Family benefits set to hit highest in 37 years
Welfare benefits for families with children are set to rise to their highest rates in real terms for at least 37 years, as the new Labour Government acts against child poverty.
A Herald on Sunday analysis of the family packages offered by Labour and National in the election has found both parties would have finally restored the real value of benefits to where they were before the 1991 benefit cuts.
Children’s Commissioner Judge Andrew Becroft is now calling for a formal cross-party accord, similar to the 1993 superannuation accord, to commit to long-term targets to reduce child poverty based on the promises both parties have made.
“It would be terrific for New Zealand children if the issue of child wellbeing was taken out of politics.”
Becroft was “ready, willing and available” to broker cross-party talks if asked.
The number of children in poverty, measured by those in households earning below half the median net household income after housing costs, more than doubled from 7 per cent in 1990 to 17 per cent in 1992, and was still 17 per cent last year.
Beneficiaries’ incomes have been raised in real terms twice since the 1991 benefit cuts — by Michael Cullen’s Working for Families package in 2005, and by Bill English’s $25-a-week increase in all benefits for children from April last year.
But current benefits and family tax credits for a sole parent with two children under 12 are still about $30 a week below what they were before the 1991 cuts in real terms.
On top of that, housing costs have doubled to a half of after-tax incomes of the poorest fifth of working-age households since the late 1980s.
National’s tax cuts package in its 2017 Budget would have lifted family tax credits for a sole parent with two children under 12 by $36 a week from next April, finally surpassing pre-1991 levels for the first time.
Labour has said it will cancel the tax cuts and use the money partly to add another $11 to the family tax credit for a first child on top of National’s $36 increase, and pay all beneficiaries a $700 winter energy payment.
This means that sole parent beneficiaries with two children under 12 will get more in real terms than at any time since at least 1980.
However benefits are still much lower relative to average wages than in the 1980s, because benefits have been indexed to consumer prices which have risen less than wages.
And that’s before allowing for housing costs. Both parties have promised identical increases in accommodation supplements from next April that will only partly ease the pain.
Prime Minister Jacinda Ardern has personally taken a new portfolio of Minister for Child Poverty Reduction and promised a bill to set child poverty reduction targets within her first 100 days in office — by February 2.
National opposed setting targets while in Government, but English said in a televised debate with Ardern on September 4 that his 2017 Budget would lift 50,000 children above the poverty line and added: “If we can get elected, within two or three years we can have a crack at the next 50,000 children, getting them out of poverty.”
An end to child poverty? p20-21