Home truths about the tricky In-Work Tax Credit

Source: Child Poverty Action Group (CPAG)

There I was, Sole Parent Beneficiary, lolling on the couch with my low-quality beverage, savouring the luxury of my state-funded holiday, when I found out that simply by securing four to six extra hours of paid work, I could increase my family’s weekly income by $72 (on top of the income earned), through the In-Work Tax Credit (IWTC). Well, I was instantly jolted from my listless apathy into that fixed-term, casual job compatible with my current working and childcare arrangements that I’d been avoiding for weeks!

Obviously, that didn’t happen. I’m not sure which theoretical model is used to legitimise the policy practice of incentivising work through offering financial rewards, but I’m picking it involves rats and switches. Yet the idea that work has to be made more financially attractive is important, because it’s the argument used to justify the existing disadvantage between the children of working parents and kids of beneficiaries. In 2008 the Human Rights Review Tribunal found the IWTC discriminatory but it was justified then – and again in the 2013 High Court Appeal – because of the “legitimate objective” of incentivising beneficiaries into work. That disadvantage manifests as material hardship for some of our most vulnerable population. And that’s somehow ok, because it’s the government’s job to entice parents into paid work by making it more financially rewarding? I can’t see there being any arguments that could justify children’s material hardship, but I don’t believe that the IWTC is an incentive at all, let alone one that legitimates discrimination.

It’s a bit silly

The premise that the lure of additional income suffices as motivation is, well, exactly the same premise you use when you’re looking for a job. As a beneficiary, I was actively seeking work. As far as incentives go, the IWTC is a bit like extra fries.

Is it an incentive or a supplement?

If the income from work is not in itself an incentive, and needs to be topped up by the government to make it worth the effort, then that raises another question. If work isn’t enough on its own, then isn’t the IWTC functioning as a tool to ensure income adequacy? I hope not, because if it is, that means we’re discriminating against children whose income is already below an adequate level.

There’s a counter-incentive at work

If the primary justification for IRD rewarding families in paid work is that it creates an incentive then what is WINZ up to? If IRD is dangling this tantalising treat before your eyes, then WINZ must be hovering nearby like the waiter who clears your glass before you’ve finished your drink. When you’re on a benefit the more you work, the less your payments are. If extra financial reward for work is considered an incentive by IRD, then isn’t WINZ’s abatement scheme a deterrent? Time for a game of incentive-off. Let’s say you’re offered 20 hours a week of ongoing casual work. From a purely motivational point of view, you could take it, so IRD will reward you with fries and a few hours of tinny Split Enz on hold. But there’s a catch. You need to come off the benefit to receive the IWTC. That means that in the weeks you don’t get 20 hours of work (like when your kids are sick) there’s no help from IRD or WINZ support. The other option is just to have your work-free WINZ burger, saving you the scramble to find 20 hours of casual, subsidised childcare at short notice (which, by the way, you’re not eligible for until you’ve been guaranteed the work that you can’t commit to until you arrange the childcare).

There’s an assumption that you don’t want to work (or don’t work already)

One of the problems with the incentive-scenario above is that the main difference between those two weeks was the availability of work. The incentive (carrot/stick) rationale sits within the weary old narrative of “welfare dependency” that National has been doling out since the 1990s. It’s a tenacious story, perhaps because it so neatly packages complex, systemic factors into a simple cause and effect story, ie. lazy people need to get off the dole. It justifies sanctions and incentives to correct individual outcomes. There is no justification, or evidence, to support the assumption that every person receiving welfare support will continue to do so. Yet the incentive is applied across the board. The assumption was that I needed an incentive. I didn’t. I needed a job. In the meantime, my kids missed out, even though they were in no way responsible for a local shortage in permanent positions.

It’s simplistic

There are many complex, intersecting factors that contribute to a need for temporary or long-term income support – disability, childcare, transportation infrastructure, change in relationship status, local labour markets, mental health, addiction, early offending, geography, education, specialised careers. I had casual part-time work as a disability support worker with an awesome little girl who I had been supporting for four years. I was looking for permanent work but I’d just come off the Student Allowance, it was the summer school holidays (I have two kids with a shared care arrangement) and there wasn’t a single role related to my recent qualification for months.

The criteria for the incentive is hard to meet

Even if finding another part-time, flexible role had been possible, it would have been too much to risk coming off the benefit for casual work, which might fall below the 20-hour threshold.

