birthright'” – see Lana Andelane’s Free school lunches: One free meal a day means one less thing on parents’ plates – Kiwi mum. However, the Prime Minister has responded negatively to this, saying that such a universal approach would cost too much.
Finally, for a clever and satirical communication of “how New Zealand’s post-Covid economy has benefited some while hurting others”, see cartoonist Toby Morris’ The Side Eye’s Two New Zealands: The K Shape.