Susan St John: A practical and just way to address child poverty

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Photo / Mark McKeown
Photo / Mark McKeown

Who could disagree that poor children in New Zealand urgently need more support from a negligent society? They have been fobbed off with endless reports and committees examining their plight from every different angle, but nothing much changes.

Now we have a bright light. The Greens' Income Tax (Universalisation of In-work Tax Credit) Amendment Bill is a chance to significantly alleviate child poverty by giving more income to the care-givers of the poorest 230,000 children.

Parents who receive benefit income, or are unable to work a minimum number of hours a week do not get the full family support for their children. A significant payment is withheld when parents cannot meet the work requirements because of child-caring responsibilities, disability or sickness.

By doing so, the Government saves $450 million a year at the expense of these children and the cumulative loss of incomefor low income households since 2006 is over $2.5 billion.

Paying the child-related payment (misnamed the In Work Tax Credit) to the families that currently don't get it, is the most effective way possible to deliver some needed income where it can do the most good. There is no leakage of the new spending to families that are not poor.

While there needs to be a debate about the fine details of the bill, this is the role of a select committee. In the meantime, politicians of all colours need to see this bill as a circuit-breaker in the current paralysis over our poor record on children.

During this recession food banks have been overwhelmed as many find a welfare benefit completely inadequate for even minimal needs.

The cruel loss of the income for children in a traumatic event such as sickness, redundancy or natural disaster such as an earthquake, means that many children in low income families are missing out on normal childhood activities.

Sole parents now have no training incentive allowance such as the Social Development Minister herself enjoyed for university study. Moreover a sole parent who is retraining with full-time tertiary studies does not get the full weekly family support for her children because she is classified as "not working".

We can expect that fewer and fewer such parents will be able to escape poverty and create a better life.

Make no mistake, an extra $60 a week for a family really matters. For many it represents the difference between being cold and sick and being able to pay the power bill, being able to go to the doctor, and being able to buy nutritious food.

Childhood poverty has lifelong consequences for health, education, and social and economic participation and is completely unnecessary in a developed country such as New Zealand.

The minister has recently trivialised the issue by claiming that families can go in and out of poverty on "almost a daily basis".
She appears unaware of her own department's full documentation of the extent, depth and duration of child poverty and of the evidence from the health sector of the serious harm to children of third world diseases that are the consequence of poverty.

We do not have a serious poverty problem among those over 65, because we have provided everyone in that age-group with a basic income. We don't ask what older people spend their New Zealand Superannuation on. We don't even care if they are millionaires or still working full time.

Every week the highest income New Zealand superannuitant couples, paying the highest tax rate - many of whom are also sitting on huge property assets - get as much as an extra net $404 a week. This is about seven times the value of the weekly In Work Tax Credit.

It is time for these superannuitants to show some leadership and support better payments for children whose very lives are compromised and stunted from a lack of material resources.

The exclusion of the poorest children from a payment that was supposed to help children have an adequate standard of living cannot be justified on moral or ethical grounds.

Nor can the In Work Tax Credit be justified on the grounds that it provides a work incentive. It has been spectacularly unsuccessful in moving sole parents into sustainable work.

Rather than rewarding an extra hour of work, it is a lump-sum payment, given only if the hours of work are met. There are many, far better ways to make work pay that don't involve punishing the poorest children.

Sole parents will tend to work when their children are older and when they are healthy and happy and settled. We should not be using a child poverty alleviation payment to force her into often non-existent, casual or inappropriate employment.

The Bill provides an excellent opportunity for the Government to rethink this discriminatory policy and adopt a practical and just measure to alleviate child poverty.

Since 2004, Child Poverty Action Group has challenged the Government over its discriminatory policy regarding the In Work Tax Credit and was granted leave in July 2012 by the Court of Appeal to appeal against the decision of the High Court in relation to its claim of discrimination against the 230,000 children of beneficiaries.

* Associate Professor Susan St John of the University of Auckland is the Child Poverty Action Group economics spokesperson

- NZ Herald

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