Everyone’s a beneficiary but the poor are still poor
The Household Economic Survey revealed 29 per cent of households receive government benefits and transfers, excluding superannuation.
According to the survey, ‘‘18.8 per cent of households earning more than $150,991, and 24 per cent of those earning between $100,001 and $150,000’’ are receiving some type of financial assistance.
How did we come to the point where households earning more than $100k – and worse, more than $150k – are beneficiaries? Where
did we, as a society, go wrong?
The Work and Income New Zealand website states a beneficiary is ‘‘a person who has been granted a benefit and also includes their partner if some or all of that benefit is payable to them’’.
A benefit is ‘‘financial assistance from the government’’.
If you receive any form of financial assistance from the government, then you are a beneficiary – this includes student allowances, superannuation payments, tax credits and so on.
I have debated colleagues about the term ‘‘beneficiary’’. Some think ‘‘beneficiary’’ shouldn’t be used to label fulltime workers who receive Working for Families tax credits, or superannuitants.
Some have argued we should stop using the term because it dehumanises members of our communities who are marginalised – that is a fair point. But therein lies the problem: households earning more than $100k are not marginalised. A household earning more than $100k should not be receiving a benefit and in no way whatsoever should a household earning $150k receive a benefit.
It is comical that 18.8 per cent of households earning more than $150,991 are beneficiaries.
Yes, there could be valid reasons for the odd high-income household to receive a benefit – for example, caring for a child with a disability or health condition is expensive.
Those households are not the norm. However, it seems we have strayed from the purpose of the social welfare system, which, if we accept the mission of the Social Security Act 1938, was established to ‘‘safeguard the people of New Zealand from disabilities arising from age, sickness, widowhood, orphanhood, unemployment, or other exceptional conditions’’.
The expansion of the welfare system has meant there are 60 different types of benefits and payments available.
The fact that we have allowed relatively high-income households to become beneficiaries means we have normalised middle-class and upper middle-class welfare.
I too was a beneficiary until earlier this month. My wife and I earn comfortable salaries as fulltime academics in the university system but we became beneficiaries when we had a baby last year.
The Government’s Best Start ‘‘baby bonus’’ programme ensured the Inland Revenue Department (IRD) deposited $60 into our joint bank account every week for an entire year. The ‘‘baby bonus’’ did not take our incomes into consideration at all. The IRD website says: ‘‘The first year of Best Start is not income-tested so any family which meets the criteria can get the payment’’.
I have to admit that when the Best Start payments stopped recently because our daughter turned 1, I missed the IRD deposits into my bank account because money usually flows only one way in the IRD relationship.
If we accept the premise of welfare programmes such as the Best Start ‘‘baby bonus’’, which was established with good intentions, then such benefits should be based on need rather than handed out to all and sundry.
According to recent data from Statistics NZ, one in four children live in poverty after housing costs are deducted. Surely those children need more help than high-income earning households?
I, like perhaps many others, would be happy to pay more tax dollars if it was for those who are actually in poverty – yes, I know it is relative – but not to the $100k club. The expansion of the welfare system seems to have done nothing to alleviate the hardship of those it was designed for.
The fact that 18.8 per cent of households earning more than $150,991, and 24 per cent of those earning between $100,001 and $150,000 are now beneficiaries, means we desperately need a courageous overhaul of the welfare system. But who is willing to do something about it?
Steve Elers is a senior lecturer at Massey University in Palmerston North. This is the first of his weekly columns for the Standard, tackling social and cultural issues pertinent to Manawatu¯ and New Zealand. Follow on Twitter @Steveelers