Benefits get boost from link to wages
Benefits will rise by $10 a week as the Government begins to boost welfare payments at the same rate as average wage growth.
The indexing of benefits to wage growth, first announced in Budget 2019 and due to begin in April, has been heralded by Prime Minister Jacinda Ardern as the biggest increase to the benefit in nine years, if one-off adjustments are excluded.
Yesterday, Ardern announced the first increase would have main benefits – which include jobseekers benefit, sole parent support, and supported living payments – rise by 3.09 per cent, or at most $10 per week.
Ardern’s announcement came a day before Statistics NZ was due to release the latest child poverty numbers, which will measure her Government’s success at lifting children out of poverty.
The Government has estimated its broader child poverty package, which includes the indexing of benefits, may lift up to 74,000 children above its designated poverty line. ‘‘It is more than any Government has done in decades to address child poverty,’’ Ardern said yesterday.
She said the change to benefit rates would have a sole parent receive $10.48 more each week, a single and disabled person $8.44 more each week, and an unemployed person over 25 would receive $6.28 more each week.
The Government has been criticised by welfare advocates, including the Children’s Commissioner,
for failing to significantly lift benefit levels by as much as 47 per cent, as recommended by the Welfare Expert Advisory Group. Yesterday, Ardern would neither rule out nor commit to further benefit increases, saying the Government could not ‘‘fix’’ welfare cuts made in the 1990s, in one budget.
‘‘You have seen the predictions around the books, we are in a tight fiscal situation and we also need to make sure we are ready to deal with things like Covid-19 and other issues that do come up,’’ she said.
When the measure was first announced, it was estimated the increase would cost $320.2 million over four years. The benefits it applies to currently cost roughly $4.7 billion each year.
Social Development Minister Carmel Sepuloni said 310,000 families would benefit from the 3 per cent increase. Formerly, the Government adjusted benefit levels to correspond to inflation – a 1.66 per cent rise this year.
Sepuloni said the income abatement threshold would also lift in April, meaning those on welfare could earn $115 a week before having their payments cut, instead of the current $100 a week.
This threshold will increase further over the next four years.
Auckland Action Against Poverty co-ordinator Ricardo Mene´ndez March said indexing benefits to wages was an important change but it ‘‘would mean very little to families that are struggling’’. ‘‘If the Government wants to stop people queuing at Work and Income for food grants because they cannot afford basic expenses, the most tangible thing it could do is increase baseline benefits,’’ Mene´ ndez March said.