All those extenuating factors that come into play when you’re a beneficiary with casual, part-time employment – which happens to be pretty much the only work you’ll be lucky enough to get while you are actively seeking permanent employment, or have children in your care – make it hard to continually meet that 20 hour per week target. Casual work is by its nature unreliable, and coming off the benefit leaves you without a safety net in the weeks that you can’t work 20 hours. It only took until March for me to find permanent part-time employment. I then had the choice of staying on the benefit, or moving off it to then qualify for the IWTC, which I did. It wasn’t an incentive – I already had the job – it was a bonus that came with a job that had regular hours.

It reinforces the nuclear family model

If I’d still been married, I would have received the IWTC, because between the two parents, we would have made it to the 30 hour threshold. Instead the kids’ dad received it, because he worked 20 hours, and I didn’t, because I couldn’t.

We don’t really know if it works

The “success” of the IWTC hasn’t been measured qualitatively, by any observed change in people’s willingness to take the work-bait, but instead quantitatively, by how many people left the benefit for paid work.

The argument is weak, the evidence is poor, and yet here we are, busily stocking the supply-end of the labour market while penalising the kids whose parents can’t find work right now. Our welfare should be based on justice, fairness, equality. It isn’t, as long as we have the discriminatory policy of the IWTC. We need to change this. It’s not the kids’ fault.

MIL OSI

New Child Poverty statistics will provide a sound baseline for reduction targets

Source: Child Poverty Action Group (CPAG)

Child Poverty Action Group (CPAG) is pleased to see Statistics New Zealand (SNZ) has been able to produce some sound baselines against which the Government can measure its progress in reducing Child Poverty.  ​

As CPAG has noted previously, the 2018 Household Economic Survey (HES) data was too limited a sample, and had other problems which has meant the Ministry of Social Development has not had confidence in the reported Child Poverty figures for the past two years. The new data has been compiled from a combination of the Household Economic Survey (HES) and administrative data (Integrated Data Infrastructure – IDI).

While this overcomes some of the problems it still needs to be recognised that the data is likely to underestimate the problem.

“The data based on the Household Economic Survey only captures those households who have a fixed address,” [1] says Associate Professor Susan St John, CPAG’s Economics spokesperson.

“The depth of the problem may be better understood if it incorporated more information about transient families who have been without a secure home.”

The first primary measure in the Child Poverty Reduction Act is the number of children living in households that have 50% of the equivalised median household income before housing costs (BHC). The new data show that 183,000 or 16.5% of all children live in households under this poverty line.

The second primary measure in the Act is the 50% After Housing Costs (AHC) fixed line measure which takes into consideration the huge impact housing costs have on low-income households. Using this measure, 254,000 children – nearly one-fifth of all children in Aotearoa – live in poverty.

Using the supplementary measures in the Act, 30% of all children lived in households that have less than 60% of the AHC equivalised median income, a total of 341,000 children. “Most worrying is that over half of these children – 174,000 – are living in very low-income situations, with household income falling below the 40% AHC line,” says St John.

The new statistics will provide the baseline for measuring changes over the next ten years that will test whether the Government’s Child Poverty Reduction targets are met. The targets include reducing the proportion of children in low income households (using the 50% BHC measure) from 16% of all children to 5%, reducing the number of children living with income under the 50% AHC measure from 23% to 10%, and those living in material hardship from 13% to 7%.

“The baseline poverty data does not include the impact of the Families Package implemented last year, as it is based on data collected from July 2017 to June 2018. The survey now in the field for 2018-19 will pick up some of the effects of increased spending on families and that will be reported on later this year. The full impact of the package won’t be clear until later in 2020,” says St John.  

“We urge the Government not to wait but to look more broadly at what the data is telling us now. Children living under the 40% AHC poverty line are likely to be living in families earning very low incomes from paid work or whose primary income is from a welfare benefit. These children are not helped nearly enough by the Families Package.”

CPAG reported on the impact of the Families Package and whether it would be sufficient to lift the worst-off children out of poverty in a 2018 paper.

“Because we know that the Families Package won’t lift the children under the 40% line up far enough, a broad range of other welfare changes is needed to help them, and we are looking to the Welfare Expert Advisory Group for their recommendations to improve these children’s lives,” says St John.

“We need an urgent response for these children and the opportunity to make their lives better is now.”

