Single benefits falling far behind wages

By Simon Collins

Welfare beneficiaries without children are now worse off in relation to the average worker than at any time in the past 26 years, and probably in the last 60 years.

Auckland University research shows that the net dole for a single adult without children has dropped from a recent peak of 45 per cent of the net average wage in 1986 to 28 per cent today.

The current rate is the lowest since the university data started in 1981, and economist Brian Easton said it seemed to be the lowest since the average wage was created in 1948.

His data, based on the benefit rate for couples, shows that the previous lowest rate for couples was 54 per cent of the net average wage in 1972. The single adult rate is 60 per cent of the adult rate, making it around 32 per cent of the net average wage in 1972, but the tax rate for single adults would have been different from the married rate.

Auckland University doctoral student Gerry Cotterell said benefit rates had continued to fall slightly further behind the net average wage in recent years because they were adjusted in line with consumer prices, not wages.

Since the Labour Government took office in the December quarter of 1999, the average wage has risen by 28.4 per cent while consumer prices rose by 20.1 per cent.

A royal commission on social security recommended in 1972 that married benefits should be kept at 80 per cent of the net wages of building and engineering labourers, to ensure that beneficiaries could "participate in and belong to" the rest of society. Benefits were increased the next year in line with the commission's recommendations, but since then have always been adjusted in line with prices, not wages.

The single adult rate was also cut by $14 a week in the "mother of all Budgets" in 1991, and has never been restored. Instead, the gap between real net single benefits and the real net average wage has widened from $300 a week in 1991 to $400 a week today.

Mr Cotterell said beneficiaries could not feel a sense of "participation and belonging" with such a wide gap behind wages. Given economic improvements "surely there is an argument for restoring the rates that existed before 1991".

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