Supporting “Hard-Working Families”?

By Dr Emily Keddell

I had to laugh, in a sort of incredulous and ironic way, at some of Bill English’s latest tweets. What is especially ironic is that Bill and I have several similarities. He’s a Southland farmer; both my parents grew up on farms in Southland and Otago. He’s Pākehā; so am I. He tries to share his household labour with his partner; snap. But I guess our divergent lives have led to very different views on many things. For example, when he made the following tweets…

…it made me wonder just who are the people he thought he was talking about.

I never worked as hard, or with such bravery (or at least, desperate stoicism), as when I was on the DPB (Domestic Purposes Benefit) with three children under five years old. For a start, I was responsible–around the clock–for the needs of three small people: no annual leave, no sick leave, no lunch breaks, and a bunch of social stigma and patronising comments from Work and Income and health professionals on top of it. Life throws you curve balls sometimes, but you just have to put your head down and get on with it. Somehow we all survived. It certainly wasn’t a time I got to slack around like some kind of weak-wristed, scaredy-cat. My adorable three little boys were not for the faint of heart.

But the other implication in the PM's tweets is that the budget will reward those in the paid workforce in some additional way. This also made my incredulous teeth whistle. Maybe this means there will be some small increases to the tax credits available for those who manage to work the hours (20 hours for sole parents; 30 hours for couples) required in order to be considered off-benefit . The irony is that even if those tax credits were increased now, it will be after a long period of sustained erosion in their value. Since 2011, they have steadily declined in real terms: the budget of that year announced that the income threshold at which the abatement of family tax credits begins, would reduce to $35k of household income, from the 36, 827 it was at that time. It also increased the rate of abatement from the 20% it was then, to 25%: in short, the tax credits now reduce sooner and faster than before. These small changes mean that many of the “hard working people” the PM claims to want to help, have had a steady decline in support for the last six years; changes that, over the same period of time, have saved the government a total of $2 billion dollars (St John, 2016a).

We don’t have to do it this way. In Australia, for example, the abatement threshold is linked to the median wage, meaning it increases each year. In 2018, it will be $55k. In New Zealand a two parent, three child family gets $192 in Working for Families (WFF) tax credits. If their combined income was $80k, they would still get $104. In Canada, the maximum is $350 per week, and at $80k, they would still get $200 per week. They have no minimum hours work test to be considered off-benefit, and nor does Australia: in fact, in Australia, the threshold for abatement rises with a second child (St John, 2016b). This has led some researchers to conclude that while we do it better for our older people, for families with children, it’s “almost the exact opposite. Australia’s system is more generous, less complex and more efficient.” (Spies-Butcher & Stebbing, 2016, p.1).

Why do we need tax credits? Tax credits keep the whole shebang of family income afloat. Wages are now so far behind the basic costs of living that, without tax credits, very few families could survive. Tax credits are the lifeblood of income redistribution that supports families with children. Let’s think about it. A family on the minimum wage gets about $610 for a 40 hour week, that’s $522 after tax (and this may not be stable income, precarious labour changes income a lot). Nobody supporting a child can live on that, because if they are single they are paying someone to care for their children; and if they are a couple, they are supporting both themselves, another adult and at least one child on that amount. Okay, maybe not nobody (the family who owns their own inherited home in a rural area where they can grow a lot of food, generate their own electricity and can walk to work might be able to). But for the vast majority of us, that’s just not liveable, with the average rent in most cities eating up most of that. For example, “up to 31 March 2016 showed that the average (median) rent for a three / four bedroomed property in Wellington was $475 per week and for a one / two bedroomed property was $350 per week” (ENZ, 2016). Add to that the cost of food, electricity, travel, school, childcare, te mea te mea. That’s why we need tax credits for families with children – and the systematic reduction in these amounts for those low-income families over the last six years has been explicit and calculated.

This is one reason why those who fall under the poverty line continue to include a significant proportion (37%) of non-beneficiaries (Child Poverty Monitor, 2015). Maybe the promised support from Bill will be like the $25 benefit increase that came last year. It enabled the government to appear generous despite the fact that it came after after many years of not indexing benefit rates to the median wage, and not paying beneficiaries all parts of the working for families tax credit package (still don’t). So, forgive my skepticism, even if there are some increases to the WFF package, it won’t make it up to the amount it would be if, all along, it had been indexed properly to the median wage. Oh, and I can’t shear a sheep, though it’s pretty fun playing around in the wool shed, sliding down the chutes.

About the author: Dr Emily Keddell is the co-ordinator for CPAG's Dunedin network. Emily teaches on the Social Work programme at the University of Otago and has practice background in Social Work with children and families in a range of settings and countries including statutory and NGO contexts. As poverty is a persistent theme in most aspects of social work with families, Emily attempts to include poverty issues in her teaching, research and advocacy roles.

NOTE: This blog first appeared on Reimagining social work in Aotearoa in New Zealand and is re-published with permission of the author.