Government to provide more support to single parents and beneficiaries with jobs, however working group urgently calls for benefits to be increased by up to 47%

Government to provide more support to single parents and beneficiaries with jobs, however working group urgently calls for benefits to be increased by up to 47%

The Government is committing to providing more support to beneficiaries with jobs, and scrapping rules that see a parent penalised if they don’t tell the Government who their child’s other parent is.

It’s also pledging to hire 263 new frontline staff over four years to help people get jobs. 

Social Development Minister Carmel Sepuloni said, in a pre-Budget announcement on Friday, that $287 million would be spent on these welfare reforms over four years.

However, with the government-appointed Welfare Expert Advisory Group recommending in its final report that benefit levels should be increased by up to 47% immediately, the changes don’t appear to go far enough.  

The Group, established a year ago, said: "The income support part of the welfare system has fallen behind the real growth in New Zealand incomes. 

"The fiscal cost of improving the adequacy and design of income support is estimated to be around $5.2 billion a year."

Put in context, the Government already spends over $25 billion a year on the welfare system. Nearly $14 billion of this goes towards superannuation. 

The $72 million a year (on average over four years) funding increase pledged by the Government on Friday is a fraction of what's deemed necessary. 

Sepuloni said she would look at a “staged implementation” of some of the 42 recommendations made by the Group. 

“The Government can’t deliver on every recommendation at once. We are taking a balanced approach and are committed to delivering change over the longer term and prioritising areas like housing and mental health which impact on all New Zealanders but especially those in the welfare system," she said.

Nonetheless, she expected 73,000 individuals to be better off by the Government raising abatement thresholds for those on benefits who work, in line with minimum wage increases.

This change will cost $97 million over four years and come into effect on April 1, 2020.

The Minister said it was all about “catching up with the times”.

“Abatement thresholds for Jobseeker Support haven’t changed in over 20 years and many people find they are no better off for working, after travel and childcare costs,” she said.

As for the law change to prevent a parent from being penalised for not telling the Government the name of their child’s other parent, Sepuloni said: “Around 24,000 children will be significantly better off as a result of this change, with many sole parents’ incomes increasing by an average of $34 a week.” 

This change will cost $113 million over four years and also take effect on April 1, 2020.

'Urgent and fundamental change is needed'

Coming back to the Welfare Expert Advisory Group’s report, it said: “The current social security system was set up in a different time and no longer meets the needs of those it was designed to support.

“Successive governments have implemented changes to the system with intended and unintended consequences.

“Agreement is near universal that the benefit and tax credit systems are unmanageably complex.

“The level of financial support is now so low that too many New Zealanders are living in desperate situations. Urgent and fundamental change is needed.”

It included the following graph showing benefit levels as a portion of wages:

Here are some of the Group's key recommendations:

  • Increase main benefits by between 12% and 47%
  • Index income support payments and thresholds annually to movements in average wages or prices, whichever is the greater. Index Accommodation Supplement rates to movements in housing costs
  • Consider introducing a Living Alone Payment that contributes to the additional costs of adults living alone
  • Reform Working for Families and other tax credits
  • Subsidise housing costs for people on low incomes (in addition to raising main benefit rates to provide an adequate income)
  • Instigate a cross-government approach to managing debt to government agencies
  • Help recipients of Sole Parent Support to return to part-time work when their youngest child is 6 years old instead of the current 3 years
  • Remove some benefit obligations and sanctions
  • Increase home ownership by considering rent-to-buy schemes, shared equity schemes, low-interest rate loans or fixed mortgages, microfinancing and similar
  • Request Housing New Zealand develop options for tenants to purchase their state houses

Here's a more detailed summary of how it would like income support increased:

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51 Comments

Benefit increases and lower mortgage rates on the same day, our resident slumlords will be happy indeed.

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State-sponsored neo-serfdom as the bedrock of the economy

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Yeap, my tax dollars in action, money I've earned given to those who don't earn it. The country is lucky that we have enough productive people making enough money to carry the rest of the population. I believe 80% of the tax is paid by 20% of the workforce, over 50% aren't paying any net tax at all.