————————————————————–

[1]  The target population for the HES is New Zealand resident private households living in permanent dwellings. This means, for example, that those in institutions and those in non-permanent dwellings are not included. (https://www.msd.govt.nz/documents/about-msd-and-our-work/publications-resources/monitoring/household-income-report/2018/2018-household-incomes-in-new-zealand-report.doc)

MIL OSI

Measuring deprivation in New Zealand regions – a CPAG presentation series

Source: Child Poverty Action Group (CPAG)

Child Poverty Action Group (CPAG) and Associate Professor Dan Exeter are launching a series of discussion documents which look at the concentration and drivers of deprivation in regions across Aotearoa, using The New Zealand Index of Multiple Deprivation (IMD).

The IMD, produced by Dr Exeter and his team at the University of Auckland’s School of Population Health, is a set of tools for identifying and measuring concentrations of deprivation in New Zealand. It measures deprivation at a neighbourhood-level with populations as small as 500 in data zones that have been custom-designed to produce better small area information without losing information due to confidentiality or suppression issues.

If used widely, the IMD has the potential to inform a critical understanding of what systemic levers are needed to provide a better outlook for children and whanau in the most deprived areas, and to guide more efficient and appropriate distribution of resources.

The IMD comprises 28 indicators grouped into seven domains of deprivation: Employment, Income, Crime, Housing, Health, Education and Access to services, which may be used individually or in combination to explore the geography of deprivation and its association with a given health or social outcome.

In his presentations, which are being held in Nelson, Dunedin and Christchurch, Dr Exeter will discuss the development of the IMD, and demonstrate the different ways in which the IMD and its domains can be used to better understand the drivers of deprivation within each city’s region.

“The situation for people suffering the ill-effects of disadvantage isn’t going to get better any time soon, unless we get real about the causes of deprivation,” says Dr Exeter.

“The IMD’s strength is its ability to drill down to see which of the seven domains are driving deprivation in each region, because it varies from region to region.

“High rates of crime in one area may be significant while it may be poor health outcomes in another.”

The individual reports are intended to provide an overall understanding of how the IMD works along with an overview of each particular region. They also contain case studies to illustrate how the tool can be utilised for examining variations in the types of deprivation being experienced at a small neighbourhood area level.

“It is our hope that people who read the reports will realise the value of the IMD dataset and use them to guide solution-driven deprivation analysis for the region that they are concerned with,” says Dr Exeter.

The first of Dr Exeter’s presentations on regional deprivation data will be held in Nelson tomorrow, Tuesday March 26.

Further presentations will follow in Dunedin on April 2, and Christchurch on April 3. They are free to attend and media are warmly welcomed. For more information visit CPAG’s website.

The report “Deprivation in the Nelson Marlborough Region” is available for download here.

MIL OSI

Parents aren’t asking for the earth, just a safe, affordable place to call home

Source: Child Poverty Action Group (CPAG)

The latest announcement from Housing Minister Phil Twyford on the new Healthy Homes standards is really great news. The new standards will mean low-income families who are renting will get homes that are able to be heated more efficiently and are better safe-guarded against dampness. Anything to stop children getting sick and being hospitalised in winter because of poor housing conditions deserves encouragement and celebration.

But housing standards and the critical link between incomes and living standards are issues that aren’t mutually exclusive, and they must be considered and improved in tandem. Homes are far from affordable, and electricity is expensive.

When I was a young renter sans dependents, I shared a gorgeous 19th century Wellington villa with a bunch of flatmates. It was, as often such vintages often were, elevated and constructed with high stud ceilings; it featured its original kauri floors and wooden sash windows. With the kitchen and bathroom modernised and a recent exterior paint job it appeared in great shape.

In winter it was comparable to an icebox. The elevation protected it from dampness. But it didn’t stop condensation pouring through the windows, leaving puddles on the sills which were permanently laden with towels. There was no insulation, the fireplace was off limits, and the gas heater, mounted to the wall in the main living area, sent warm air to the loft bedroom and nowhere else. Running it constantly was ineffective and our power bill was hefty.

But I wasn’t a parent then. I shared with three other young single non-parents. We had the luxury of huddling in our (separate) beds with our respective heaters and electric blankets and DVD players all winter long without a care in the world, except a quibble over the power bill occasionally. Though we also had the luxury of four separate incomes to apportion parts of towards expenses.

