Covid-19 payouts show disparity of the welfare system, advocates say

Sunday, 28 June 2020

Members of E Tū union are calling for the company to reinstate leave and reimburse the loss of wages for affected employees.

New Zealand's new Covid-19 income relief payment (CIRP) highlights how inadequate the regular benefit system is, says lobby group Income Equality Aotearoa NZ.

Another 4743 people signed up to the CIRP payment in the week ending June 19. It pays $490 a week for 12 weeks to full-time workers who lost their job because of Covid-19.

But Income Equality Aotearoa NZ spokesman Peter Malcolm said it highlighted that normal benefit amounts for people who needed income support were substantially below what was needed to live on.

“The JobSeeker amount for a single adult over 25 is $281 a week before tax, that’s just over $7.02 an hour, compared to $756 a week for someone on the minimum wage who gets $18.90 an hour.

* Income limit stopped 1000 benefit applications in April, data shows

* Coronavirus: Government defends unemployment payments, says it's considering 'social insurance'

'And now we have a two-tier system where people who have lost their job because of Covid-19 have access to a greater weekly amount of $490 a week with no tax,' he said.

Trevor McGlinchey is chief executive of New Zealand Council of Christian Social Services and a member of the Welfare Executive Advisory Group. He says benefits should be high enough to enable people to live with dignity.

The payouts for job losses due to Covid-19 also had fewer conditions attached. A household can earn up to $2000 a week before it is ineligible.

People on standard JobSeeker Support had to make daily choices between food, medicine, rent and feeding kids, Malcolm said.

“Rents and other housing costs take such a proportion of people’s incomes,' he said.

'I get tired of the argument that benefits encourage people not to get work ... when you're focussed on trying to feed your family your ability to focus on getting work is quite constrained,' says Trevor McGlinchey.

The Government's Welfare Expert Advisory Group (WEAG) had reported on this issue 18 months ago, but no action had been taken, he said.

WEAG member and chief executive of the New Zealand Council of Christian Social Services Trevor McGlinchey said the report had recommended benefits be raised by between 12 and 47 per cent.

Researcher Jess Berentson-Shaw says purpose of income support is to enable people to participate in society.

“[It] identified benefits were too low for people to live with any sense of dignity,' he said.

Malcolm said other findings from the report showed a single person receiving a benefit had a weekly deficit of between $130 and $170 a week, and sole parents with one child under two renting privately were short by $110. If there were three children, this went up to a deficit of $250 a week. For a couple receiving a benefit each and renting privately with two children, the deficit was around $350 a week.

McGlinchey said benefits had been cut by about 20 per cent in the early 90s and had never been topped up by any government since.

'Budget advisers will tell you most of these people are expert at budgeting, down to the last cent. It’s not their budgeting skills, it’s the level of income they have to live on.'

The more desperate people became the more likely they were to access the third-tier lending market and take on loans with high interest rates.

'I get tired of the argument that benefits encourage people not to get work. But I would say when you're focussed on trying to feed your family your ability to focus on getting work is quite constrained,' he said.

Researcher Jess Berentson-Shaw, of think tank The Workshop agreed the higher payments for the economic victims of Covid-19 were an acknowledgement from the Government of what people actually needed to live on.

'That does bring up for people the stark contrast. Why is it OK to have a system that does lock people into poverty the rest of the time?'

A strong and comprehensive benefit system was needed to unlock people from poverty, and the Government had done that for Covid-19.

'I think they just need to extend it,' she said.

The obsession with keeping benefits low and having people go into low paid 'crappy jobs', instead of work that would provide long-term career development showed a lack of respect and 'didn't see them as members of society,' she said.

Minister for Social Development Carmel Sepuloni said the Covid-19 payment was intended to be a short-term measure to address the unprecedented nature of the crisis.

'There is a growing number of New Zealanders who might not be eligible for a benefit, but need temporary support to get back on their feet and reduce flow-on effects such as not being able to meet their living costs. We know that they will be in a different labour market than they have faced before.

'As part of the Confidence and Supply Agreement between Labour and the Greens we committed to an overhaul of the welfare system. To help us achieve this we created the Welfare Expert Advisory Group, whose Terms of Reference included income adequacy. However we have already taken significant steps to improve incomes for New Zealanders. In our first 100 days, this Government introduced the Families Package to provide more support for low and middle income families.

'This is the biggest boost in household income in a decade for thousands of families. Changes through the Families Package resulted in improvements to Working for Families, a Best Start payment to help with the costs of children in their early years, a Winter Energy Payment to assist with heating costs over winter, extended paid parental leave, increased Accommodation Supplement and increased Orphan’s Benefit, Unsupported Child’s Benefit and Foster Care Allowance.

'In Budget 19 for the first time in New Zealand’s history we indexed main benefit increases to wages, removed the punitive Section 192 sanction that penalised sole parents and increased the abatement threshold so people on a benefit could keep more of what they earn.

'This year, along with increasing main benefits by $25 per week, we removed the hours test for the In-Work Tax Credit and doubled the Winter Energy Payment for 2020.

'I have never shied away from the fact that we have more to do in the long term to address income adequacy. We will continue our work to overhaul the welfare system to support the wellbeing of New Zealanders now and into the future.'