NZ Herald's Liam Dann and Jenée Tibshraeny break down the big takeaways from Budget 2024. Video / NZ Herald
The Government is saving $56 million over five years by dumping a programme topping up the pay of disabled workers to the minimum wage.
That could see 900-plus workers - mostly with intellectual disabilities - continue to be paid as low as $2 an hour, but the Government says it’sbetter than not working at all.
The previous Labour Government had planned to end the exemption that allowed employers to pay disabled people below the minimum wage. Budget 2023 allocated $37.3m over four years to top up their pay to the minimum wage (currently $23.15 an hour) - from next year.
But that was axed in Budget 2024, boosting the Government’s coffers by $11.34m in the coming year, and $56.345m over five years.
Social Development Minister Louise Upston was grilled about this today at the Social Services and Community Select Committee, leading to heated exchanges between her and Green MP Ricardo Menéndez March, as well as with her ministerial predecessor, Labour deputy leader Carmel Sepuloni.
Menéndez March asked Upston how she could justify a disabled person being paid $2 an hour for “minimum wage work”.
Upston said this group of New Zealanders who “would clearly produce less an hour than someone else” would “otherwise be completely shut out of a job”.
“I wouldn’t want to be the minister to rip that away from them.”
Green MP Ricardo Menéndez March accused the minister of an 'almost eugenic-type definition of productivity'. Photo / RNZ
Menéndez March then accused Upston of an “almost eugenic-type definition of productivity”, highlighting her comments on a disabled person producing less.
Upston scoffed at this comment and said disability enterprises - which employ disabled people - “weren’t confident the previous [plan] was going to enable them to retain disabled people in work”.
“That was a very significant concern to me.”
Working disabled people also had other supports including the Supported Living Payment, she added, while employers were also being supported to provide what they needed to hire a disabled person.
Sepuloni said Labour’s Budget 2023 commitment had no intention of anyone losing their jobs.
“The plan was for a government subsidy of sorts for employers so they [the disabled workers] could work with dignity and receive the minimum wage.”
She said the $11m the Government was pocketing in the coming year could have gone towards those workers being paid the minimum wage.
“Not if they weren’t able to keep a job,” Upston retorted.
Sepuloni: “It’s subsidising them. This argument is going around in a circle. It makes no sense.”
Labour deputy leader Carmel Sepuloni. Photo / NZH
9000 beneficiaries worse off
Sepuloni also grilled Upston about the 9000 beneficiaries who would be earning less after Budget 2024, but Upston said that was unexpected and she hadn’t received any advice on it.
But there was also a drop in the number of hardship grants over that period, despite the Salvation Army reporting people showing up for food parcels who have been declined a hardship grant.
Of the two types of hardship assistance, food grants dropped 4.8 per cent in the March 2024 quarter compared to the previous year, while emergency housing grants fell 16.2 per cent over the same period.
Upston said there had been no policy changes on hardship grants, though Ministry of Social Development chief executive Debbie Power said a single grant over $400 now needed manager approval.
The forecast peak for Jobseeker beneficiaries is now 202,000 in January 2025 (up from 188,000 in March this year), and the Government has introduced seminars for those on a Jobseeker benefit within a fortnight of signing up.
Menéndez March asked if there was any evidence or data on seminars moving beneficiaries into work or whether the minister was “just going on vibes”.
When Upston shared a story of an employer coming to a seminar in Porirua and hiring one of the attendees, who was on the job five days later, he dismissed this as “anecdotal”.
He added: “Please tell us you’re seriously interested in data and evidence rather than vibes ... You measure how many people you punish [through welfare sanctions] but not how many get into work after a seminar?”
Upston shared another story about an employer coming to a seminar in Christchurch looking for workers before shooting back that it was unreasonable to ask for a figure “that talks about every participant in every seminar across the country”.
She agreed with Sepuloni that one-to-one case management was far more effective in getting beneficiaries into work. She would make announcements shortly about more case managers, even though total MSD staff numbers had fallen from 9500 at the height of the pandemic to a forecast 8700 by the end of next year - including 200 voluntary redundancies.
Menéndez March tried to ask Upston about the tighter rules for emergency housing, including occupants being interviewed about eligibility daily or every fourth day instead of every three weeks.
But the questions were ruled out because Upston is not the minister in charge of emergency housing.
Derek Cheng is a senior journalist who started at the Herald in 2004. He has worked several stints in the press gallery team and is a former deputy political editor.
