Budget 2017: A Trickle Not a Tide

The Budget announced today shows some slight change in the weather for families in poverty, but it is not the sea change that is required for many, says Child Poverty Action Group (CPAG).

While the small offerings show some improvement for around 50,000 children in severe poverty, another 100,000 to150,000 children will not benefit enough from the changes.

The increases to the Accommodation Supplement (AS) will benefit many of the lowest income families, but without adjusting the income thresholds, the after-housing disposable income of working families living in poverty, paying for a private rental will still be unfairly squeezed.

Working for Families (WFF) increases are a long-awaited improvement that signals some relief for low-income working families and beneficiary families, benefitting a family with three under-16s and an income of less than $35,000 per year by around $54 per week. But the increase in the abatement rate and threshold reduction for maximum entitlements means that a family earning any more than this will have their Working for Families entitlements reduce sharply.

“While the reduced tax rates may benefit those in work, the same is not true of beneficiary families. Income support benefits for families are net of tax and therefore they will not see any tax benefits, as the gross figure will be reduced accordingly; in contrast superannuitants clearly will benefit from this tax cut with an increase in their weekly net incomes,” says Associate Professor Susan St John, CPAG economics spokesperson.

“Furthermore, without a plan to properly index WFF going forward, the small benefits will quickly be swallowed in cost increases.”

The increases in the Family Incomes Package will lift only 35,000 children out of severe housing stress, meaning that less than half of the 85,000 children known to be suffering severe material hardship will see no improvement in their situation.

Importantly, none of these changes come in until April 2018.

Professor Innes Asher, CPAG spokesperson for health, says, “Making children, who are cold, hungry and sick right now, wait this long is negligent.

“Given there is a budget surplus there is a surprisingly small gesture for the children in New Zealand who are suffering the worst effects of poverty - and it won’t go far to reduce the number of hospital admissions due to preventable diseases, a target set by the Government itself earlier this month.”

“We estimate that even with the small changes in this budget there are around 100,000 to 150,000 children who will continue to suffer severe hardship because the changes aren't big enough nor do they have far enough reach to significantly lift them out of poverty. These are the children whose mental and physical health is most at risk.”

These moves by the National government must be encouraged - but there is a lot more work to do to change the tide for children in poverty in New Zealand.

CPAG has prepared a brief summary of the 2017 budget and its implications for children and families.