Sorry that's the way a just society works.
Unfetted capitalism (effectively survival of the fittest leads to extreme inequality with most of the wealth held by very few while the rest are slaves.
Unless you want a slave economy & eventual rebellion of the masses those earning to have there income/wealth redistributed.)
A society in judged by how well it looks after the less well off and the challenged.
This includes the unemployed, who through no fault of their own cant get jobs (we run an economy based on price stability which requires and unemployment rate given we also need a minimum wage if we are not to have slave wages (i.e. no minimum wage)

If there is a problem in NZ, its a lack of productive wealth or real productive income per capita. We've been busy bidding up the land price which is about the most unproductive use of money possible.

Wow, people had it good back in the old days of Family Benefit etc.

But this should be accompanied by winding down WFF and the Accommodation Supplement, handouts to landlords and company owners.

Hahahaha funny that, you wouldn't think it was good back in the day going off the rhetoric that's often spouted about today's supposed lazy entitled beneficiaries with all the handouts.

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“Abatement thresholds for Jobseeker Support haven’t changed in over 20 years and many people find they are no better off for working, after travel and childcare costs.”

That attitude really annoys me because you are of course better off. The unemployment benefit is not yours by right but your wages are yours by right.

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AUT recently concluded from its Growing up in NZ survey data that a significantly lower percentage of children than MSD's claimed 30%, are being raised in sole parent households. 70% of those surveyed who confirmed they received the sole parent support benefit, admitted they did have a partner. Even allowing for an element of potential bias due to the sample possibly not being fully population representative, it presents a compelling picture of a major mismatch between official data and what is actually happening and indicates widespread abuse of the system is occurring.

It's a start, I guess. The idea that you can support yourself on $179 per week is pretty laughable.
I'd be in favour of scrapping the accommodation supplement, it's a straight subsidy to landlords.
Housing NZ is really a key player in actually improving the situation. Without actually affordable housing the living situation of beneficiaries is always going to be unstable.

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You're not supporting yourself, someone else is supporting you

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And if you're a landlord who rents to beneficiaries who can only cover the rent because of the Accommodation Supplement, you are also being carried by the taxpayer. Funny that.

I would never rent to beneficiaries, they're far too much trouble as tenants. If they can't look after themselves and need benefits, how could you expect them to look after someone else's house

And regardless you benefit from the handouts pushing up the rental price baseline, and helping fuel the property speculation bubble.

My Mother in law and her husband live in small '60s adjoining 2 bed state house/flat in a run down undesirable part of Christchurch. It still has the original kitchen and bathroom, no garage or carport, tiny section, dodgy neighbourhood. Housing NZ, bless their cotton socks, charge them $350 a week for the privilege. I'd expect circa $250k would buy it outright. I'm sure the average landlord would be delighted with such a yield on a low maintenance shitbox such as this. Quite frankly, given all the flak private landlords get, I'm disgusted.

Buy the house for her (in your name), that's exactly what I did for my mother-in-law, she's a great person, she deserves it.

This is where an interest only mortgage can work well. You can buy a two bedroom unit in Christchurch for less than 250k. The interest currently would only be $190 a week. The in-laws can pay rent of $300 a week which would be cheaper than the HNZ place.

Funny how every time a beneficiary gets a bigger handout, most people here seem to think it's property owners who are getting the money. It's almost a mental illness where everything is twisted by a hatred of landlords. Maybe everyone should stop renting so the landlords go broke, wouldn't that be a great thing¿

In Singapore and Japan, housing for the disadvantaged is often owned by the state. They are somewhat protected from the evil landlord type.

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I don't blame landlords as individuals, but our economy is ridiculously skewed towards landlordism as a means of capital accumulation, at the expense of productive investment. It's trickle-up economics. And looking at the relative growth of rental prices vs benefits, it is entirely logical to say that benefit increases have been swallowed, and more than swallowed, by rent. It's not a mental illness, it's an unpalatable fact.The growth of inequality is not a lefty opinion, it's a scientific-mathematic-empirical FACT.
(Full disclosure: I'm not a beneficiary, but I was for a period about ten years ago, and 80% of my income went to paying the cheapest rent I could find in Wellington. I ate once a day and faced constant harassment from utterly inept WINZ staff. I get really pissed off when people don't understand how poverty traps work.)