Families on low-incomes don’t have any of those luxuries. If they are on a benefit, stretching the budget to manage winter expenses can be an impossibility. While the Winter Energy Payment has provided some relief, the paltry $30 or so a week only goes so far and it’s quickly consumed if there’s a rent increase. Families with children may end up in huddling in one room together, with the curtains closed and the heater on to save on power. Yes, it’s a surefire way of spreading illness and increasing moisture – but it’s a matter of keeping everyone warm when there’s no choice except for heating just one room at a time.

Late into my pregnancy with our first child my partner and I moved into what we thought would be an adequate family home, but soon the fresh lick of ceiling paint was peeling, exposing the mould damage beneath. The furniture in the room we intended for our baby absorbed moisture and furry mould grew on everything. I washed cabinets and drawers and walls weekly. We kept our son’s cot in our room the whole of his first year to avoid exposing him to the cold and damp.

Fortunately, for a short period of our tenancy we had a really good property manager, who had five children of her own and was no stranger to renting herself. When she realised the extent to which the house was damp she urged the owner to install a ventilation system. This helped remarkably – but not entirely – with the dampness but the mould spores remaining meant the house was still an unhealthy environment for adults, let alone babies and children.

And it was so hard to keep warm. Despite keeping a fire going daily, the cost of power was astonishing. We were stressed, sick frequently, and there was no money to move house.

During that time, I was able to access our full Working for Families (tax credits) entitlements, including an additional “In-work” payment of $72.50 a week – which was sufficient enough to support us with our huge power costs. Even though I wasn’t ‘working’ at that point (or not the kind of working that our policies consider most valuable) my partner’s hours of paid work made me somehow more deserving of this additional support than a sole mother at home raising her baby. If I were in the same situation nowadays, I’d also be eligible for an additional $60 a week since Labour instated a “Best Start” payment for every newborn in their first year, which the sole mum would also get, but I’d still be the better off – in terms of social supports – through receiving the significant “In-Work” tax credit amount of $72.50.

Judith Collins’ and the New Zealand Property Investors’ Association’s claims that the costs of implementing the new standards will simply be passed onto tenants just don’t stand up. Landlords will hike your rent up every six months if they please, because they’re entitled to – the law says so. I’m sorry to say, landlords – your personal concerns with profit and long-term goals don’t marry up to social responsibility.

My family and I subsequently rented, for two years, a home which had the chimney condemned before our first winter there. As our luck had it, the house was also uninsulated and freezing. The landlords – concerned for the wellbeing of our children and keen not to have us move out anytime soon – responded by installing a heat pump for us. Despite the thousands they outlaid, our rent stayed the same throughout our tenancy. In contrast, when we were raising small children on a single income, at our previous tenancy rent had increased by $80 a week from the beginning to the end of our lease. Collins’ warning is just a futile reminder that many investors have nothing but lining their own pockets as a priority (while some are good honest folk that have a social conscience).

So while I am really very pleased with the latest announcements on healthy homes, which will surely go a long way toward making rental homes healthier for tenants, including children and babies, there are still serious concerns that remain unattended. Inadequacy of family income, including retaining the discriminatory criteria for the In-Work tax credit, tenancy law that is weighted in landlords’ favour, a lack of affordable homes and rising prices – all of these things must be addressed urgently.

MIL OSI

CPAG welcomes move to qualified in-home early childcare providers

Source: Child Poverty Action Group (CPAG)

Child Poverty Action Group (CPAG) welcomes the move by the Ministry of Education towards more professional in-home early childhood care and education (ECCE), ensuring all children in ECCE environments are accessing high quality, culturally relevant, consistent and safe educational opportunities.

Dr Jenny Ritchie, Associate Professor in the School of Education at Victoria University of Wellington, and spokesperson for CPAG agrees there is a need for qualifications for this “largely overlooked but burgeoning early childhood workforce”, considering the growing demand. But quality provision can be assured only by effective resourcing, and to date the ECCE sector has suffered chronic underfunding.

“We agree with NZEI that this is an important and overdue move, and that alongside the requirement for qualified educators, the Government must ramp up its funding to ensure that the sector is adequately resourced to provide high quality, culturally responsive services for all children, especially those affected by disadvantage, disability or who may have special learning needs,” says Dr Ritchie.

“It is vital that ERO is resourced to be able to conduct appropriate evaluations of these services. Home-based carers should be supported to continue their learning beyond the initial level four qualification, to gain a degree level qualification. They should also be linked into community hubs and provided with much greater support than a one hour per month visit from their agency.”

