Income limit stopped 1000 benefit applications in April, data shows

Wednesday, 27 May 2020

Many people have found themselves out of work - or their income significantly reduced - due to Covid-19.

Just over 1000 applications for JobSeeker Support were turned down in April because the applicant, or their partner, earned too much money.

The total of declined applications was made up of 414 from people who indicated they had a partner and 605 who claimed as a single person. All were rejected because they earned more than the household income limit.

JobSeeker support is paid at a rate of $250 a week after tax for single people.

But the amount that is paid out reduces as soon as an applicant and their partner, if they have one, earn a combined $90 a week. By the time a single person earns $449 a week before tax, they qualify for no assistance. A married couple can earn up to $664 or $702 if they have children.

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It is likely that virtually all of those rejected applicants would qualify for the new Covid Income Relief Payment, if they were made redundant recently enough.

The Covid income payment, of $490 a week for 12 weeks for people made redundant after March 1, can be paid if someone has a partner earning up to $2000, and even if they themselves are receiving the pension.

Kay Brereton, a beneficiary advocate and a member of the Welfare Expert Advisory Group, said the 1000 applicants declined would probably have been shocked they were not entitled to support.

'People aren't aware of how restrictive the benefit rules are until they ask for help.'

She said it was possible some of the declined single people had received the wage subsidy. 'In some cases it was paid in a lump sum for people and when that happened people didn't realise they had to use it over the next 12 weeks.'

Some applicants have been upset at the relationship test for the benefit, and called for it to be assessed on an individual basis.

In a statement, the ministry said considering eligibility with regard to family circumstances and relationship status was a longstanding principle that underpinned New Zealand social security legislation.

“It is based on the notion that for a person who is married, or living in the nature of marriage, spouses and de facto partners owe primary obligations of support to each other, and that the state's support obligations are secondary.

“Accordingly, legislation requires that Work and Income take all income received by either spouse or de facto partner into account when assessing the rate of benefit. Unfortunately, there is no discretion to waive income tests for benefits.”

Susan St John, associate professor at the University of Auckland, said the income test was very harsh and there was a lack of clarity on what was a relationship in the nature of marriage - the rule by which another person's earnings would be counted towards an applicant's total household income.

'This is a large number of people turned down and there will be an equally or greater number of people who don't apply because of the rules. The contrast with the Covid payment is bizarre, divisive and cruel.

'I was talking to someone this morning who was unemployed before March 1 and has not got employment since because of Covid -- he would not be eligible for this new payment and misses out on the JobSeeker because his partner has a small income - only enough for herself. '

Research Jess Berentson-Shaw said the abatement rate for JobSeeker was so low that the system seemed designed to do everything it could not to support people sufficiently. It was not based on the reality of what it cost to live, she said.

Berentson-Shaw said the Government needed to offer the same 12-week $490 payment to people who were already on the benefit.

The Covid income relief payment was a good policy because it helped people withstand a financial hit and continue participating in society, she said. “What it says is we don’t want you to be pushed into poverty but we need to do that for other people.”

Twelve weeks in poverty would be enough to spiral people into debt they could not get out of for the rest of their lives, she said.

A spokeswoman for Social Development Minister Carmel Sepuloni earlier said entitlement to most benefits and social assistance was reliant on the 'couple' unit of assessment.

“Moving to an individual unit of entitlement would be very complex however it is something that is in our medium to long-term work programme.”

Brereton said the Welfare Expert Advisory Group had considered whether benefits should be 'individualised' so that a partner's income was considered, but decided that was an expensive proposition.

Instead, it recommended a significantly higher threshold for a partner's income.