It is not a fact. Inequality has basically flatlined for the last decade. Look at all the graphs and you will see.

specifics.. what graphs are you referring to?

Because the graphs I see are not a flatline at all.
https://closertogether.org.nz/nzs-income-inequality-problem/#foobox-1/0/...

And that is income inequality, but as we all know, capital gains aren't "income" so won't be reflected in those figures, so the real change in "wealth" inequality is likely much higher than that.

Where do you actually think Accommodation Supplements end up...? Do you genuinely not understand that it ends up going to the property owners?

Though it's understandable perhaps that some landlords would react against their receiving of welfare being pointed out, with some of the stigmatising of beneficiaries that occurs these days.

You may as well say it goes to KFC or a packet of smokes, they didn't earn that money, and they can choose how they spend it. The landlord is investing, taking risks and providing a service which contributes a lot more than someone on free handouts.

Despite the grasping at straws, yes the accommodation supplement ends up in the bank accounts of landlords - a nice wee welfare benefit to raise the rent floor. People acknowledged this as obvious when landlords mopped up the additional allowance of students in Wellington recently, highlighting it as misguided policy...so it's surprising to see landlords reluctant to have it pointed out that they're receiving welfare.

Stop giving the supplement and it wont be landlords who squeal lol.

I see no evidence in recent events to suggest a declining proclivity to squeal in NZ's landlord population.

I work with people on minimum wage (just above) and I also regularly deal with people on the benefit who don't work.

I prefer by far having minimum wages increased (which is happening) and income taxes reduced rather than giving more benefits to people who don't work. We are currently in a situation where a person on minimum wage doesn't earn much more after taxes than a person who doesn't work and is on the benefit. That is very counter productive, tragic, and a very weak incentive to get people to work.

We have to reward work and penalise laziness.

"We have to reward work and penalise laziness."

Why don't you pay your employees (the people you "work" with) a bit more then?

That's exactly what I do, that's why even my starting cleaner earns more than minimum wage

We have to reward work and penalise laziness.

Instead we hit income from work hard and exempt windfall income from capital gains.

You assume people who invest in anything do not work hard. Do not be so naive ! Shall we all watch shortland street instead ?

"We have to reward work and penalise laziness." - This is totally illogical.

We run a system based on price stability (2% inflation target) which requires an unemployment rate given we have a minimum wage. The alternative is no minimum wage & slavery.

Whilst individuals may be responsible for the own unemployment, at the macro level there will always be a % of the population unemployed.

Interesting development and a good start to unrooting the purposefully created entrenched poverty inflicted on our most vulnerable. I'd like to see an end to the landlord subsidy which goes straight to the rich white baby boomers who love things as they are. Also, after following several cases of injured persons being declined income support by ACC on litigous grounds and instead are having to face (1) taking a 40 billion dollar corporation to litigation (2) survive on invalids benefit (3) try and heal all in one go....that at least the invalids benefit is increased and or ACC be brought to heel and stop savaging the people they are supposed to save. Too transformational?

Your comment would be better if you didn't single out "rich white baby boomers" as I am sure there are a fair number of landlords not in this category. Why not just landlords or even just Boomers if you want to be more subtle as it implies rich and white also?

It's also blatantly false. In my experience, the most voracious per capita accumulators of rental properties are Asian and Indian professionals.

I am a landlord which is probably why I don't understand these things and I am obviously completely insensitive but why does a solo Mum not have to let the govt know who the farther of the child is. Should the farther not have to pay support for the child instead of the tax payer in the first instance. I already have children to pay for.

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People need to follow the Chinese 996 principle. Focus on success starting at 9am, finish at 9pm, six days a week. Although I would prefer a 666 principle which is starting at six and finishing at six, six days a week.

Yeah, nah. Completely daft and counterproductive. https://hbr.org/2015/08/the-research-is-clear-long-hours-backfire-for-pe...

