What is government doing to assist low income families?

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What is government doing to assist low income
families?

• QUALITY PUBLIC EDUCATION COALITION (QPEC)
• March 19th 2005
• Dr Susan St John
• Department of Economics
• University Auckland
• s.stjohn_at_auckland.ac.nz

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Why the poorest families struggle in the
education sector

• The benefits cuts of 1991
• Tax cuts of 1996
• Introduction of the Child Tax Credit,
• Lack of indexation of Family Support
• The explosion in housing costs
• Student loans and other debt
• Casualisation of low wage employment
• Social hazards such as drugs and gambling
• Time-fractured nature of family living.
• Invisibility of children in policy making

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Economic growth is not the answer
MSD 2003
(MSD, 2004)
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Doubling since 1996
Doubling since 1996, huge increase2003-2004
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Children below the unofficial poverty line (MSD,
The Social Report 2004)
Based on 60 of equivalised median income after
housing costs, MSD
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UNICEF report 2005
50 poverty line
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Whose done something about it?
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Is it all the fault of 9 long years under
National

• UNICEF 16.3 2000
• MSD 14.7 2005
• What has the government done?
• income related rents
• Minimum wages
• Working for families

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• Working for families is the biggest offensive
  in the war against child poverty in decades
• Helen Clark
• Using a poverty value measure of 60 per cent of
  median household income there is expected to be a
  30 per cent reduction in child poverty by
  2007/08.
• 
  Budget 2004

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The poorest of poor children are those in benefit
families- MSD

• 250,000 children on benefits
• MSD The social report 2004
• 300,000 children in poverty
• 176,000 with parents on benefits
• 122,000 with parents in work

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Working for Families- highlights

• 2005 Increases in Family Support 25/15
• 2006 In Work Payment, threshold for Family
  Support increases
• 2007 Extra 10 Family Support

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Working for families - low lights
Opportunistic behaviour Other agendas
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Neglect of family assistance

• From Post war security
• 1986 Family Support/ Family benefit
• 1991 Family Support
• 1996 Family Support and the Child Tax Credit
• 2005 Working for Families??

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Figure 2 Maximum per week real family
assistance(1-child family) 1986-2008 (2004)
Substantial real gains for in work families
from 2006
Loss of Special Benefit may leave some families
on benefits no worse off
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Problem with the In work Payment

• Replaces the Child Tax Credit
• Families get at least 15 more week
• Only applies where there are children
• Complex
• Hours worked required
• Discriminatory
• Sole parents
• Maori and PI
• Families in work get complex benefit top-ups
  from the state
• Hurts children when jobs are lost
• Or hours worked are not met

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Why does WFF do very little for the poorest
children?

• Primacy of work incentives over immediacy of
  ending child poverty
• Beliefs around whose work incentives are the most
  important
• Middle income parents
• Parents on benefits
• Multiple goals
• Core benefit restructuring
• Cuts to hardship provisions

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Why should child poverty be the focus?

• Child poverty damages now
• Public health approach
• Investment approach
• Rights approach
• Implications
• Reducing child poverty requires increasing income
  by real redistribution now
• then focus on dysfunction
• work follows does not lead
• accept some parents cant work
• Creating work incentives cant justify keeping
  families on benefits in poverty

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The irony of this budget
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High effective tax rates long income ranges

• A 4-child family on over 38,000
• Earns another 1000
• tax 330.0
• Loss of Family support 300.0
• ACC 12.2
• Student loan 100.0
• Retains only 257.8

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Conclusion

• WFF delivers a significant real redistribution to
  working families by 2006/8
• Restructuring benefits in 2005 has muddied the
  waters
• Those who fail to qualify for the IWP in 2006 are
  left further behind
• WFF is too little and too late to make
  significant impact on the poorest children.