Susan St John: Working for Families simply not working

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Child poverty figures clearly show fundamental changes needed in Government’s assistance package.

The children of low-income parents often suffer poor health and stunted opportunities. Photo / Getty Images
The children of low-income parents often suffer poor health and stunted opportunities. Photo / Getty Images

Jonathan Boston and Simon Chapple, authors of Child Poverty in New Zealand, rightly fume at the nonchalant political response to the finding of serious errors in measured child poverty.

Their book also points out the unsatisfactory nature of family policy. If the correct child poverty figures had been known, perhaps by now public outrage would have seen that the flaws in Working for Families were fixed.

A more buoyant economy provides an opportunity to repair the damage to the social fabric suffered during the recession by policy measures aimed at reducing child poverty and inequality.

There is no cause for optimism on this front. Deeply ingrained in policy-makers' minds is that paid work alone is the answer to child poverty.

Yet the sheer impossibility of many poor families achieving reliable fulltime paid work, especially sole parents with young children, or households experiencing sickness and disability, leads to the inevitable consignment of these families and their children to deep poverty.

Moreover, fulltime work at low wages is not enough to cure child poverty. The Government has to top up low wages with Working for Families and is now not doing this very well at all.

The parents of poor children are the ones who line up at foodbanks and welfare agencies; facing bleak choices such as whether to heat the house or pay for the child's medicine. Their children overload hospitals with preventable diseases, often suffering neglect, malnutrition and stunted opportunities.

While all low-income children qualify for the Family Tax Credit, a per child weekly payment to the caregiver, more than 200,000 are denied the In Work Tax Credit, worth $60 a week for one to three children and an extra $15 per child for larger families.

Boston and Chapple rightly complain about the requirement for 20 hours of paid work a week for a sole parent and 30 hours a week for a couple.

They don't like the second test for the In Work Tax Credit either. This requires that a parent must not be on any kind of benefit or student allowance, even if working part-time. But no matter what work incentive is offered, most parents with young children in the benefit system cannot sustain work fulltime because they or their children are sick, disabled or chronically ill, or they have caregiving roles, or there is no work available.

New Zealand has been cavalier in ignoring that the poorest children are denied the protections of the UN Convention on the Rights of the Child. We have signed this convention that states all children have a right to social security and that the government has an obligation to implement measures necessary to achieve full realisation of that right.

Disturbingly, about 40 per cent of children in poverty are found in working families. Had Working for Families been properly adjusted for inflation, things would not be so dire for a family on low wages. Worse still, the Government has set in train gradual reductions to the level of income where the maximum Working for Families can be paid to the caregiver and is slowly increasing the rate at which it is clawed back.

Further, had Working for Families been adjusted for wage growth, as is New Zealand Superannuation, there would be no need for a living wage campaign to ensure parents with two children, working 60 hours a week, have enough to live on.

A solution would be to remove the hours worked criteria and the off-benefit rule. The In Work Tax Credit would become an addition to the Family Tax Credit. A significant extra payment would go to the poorest families who need it most.

Boston and Chapple say some working parents have high childcare and transport costs and an inwork payment is needed. But it is much more effective to assist with these costs directly, through, for example, improved childcare subsidies. There is much more that needs to be done to solve child poverty but until this fundamental distortion is corrected any change will be only tinkering around the edges.

Susan St John is the economics spokeswoman for the Child Poverty Action Group.

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- NZ Herald

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