A backgrounder prepared for Child Poverty Action Group by Janet McAllister and Susan St John (August 2019)
Summary
Welfare benefits were cut in the early 1990s and the value of benefits, in relation to wages has been on a declining trend since.
It is important to understand this deterioration in benefits as it helps explain the rising levels of hardship in beneficiary families as they struggle to maintian living standards. In contrast, New Zealand Superannuation is linked to the average wage, thus it protects relative living standards of less well-off older people.
Benefit replacement rates
If the Winter Energy Payment (WEP) is taken into account, net real benefits are compared to the net real average wage, are back to their level in 2008 for families with 2 children, and 2009 for families with 1 child.
For those without children, WEP has helped to hold their net real benefit steady (at an extremely low level) against the net real average wage.
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