Launch of the Greens Campaign on Welfare Reform

By Susan St John

Congratulations to the Green Party for their initiative that calls for an overhaul of the welfare system which is no longer ‘fit for purpose’.  2018 offers a unique opportunity to get meaningful change – but it will only happen If civil society campaigns vigorously for it. Alongside the Greens campaign, CPAG is running its own campaign, as is AAAP.

If we could get only a fraction of the attention and enthusiasm for this issue that will flow into the America’s Cup as nationalist fever builds.

Let’s remember that 30 years ago New Zealand adopted a flat-ish tax structure and introduced GST on absolutely everything. Today tax is very tough for those on low incomes, and GST is applied at the punishing rate of 15%.

That means our welfare system has got a lot more work to do than in other countries where the tax system is more progressive.  As the Tax Working Group (TWG) has said, in fact, it has done a lot less work:

‘The tax system is not particularly progressive. Instead, progressivity is largely delivered through transfers, such as Working for Families. Yet New Zealand’s tax and transfer system reduces income inequality by less than the OECD average.
(TWG interim report)

Over 10 years ago the Ministry of Social Development Pockets of Significant Hardship and Poverty report noted with alarm that many families with children were living under the “very stringent 40% after housing costs poverty line where there is nothing in reserve.”

Every year MSD says in its household income reports that Working for Families (WFF) was ineffective in reducing child poverty in workless families.  As the Greens have consistently acknowledged – the exclusion of the poorest children from a significant part of WFF has been plain wrong. It has been a major factor in the intensification of deep family poverty.

Today, at least 140,000 children (with their parents means about 250, 000 people) fall under this very low 40% line—that’s even more than ten years ago!

Around 290,000 children (27% of all children) are living in households that fall below the 60% after housing costs income poverty line, but the worst-off children – the 140,000 previously mentioned – fall so far below that the Families Package has hardly touched them.  Charities such as KidsCan, foodbanks and budgeting services are reporting higher than ever demand, while there has been an explosion in the last two years in the use of Work and Income hardship top-ups.

The new Government’s Families Package was largely a catch up that followed nine years of neglect and outright cuts and is not future-proofed by being indexed either for inflation or wage growth.

CPAG’s Fix Working for Families campaign in 2016 drew attention to the inherent discrimination in WFF. The worst-off families still miss out on at least $72.50 a week for their children and Māori are disproportionately affected. Neither Labour nor National have wanted to address this so it is very pleasing to see that one of the Greens top five asks is for the In-Work Tax Credit to be joined to the Family Tax Credit so all low-income children can benefit.  

CPAG’s latest campaign for Welfare Fit For Families has recommended this as well as 16 other policy recommendations for immediate action. Find out more about CPAG’s campaign here.