CPAG has been concerned that previous policy seriously undermined the value of parents providing care for their children in their early years.

“Many beneficiary families pressured to put their children into care may have opted for home-based services with an unqualified carer, as this may have been local and accessible. However, this means that their child was then being cared for by someone other than their parent, for no particular benefit and quite possibly to the child’s detriment,” says Dr Ritchie.

Dr Andrew Gibbons of AUT, also supports the move to qualified in-home carers. This aligns with the draft Early Learning Strategic Plan, which aims to ensure that all families/whānau have access to high quality ECCE provision which is responsive to diverse learning needs and cultural backgrounds.

“Its essential the opportunity is not missed to re-evaluate current teacher education to build more innovative qualification pathways, which take seriously the integration of well-being and education within home and centre settings, including looking at how different cultural and philosophical strategies can enhance learning and well-being,” says Dr Gibbons.

Dr Gibbons also hopes that more quality in-home services will reduce the burden on centres with waiting lists, and may provide families/whānau with local options that do not require them to travel extensively.

MIL OSI

CPAG welcomes move to qualified in-home carers

Source: Child Poverty Action Group (CPAG)

Child Poverty Action Group (CPAG) welcomes the move by the Ministry of Education towards more professional in-home early childhood care and education (ECCE), ensuring all children in ECCE environments are accessing high quality, culturally relevant, consistent and safe educational opportunities.

Dr Jenny Ritchie, Associate Professor in the School of Education at Victoria University of Wellington, and spokesperson for CPAG agrees there is a need for qualifications for this “largely overlooked but burgeoning early childhood workforce”, considering the growing demand. But quality provision can be assured only by effective resourcing, and to date the ECCE sector has suffered chronic underfunding.

“We agree with NZEI that this is an important and overdue move, and that alongside the requirement for qualified educators, the Government must ramp up its funding to ensure that the sector is adequately resourced to provide high quality, culturally responsive services for all children, especially those affected by disadvantage, disability or who may have special learning needs,” says Dr Ritchie.

“It is vital that ERO is resourced to be able to conduct appropriate evaluations of these services. Home-based carers should be supported to continue their learning beyond the initial level four qualification, to gain a degree level qualification. They should also be linked into community hubs and provided with much greater support than a one hour per month visit from their agency.”

CPAG has been concerned that previous policy seriously undermined the value of parents providing care for their children in their early years.

“Many beneficiary families pressured to put their children into care may have opted for home-based services with an unqualified carer, as this may have been local and accessible. However, this means that their child was then being cared for by someone other than their parent, for no particular benefit and quite possibly to the child’s detriment,” says Dr Ritchie.

Dr Andrew Gibbons of AUT, also supports the move to qualified in-home carers. This aligns with the draft Early Learning Strategic Plan, which aims to ensure that all families/whānau have access to high quality ECCE provision which is responsive to diverse learning needs and cultural backgrounds.

“Its essential the opportunity is not missed to re-evaluate current teacher education to build more innovative qualification pathways, which take seriously the integration of well-being and education within home and centre settings, including looking at how different cultural and philosophical strategies can enhance learning and well-being,” says Dr Gibbons.

Dr Gibbons also hopes that more quality in-home services will reduce the burden on centres with waiting lists, and may provide families/whānau with local options that do not require them to travel extensively.

MIL OSI

Children’s voices denied in Select Committee debacle

Source: Child Poverty Action Group (CPAG)

Child Poverty Action Group (CPAG) believes that National’s attempt to thwart Finance and Expenditure Select Committee submission hearings on the Budget Policy Statement last week has serious implications for the democratic process.

“On this particular occasion, representation for children, people affected by disability, and those facing disadvantage was denied,” says Associate Professor Susan St John, CPAG’s Economics Spokesperson.

“There are all too few opportunities to give a voice to those who may be unable to directly convey concerns about serious matters that affect their lives.”

Dr St John says that while CPAG was presenting on many of the same issues that have been brought to the Select Committee in the past, this year was important because there are new opportunities for being listened to now that the Government is committed to a well-being budget and the priority of reducing child poverty.  

“CPAG would like the government to honour its commitment to the well-being of the worst-off children with policies that go well beyond recent lifts to family incomes through changes to Working for Families (WFF) and Accommodation Supplement increases.

