Susan St John: Time we had some bold action for children

New Zealand can do so much better on child poverty, so why isn't it? Photo / Getty Images, File

OPINION

The Herald has run articles this week that must greatly disturb all thinking New Zealanders.

The first of these tells of desperate families rummaging in bins to feed their families and how the lockdown is enormously stressful and debilitating for low-income families. While the problems of inadequate income are not new, they are thrown into stark relief in the Covid lockdown.

The second points to soaring prices. The latest inflation data show prices have been rising at the fastest rate since the June quarter of 1987. Annual inflation is almost 5 per cent. Rents and food are two drivers and we know low-income families face overall higher prices than the general CPI indicates.

We are warned "We should brace for an inflationary shock to the system".

But the only response has been Government finding another $13.55m for foodbanks. How did we get to the point where private charities are seen to be the answer and there is so little outrage?

The children we are not taking care of in this crisis endure deteriorating health and education opportunities, with implications long into the future. But when are they the focus of a government select committee along with business interests?

A promised review of Working for Families (WFF), the main programme that helps with the needs of children in low-income families, has been going round in circles for months behind closed doors. It has just been shelved until some unspecific time next year. In the meantime, there has been no adjustment of children's WFF tax credits for three and half years.

NZ Super is automatically increased every year for wage growth but this generosity even to well-off superannuitants is never questioned.

The lack of regular adjustments to WFF however is far from the worst thing that needs urgent fixing.

The reason the review of WFF has lost its way and became bogged down in repetitive inconclusive meetings is that the bureaucrats are wedded to the idea that WFF must not only address child poverty it must also incentivise paid work.

The essential inconsistency in these two objectives is not discussed, although it is acknowledged that the work incentive aspect has not worked out well. But neither has the child poverty reduction goal.

We need to learn from Australia which has a more generous system focused only on the needs of the children. A family on a benefit is not denied the full packages of tax credits as is the case here just because they need a benefit to survive.

If a WFF payment for children in poverty (ie the In Work Tax Credit IWTC worth $72.50/week or more for larger families) is designed to reduce child poverty, then, by definition, children in poverty who are denied the payment must remain in poverty (to give their parents an incentive).

Thus for 17 years, the number of children under the lowest of the low poverty lines (about 170,000) has barely budged. Year after year, the MSD has drawn attention to the fact that the WFF made no difference to the levels of child poverty in "workless" families.

The confusion of objectives has led to a desperate muddle. Children of parents who work part-time while on a benefit are still deemed unworthy - their parents will have to find a paid job that lifts them out of the benefit system before they qualify for the full tax credits.

In the first Christchurch earthquake, the government allowed parents who lost jobs to keep the full WFF for 16 weeks even when they weren't working. In 2020, the government removed the unjust rules that required 20 hours of paid work for a sole parent (30 for a couple) to get the full package.

But the government couldn't let go completely of the paid work requirement, creating a further muddle. Today a parent still has to be off any benefit and provide evidence of some paid work to qualify.

Susan St John. Photo / Supplied, File

The families in most need who have had to go on to a benefit because they are now so poor also lose this critical payment that is supposed to protect their children from child poverty.

Getting rid of fixed hours of paid work took far too long and while it was essential in today's fragmented and precarious labour market, the fundamental requirement that the parents do not access any kind of benefit remains.

For example, when parents have to go on a benefit, a family with four children loses $87.50 a week, which explains why such families must rely on food parcels. Instead of a pittance of an extra $13.55m given to charities to buy the food families should be able to buy for themselves, the Government should do something meaningful and spend $0.5 billion per annum to give all families the full Working for Families.

This happens in more enlightened countries such as Australia, and it can and should be done immediately.

• Susan St John, CNZM, is an Associate Professor with Auckland Business School.