Susan St John: Welcome first steps for poor but much more to be done

COMMENT

After eight long years since the divisive 1996 Budget, this package will be welcomed by child-advocacy groups.

Eventual indexation of family assistance, a substantial increase in family support, extra subsidies for childcare and a massive injection into early childcare education will make a tangible difference. However, there are some worrying features and the effects of these will doubtless become clear over time.

The Budget emphasises work incentives but, ironically, bribes people to get off benefits by paying something that looks like a special welfare payment itself.

The Child Poverty Action Group has long argued for the assimilation of the Child Tax Credit into Family Support so that all children on the same income are treated the same. Unfortunately, its replacement, the "In-Work Payment", again draws a line between those "in work" and those "not in work".

While this new payment of $60 a week is not based on the number of children, it applies only to families with children and, like the Child Tax Credit, will disappear when recession hits.

It will be complex to administer, as it requires that parents fulfil a weekly work requirement of 20 hours for a sole parent and 30 hours for a couple.

For the first time in living memory, the Budget speech acknowledges that child poverty is a problem in New Zealand.

But there is no significant measure for poor families until 2005 and the new single threshold of $27,500 of joint income does not apply until 2006. The first steps have been taken, but there is much more to be done.

There are some real concerns around beneficiary families who will get only very modest amounts from this Budget. We are told that the increases in accommodation supplement and family support for families on benefits will offset entitlement to the special benefit that has been keeping many of these families afloat.

It is not always possible for a parent to work, nor should it be the sole aim of policy to get parents into work regardless of circumstances.

The Budget claims that child poverty will be reduced by 30 per cent by 2007. Even if this modest goal is achieved, what of the children left behind? A strong commitment is required to build on the first steps in this Budget.

* Dr Susan St John is a University of Auckland senior lecturer in economics and executive member of the Child Poverty Action Group