CPAG says investing in children’s wellbeing requires more substantive and enduring changes than have been implemented to date. These changes must be timely, and families should not have to wait a long time as they did with the overdue Families Package.

“Lifting the income of those on core benefits by around 30%, including the adding of the child tax credits together so that the worst off get an extra $72.50 a week should be an immediate response to unacceptable levels of family poverty,” says St John.

The harmful 5% cumulative inflation rule still applies to WFF. This disadvantages low-income families in times of low inflation and has no justification except as a cost-saving measure.  Treasury’s forecasts for inflation indicate that there won’t be another adjustment until April 2022.

“As well, the recent increase to abatement rates for WFF have reduced the chances that a low-income family in paid work, who earns a bit more, has to get ahead,” says St John.

“A family may find earning over the new threshold of $42700 for WFF may not be worthwhile after tax and abatements, especially if they are also getting the Accommodation Supplement. They could lose 67.50% of those extra earnings. If they are repaying a student loan this could be nearly 80%. Once their income is over $48,000 they may lose 92% of extra income because of the higher tax rate. For example, an extra $5000 might mean they are only $400 better off at the end of the year after working harder to get ahead.”

“It is simply false economics,” Says St John.

CPAG is says the decision to continue contributions to the NZ Super fund when poverty for children is so far from being solved is also highly questionable.

“Many of working age are paying the taxes both for NZ Super today and for their own NZ Super later – if they are lucky to live that long. It is more prudent for an ageing population to invest in the wellbeing of the young today.”

To read CPAG’s full submission to the Finance and Expenditure Committee on the Budget Policy Statement 2019, download it here.

MIL OSI

State of the Nation report shows little improvement for children

Source: Child Poverty Action Group (CPAG)

Child Poverty Action Group (CPAG) welcomes the The Salvation Army’s annual State of the Nation report “Are You Well? Are We Safe?” released today, which provides an overview of how New Zealand is doing for the wellbeing of its citizens. The report has a particular focus on children, including comments on child poverty, care and protection as well as educational achievement.

The latest report shows incremental policy changes over the past few years have done little toward providing the substantial improvements which current and future generations of children need, to have equitable opportunities and to sustain good outcomes. In particular there are still large gaps for Māori children who are disproportionately represented across multiple statistics, including youth offending, education, and those in state care, compared to non-Māori.

CPAG Co-Convenor Janfrie Wakim says, “It seems clear that there have been no real successes in ameliorating the social inequities and associated health issues that are experienced by families and whānau, and it is critical that a more radical approach is needed to address reform of welfare and justice systems as well as education in Aotearoa.

“Changes need to be robust enough to have longevity, or they risk fragility and failure.”

CPAG says it is vastly concerning to see there been little in the way of change over the past four years in the nature and extent of adult violence toward children, while the number of children in state care has reached the highest ever recorded.

The increased number of children in care is only partially explained by the extension of the age of care from 17 to 18 years.

“It’s critical that we hear from Oranga Tamariki why there should be such an increase,” says Wakim.

“Is it due to changing operational priorities or increased levels of neglect and abuse of children, and are there sufficient resources within the service providers to meet the need?”

The Salvation Army report highlights consistently wide gaps between Maori and non-Maori in terms of social outcomes, a concern highlighted by the United Nations in the recent Universal Periodic Review of how New Zealand is performing on human rights issues. The UN draft outcomes report included a recommendation that New Zealand should “continue to work to enhance the rights of Māori and other indigenous minority groups in New Zealand, and provide increased rehabilitative support for Māori prisoners”.

CPAG says that as a Nation, Aotearoa should be working hard to close these gaps completely over the next 10 years.

New minimum wage legislation, the Winter Energy Payment and the Families Package have been helpful to many who have low incomes, and the report notes a slight reduction in income inequality. However, the picture is uneven, as the reduced food bank demand outcome reported is for the Salvation Army alone while other charities, such as the Auckland City Mission, report figures that show demand increasing.

“While things may have improved for those on low incomes in paid work, little has changed for people who have need of a benefit, or for their children,” says Wakim.

“The Government has placed a commendable focus on the interests of low-income working families, through recent increases to the Working for Families maximum payment threshold and the minimum wage. But many of our very worst-off children – those in families whose income is primarily from benefits, remain in severe hardship.”

CPAG believes a meaningful reduction in child poverty rates is not attainable unless the harmful inadequacy of benefit levels is addressed, and the application of harmful sanctions is abolished.