It wouldn't be unproductive at a personal level. If you really put in a total of 72 hours a week, say 40 at work, and 24 at a second job and/or studying for qualifications, 8 hours physical training/personal development then I am sure a degree of success would come your way.

Okay, including the personal development thing not so bad. But a second job for 24 hours on top of a full 40 hour week isn't something you can maintain for long, not without really running yourself down.

As someone who puts in 14 hours a day 5 days a week (including 4 hours a day of commuting), I agree it's not sustainable long term.

And thats commuting by train, and muckng about on interst.co.nz while you do, probably the best way to commute over that distance.. Imagine if you had to drive your commute...

i dont like WFF its a subsidy for business to keep wages low
i dont like the accommodation supplement its a subsidy to property owners
i would prefer the state used those funds to build housing of all types , sell some at cost use the rest to house those that can not buy similar to the Singapore model.
as for the benefits why are there different levels? why not make simplify payments i.e why does some on super get what they get and someone unemployment get a different payment, they are both not working ?
why are benefits taxed? its just more red tap make them tax free and if you want to make it simple make all wages under 20K tax free then up the upper bands to balance it out
last why penalize people for working part time while on a benefit and we wonder why we have to import fruit pickers etc
its a disincentive to try and i know many do under the table jobs to get around it
they need to sort that out so that if you can supplement the benefit you are taxed at the normal income rate
last our welfare system is a mess and the whole thing needs to rethought with a clean sheet of paper, too often it is hijacked by party politics left and right instead what is the most simple structure and best for the people working and not working

"why are benefits taxed? its just more red tap make them tax free "

They aren't really , the tax on benefits only exists for accounting/taxation of other income purposes. The money never leaves the govt coffers.

"It’s also pledging to hire 263 new frontline staff over four years to help people get jobs." - illogical at the macro level.

As I've noted in 2 other comments. We run an economic system based on price stability (inflation target) which requires a % of the population unemployed, given we have a minimum wage (slave wages anyone?)

Training will help individuals as they may then be unemployed for a shorter period, rather than being long term unemployed, & may remove some job filling friction, but at the macros level it means someone else is unemployed.

The unemployed deserve our full support as full members of society. They are unemployed so the rest of us are lucky enough to have a job.

Well it does mean 263 people will find a new job.

"Social Development Minister Carmel Sepuloni said, in a pre-Budget announcement on Friday, that $287 million would be spent on these welfare reforms over four years."

What a joke. NZ society is so greedy & Labour has forgotten the poor. How is this going to help the Prime Ministers attempt to lower child poverty levels.

NZ society is judged on how we treat the poorest in society and we do an appalling job.

The baby boomers get fully indexed superannuation, didn't pay tertiary education fees, and have been the beneficiaries of the housing price boom. (& I'm almost one of them).

1) Land tax & free up the RMA from density restrictions (billing up land prices is the height of stupidity)
2) Push out the age at which super is paid so that it is a % of life expectancy. It can easily slide to 67+
3) Wipe study debt (its a failed policy worldwide) & re-instate free tertiary education.
4) Kill Kiwibuild (middle class welfare) & have government & Housing NZ focus of regulating to provide small sized (m2) affordable housing within developer masterplans.

Wiping study debt does seem like the middle-class welfare in your next point. But it could be afforded if the tertiary education was brought under control - why is every 2nd school leaver spending 3 or 4 years getting a degree which is only rarely relevent to future work?
Partial solution for child poverty would be universal child benefit. Low admin cost. Investing in the children who are our future. Only argument against it is having to increase income tax to pay for it. Pay it to both parents and you will get fewer single mothers unwilling to name fathers.

I see some people have very strong opinions against accommodation supplements as they see landlords as the ultimate winners. They seem to prefer all that accommodation be provided by the Housing NZ.
You can easily apply the same argument to food and groceries. Surely, all the benefit paid to people who need help ends up in the pockets of supermarket owners. So should government runs it own supermarkets too? what about whiteware and appliances?

Not a great comparison.

The problem is providing demand subsidies that flow to investors while not allowing supply to ramp up. No one is arguing all accommodation be provided by Housing NZ. Might be convenient if they were arguing that, as it's easier to argue against.