Economists: Ease rules on dole for couples

Social Development Minister Paula Bennett says the current system is 'no different' to how it has always operated. Photo / Herald on Sunday

Two economists are calling for a fundamental rewrite of New Zealand's welfare system because of the numbers of people being made redundant who can't get the dole because their partners are still working.

Dr Susan St John of Auckland University and Keith Rankin of Unitec say the system is based on "outmoded social concepts" such as assuming that everyone lives in single-income families where dad goes out to work and mum stays home with the children.

On this basis, the unemployment benefit is clawed back by 70c for every dollar earned above $80 a week by either the main earner or their partner. This means anyone with a partner earning more than $534 a week cannot get even a partial benefit.

In Australia, the dole is reduced by only 60c for every dollar of a partner's income above A$387.50 ($485) a week, so a partial benefit is available until the partner earns A$1069 ($1340) a week.

Mary Williams, of Muriwai Beach, who lost her job in a bank in March, said in a letter to the Herald: "Why am I classed as a single earner paying ACC and income tax when employed but classed as a couple when out of work?"

She and her husband Neville have started selling their possessions.

"Because my husband earns just above the income limit for a couple I cannot register for unemployment," she said.

Mr Rankin said NZ's much tighter treatment of partner income was probably the main reason a Ministry of Social Development analysis last week found that only 32 per cent of the unemployed get the dole in this country, compared with 99 per cent in Australia.

A paper he has written with Dr St John, Escaping the Welfare Mess, argues that all main benefits should be assessed on the basis of individual, rather than household, income.

"Anachronistic requirements to meet hours worked or to force couples to aggregate their incomes for benefit purposes need to be progressively removed," they write.

Dr St John said: "The use of the married couple as the unit is as antiquated as the fax machine [and] reflects the refusal to recognise the welfare mess and the lack of consistency with the tax system (and NZ super and ACC, where the unit is the individual)."

Social Development Minister Paula Bennett said any change to the system would have a huge economic impact.

"While I sympathise with the situation an increasing number of family breadwinners find themselves in, this is no different to how the country's welfare system has always operated."