“Budget 2019 should prioritise at least a 20 per cent increase in all core benefits, and a removal of the paid work criteria from the portion of Working for Families that children supported by benefits are currently denied,” says Wakim.

MIL OSI

Back-to-school costs: A looming spiral of debt

Source: Child Poverty Action Group (CPAG)

It’s my daughter’s first day at intermediate and my stomach is in knots. I know she’ll be ok. She knows how to slap on a fake-it-till-you-make-it grin and step out into the world. But this tactic isn’t going to work for me.

I’ve sourced second-hand uniform items, I’ve been donated stationery items and I’m still wracked with anxiety at somehow having to pay several hundred dollars for her uniform, shoes, fees and activities. And let’s not even talk about Bring Your Own Device! At this point I’m reminded of that fortunately-unfortunately campfire game. Fortunately, her dad will pay half of these costs. Unfortunately, her brother is going on school camp this year, which will add another $170 to his school costs. Fortunately, he doesn’t want to play sport this term. Unfortunately, his school bag just broke. This is the way of it, of course, single parents on low incomes are always treading water. The problem is that when we start the year facing several hundred dollars of costs, well, it’s almost impossible to keep your head up.

So I was relieved when I saw the words “we may be able to help with back to school costs” on the Work and Income website the other day. I clicked on it and my smile turned wry. This “help” is a loan. I meet the income test for this loan, but there is a sole parent asset limit of $1,794.51. Aside from being an enigmatically arbitrary number (that fifty one cents!), that amount is a paltry savings buffer for a sole parent. All you need is your car to break down or emergency dental treatment, and that’s it. You’re down to absolutely nothing. And when you’re destitute, debt is the last thing you can can afford. So, thanks but no thanks.

I’m one of the lucky ones. My mum is helping me out this year. It takes a village to pay for a child. But wait, isn’t that what we’re already doing in New Zealand? Isn’t our compulsory education supposed to be free? It strikes me that what I’m dealing with here is a struggle to find an individual solution to a collective problem. National MP Nicola Willis recently suggested lengthening the school term as a solution to parents’ struggle to fund/find childcare over the summer holidays. Putting aside the question of how effective her solution might be, I want to acknowledge that at least she’s recognised the possibility of a broad solution. I just think her question needs a bit of reframing. Because the “problem” of the cost of childcare or schooling can be taken out of this deficit model. The cost of going back to school isn’t just my “problem”, the way affordable childcare isn’t just my “problem”. This isn’t about keeping parents working or staving off the spectre of debt. This is about how we collectively find ways to give our kids what they need to thrive. Education is a social cost because we are all investing in our shared prosperity.

I asked my kids what they thought the cost of going to school should be. “Well, the thing is,” said my nine-year-old with his characteristic sagacity, “that money for books and shoes and tablets … It doesn’t go to the school.” Which is a good point. And begs the question of why we are willing to fund our MPs’ travel allowances, but not our kids’ stationery. Not to mention that if school costs were funded by taxpayers, I’d be very surprised if my daughter’s school could get away with charging $75 for a hideous pair of tartan skorts without the national media furore that it deserves.

The question is, how can we save low-income families from the looming spiral of debt caused by school costs? One answer to this question could be something like the Back to School Bonus Australia phased out in 2016. Yet any targeted grant, like Work and Income’s loan scheme, is individualised poverty stop-gapping. The thing is, every child in Aotearoa should be able to start their school year with the books, clothes and equipment they need. We can answer the same question by asking another one. We can ask how we can give our kids what they need to flourish at school. How can we make sure they all have what they need to be able to learn well, for their own future and our collective future growth? How can we can support the wellbeing of all New Zealand children so their futures are open to possibilities?

MIL OSI

The recovery phase of Christmas – is there really such a thing?

Source: Child Poverty Action Group (CPAG)

There’s a meme circulating Facebook that expresses the anguish of Christmas being finally over … only to have kids’ birthdays to contend with in January. As far as I can tell, it’s widespread and resonates deeply for parents feeling the pinch of having to keep their pockets open and continuously flowing during what’s already an expensive time of year. That’s after having met all the expectations of extended family – who brings what to the Christmas table, who’s buying what for whom. Doubtlessly, Christmas is a bittersweet time of year for many families who simply don’t have the kind of cash flow to meet the endless costs. Forthcoming New Year’s celebrations are tinged with the pangs of additional outgoings on credit cards and other debt repayments. And then there’s back-to-school preparation.

