New Research Shows Current Benefits Leave Families in Poverty

Recently released research shows families who rely on benefits could find themselves hundreds of dollars short every week of what’s required to get out of poverty.

As thousands are projected to lose their jobs and seek income support over the coming months, more and more children could be locked into poverty due to inadequate benefit levels, making New Zealand’s long term recovery from COVID-19 that much more difficult, says Child Poverty Action Group.

CPAG’s research shows that six model families with children receiving benefits would require an estimated $110 a week on average to reach 50 per cent of equivalised median after-housing-costs (AHC) income, and an extra $215 to reach 60 per cent of the same, meaning income support levels for the 2020/21 year are well below the Government’s official poverty measures+, even when recent benefit increases are included.

As part of its Covid-19 package, the Government increased benefits by $25 a week and temporarily doubled the Winter Energy Payment.

"While these increases are welcome, we find they are still nowhere near enough to unlock all children from poverty and allow them to thrive," says CPAG’s Georgie Craw executive officer.

"This means many families are forced to rely on temporary top-ups, foodbanks, and high interest loans, just to survive."

Child Poverty Action Group modelled the effect of latest policies for families accessing core benefits, accommodation supplement and Working for Families in 2020/2021.

The researchers found that after paying lower-quartile rent for a two-bedroom house in a low-income Auckland suburb, a couple on the Jobseeker benefit with two children receiving core entitlements would still need around $195 extra a week to reach the 50 per cent AHC poverty line. They would need $322 extra a week to reach the 60 per cent AHC line - a supplementary Government child poverty measure.

"While people’s income can be topped-up with hardship grants, these are temporary, and Work and Income manuals refer to them as a ‘last resort’," says researcher Janet McAllister.

"Accessing them can be difficult, particularly when families are already trying to cope with the toxic stress of inadequate support.

"The supplementary systems are complex to navigate and often require people to run down their modest assets before accessing extra assistance."

The twelve hypothetical households in the report - which include parents on Sole Parent Support with one and three children, parents on Jobseeker with two children, and individuals on Jobseeker, Supported Living Payments and NZ Superannuation - will have, on average, $41 more in the hand every week after they pay their lower-quartile rent in this current financial year than last year, an increase of 17.5 per cent in disposable income from last year.

Susan St John, CPAG’s economic spokesperson, says Child Poverty Action Group is alarmed that the Government did not increase core benefits to adequate levels.

"In the recent budget the Government had an opportunity to fix the inadequate levels of core benefits and to reform Working for Families (WFF) to make it immediately available in full to all low income families including those on benefits - and it is disappointing this opportunity was missed.

"However we will continue to advocate for these changes, as we are looking at an explosion in family hardship and child poverty unless the government takes urgent and meaningful action," St John says.

+The Government charts how many children are in poverty based on 10 measures, which includes those children living in households with:

- less than 60% median equivalised disposable household income after housing costs (AHC).

- less than 50% median equivalised disposable household income after housing costs (AHC).

The full background paper titled: "The effects of 2020-21 income support changes on After Housing Costs (AHC) incomes for representative households receiving benefits" can be accessed here.