Let Beneficiaries Keep More Earnings: A Letter to Jacinda, Grant and Carmel

By Dr Anne Else

As a lifetime Labour supporter, I deeply admire and support your commitment to reducing child poverty - which of course means family poverty. A very important part of that is raising the minimum wage, to $20 per hour in 2021.

But this makes it even more obvious how ridiculously low the abatement thresholds for beneficiary earnings are. They have not changed since 1986. Back then, the lowest threshold of $80 per week covered about 15 hours' minimum wage work. Today it covers less than 5 hours. The highest threshold of $200 for some sole parent families covers less than 12 hours. 

Rather than encouraging beneficiaries to do more paid work if they can, the current thresholds have exactly the opposite effect. No wonder the Welfare Expert Advisory Group recommended immediately raising abatement thresholds to $150 a week for Jobseeker Support, and to $150 and $250 for Sole Parent Support and Supported Living Payment. They also recommended that these thresholds be indexed.

This would be really easy to do politically, because it would clearly encourage all those who are able to take on more paid work hours, and can get them,  to do so. Even people opposed to raising core benefit levels are likely to see the common sense of this simple, straightforward change.

Instead your government has announced only tiny increases over the next four years, amounting to a total of $25/$30 by 2023. These amounts come to less than 2 hours of the 2019 minimum wage. It makes no sense whatsoever. If I were a sole parent or jobseeker, I would see this as proof that the government has no real understanding of the realities of poverty, and no real commitment to helping people do better. 

I am hoping that you intend to reconsider this issue over the next year. To make a real difference, you need to raise abatement thresholds to at least $150/$250 in the next Budget or sooner - then index them to stop them quickly losing value.

About the author: This letter was penned by CPAG Associate Dr Anne Else MNZM, a writer and editor based in Wellington.