The meme doesn’t simply imply a lack of want or a general Scrooge McDuck attitude to spending. Everyone wants the very best for their children, and wants them to enjoy the holiday like the ‘other kids’ do, and they also feel a strong pull to ‘fit in’ with other family members. They are also loaded with guilt for having January kids’ birthdays overshadowed by the hype of Christmas, when compared to the children whose birthdays are mid-year. Neither should the meme be translated as about the financial burden of parenthood, or invite speculation as to employment status. Let’s be clear. Christmas is expensive and stressful for everyone. But it’s so much more stressful if you’re struggling to pay rent, and not sure if there’s going to be money enough for grocery shopping next week.

While meeting day-to-day costs on a modest income is hard enough, the pressure of other continually increasing costs of living makes Christmas, holidays and birthdays thereafter a matter of sheer anxiety for low-income parents. Take housing, for example, arguably one of the biggest costs families face. Even a two-bedroom unit in West Auckland costs in the range of $400 to $500 per week, and that’s at the lower end of the scale. Even without children, people on lower-than-average incomes are being financially debilitated by their housing costs. Our plentiful Aotearoa is fast taking a backward slide into the class-based society of yesteryear where churches and charities took care of the needy. But as costs rise faster than incomes – especially for those in the lowest income brackets, more people are sliding into that “needy” category. In the week before Christmas, the Auckland City Mission gave out more than 12000 food parcels and presents to those who simply could not afford to survive over the period, let alone buy gifts for children. Most of the people lining up before doors opened for service were mothers with children. Many of whom had some form of employment. Many lacked a permanent home. Community Facebook pages were also awash with cries for help.

Doing Christmas ‘on the cheap’ is not as easy as many suggest it is, and often even with the best of intentions those who try still end up spending more than they can afford, potentially having to fall back onto credit to do so. Even preparing homemade gifts for the hordes comes with a significant outlay. And, birthdays in January aside, there are further costs associated with having extended family and other children stay over the holiday, expensive school holiday programmes, holiday entertainment, additional food, the list goes on. There may be unpaid time off work if holiday pay has been exhausted and work has shut down, and parents may be on casual contracts that don’t pay over the break.

Come January, recovery from the cost of Christmas is nowhere in sight, and there are the back-to-school costs to contend with. As is usual, there are school fees expected to be paid (sometimes at a discounted rate for early birds, putting pressure on to reduce the overall cost but to pay faster). Even though the ‘fees’ are technically a ‘donation’, there are often certain privileges that children may not have access to unless fees are paid, such as school camps and extra-curricular activities. Stationery gets more costly every year, and as children get older, there are increased expectations from schools for parents to provide more expensive items such as digital devices – extra costs that are becoming the norm. Uniforms, new bags, drink bottles, lunch boxes to replace last years worn out ones. Another long and costly list.

Families could really use a bit of help here.

In the colder season, there’s now a Winter Energy Payment (WEP), the purpose of which is to provide some people extra help with the additional costs of keeping the home warm over winter. And it is indeed a worthwhile initiative from the Labour-led coalition Government. People on benefits (including many on pensions) often struggle during this time, and for those eligible recipients, the extra $30 or so is welcomed. But it doesn’t go far, and it’s sorely missed when it ends all too quickly. For parents however, the bell-curve of cost increases is not as black and white as the power bill in wintertime. Costs escalate at all other times of the year, costs that are often are met by credit cards and loans from high-interest fringe lenders that create another layer of weekly outgoings, often lasting into subsequent years, compounding with each round of borrowing. Furthermore, struggling working families who miss out on additional supports, such as the narrowly-targeted WEP, see no respite even in winter.

There is logic in the WEP and yet none. Especially when some wealthier pensioners get it automatically, and while we are still waiting for a systemic response to the burden of poverty that is afflicting more and more families with children, whose costs continue to rise throughout the year.

This time last year, the Government flipped a switch and gave eligible tertiary students an extra $50 a week. It’s time they flipped a switch for children, on the so-called “In-Work” tax credit, and gave low-income beneficiary families and those who are in paid work but don’t meet the minimum hours criteria an additional $72.50 per week, to give them the real boost they need, for their children, to get through these evermore costly times.

Image credit: rawpixel

MIL OSI