Carrot attack to get those lazy sole parents working

By   /   May 26, 2015  /   16 Comments

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The new work requirements intensify the control and surveillance. There is no appreciation that young mothers on benefits are time poor. Worryingly there will be more and more bureaucratic interventions in their lives, more meetings and more hassles and threats of or actual sanctions.

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Trust the government to sneak in the word ‘working’ in its budget title   “A Plan that’s working”. This tells us what is really at the heart of this package: not children’s needs, not child poverty, not poor beneficiaries but a continuance of the ‘relentless focus on paid work’.

Enough of the praise.  While politicians may have opened their eyes for the first time to glimpse the social disaster in our midst, this package offers no protections for 21st century uncertainties. It  gives no poor child a cent more until 2016, leaves out vast swathes of the poor; ignores the social deficit and fails to grapple with any of the structural issues in welfare or tax credits.

After months of detailed finicky tinkering  the government produced 3 main sources of income increases (but not until 2016) to address child poverty;

  • $25  per week increase in benefits
  • $12.50 per week increase in the In Work Tax Credit
  • $12 increase in the Minimum Family Tax Credit.

First the benefit increase. While it is the first time that benefits have increased by more than inflation, they were cut in real terms in 1991 and many on benefits had then cut back again in 2005 when Working for Families introduced. Remember too they are adult benefits and the increase is more than needed by all adults on benefits not just those with children. While the sole parent payment is more than the single rate of Job Seekers, its higher rate reflects that being a sole parent is more like being an invalid than being a single unemployed person. What I find most distasteful is that in one fell swoop they have reversed the tiny bit of rational thinking to come out of the direction of welfare reforms in 2005 that saw the removal of the child component from the benefit rates themselves. Numbers and ages of children are much better reflected by a per child, per week, payment and Working for Families was supposed to do this.

Thus Working for Families was  geared to meet the needs of children; welfare benefits the needs of the adults. Re-introducing a family element in the adult benefit rate is a very poor way to help children. For example in a 4-child 2-parent family the $25 has to be shared among 6 people.

Figures produced by Jonathan Boston and Simon Chapple shows how woeful the $25 is for families on benefits. To reach the lowest 50% after housing costs poverty line, a couple with 2 children requires $184 more and $286 per week more to reach the 60% line. It is also clear that many beneficiaries with children will get far less than $25 once there have been offsets to the Accommodation Supplement, income-related rents, Temporary Additional Support and the extra costs of more work demands.

There is no free lunch, not even one that doesn’t get eaten until next year. The work requirements of 20 hours for mothers whose youngest is 3 is social engineering at its worst. It means a huge commitment to expensive daycare.  Forget it being 20 hours free that is a sorry myth. Too much time in poor quality childcare or simply when the child is not ready, is not in the interest of the child or mother.  The government wants its pound of flesh even when jobs markets that are far from buoyant and fails to see that mothers are already working taking care of their own young children and are capable of deciding for themselves what is appropriate or not for their child.

Community Law Christchurch have just written a 200 page report confirming how oppressive WINZ is for those on benefits.  Access to Justice for Beneficiaries says:

  • ..Poverty and inadequacy of income is the main problem for people on benefits.
  • ..There is an inherent imbalance of power between beneficiaries and the government department that makes decisions about their entitlements at both the institutional and individual case manager levels.

The new work requirements intensify the control and surveillance.  There is no appreciation that young mothers on benefits are time poor.  Worryingly there will be more and more bureaucratic interventions in their lives, more meetings and more hassles and threats of or actual sanctions.

Lets see what is behind the trumpeted new found generosity for so called ‘ working’  families. The $12.50 for the In Work tax Credit is just the inflation adjustment that families ought to have had since 2006. The other $12 extra per week than the very lowest income families may get is  very ill-explained in the budget.

The game plan is to use a carrot to move sole mothers off the benefit.  But at what cost?

Mothers on Sole Parent Support who work 20 hours at the minimum wage earn $295 gross. But how disheartening for them because every dollar earned over $200 a week produces a loss of close to a dollar, or over a dollar when there is a student loan to repay. That is, earning the last $95 dollars ie working the last 6.4 hours can actually make them worse-off after tax and benefits loss.

The situation can be even worse for couples on the Jobseeker or Supported living payment who begin to lose their combined benefit from just $80 between them.

The Government is effectively telling the sole parent who achieves 20 hours paid work  to leave the benefit system. As she can’t live on just $295 gross a week she will be topped up, with another payment called the Minimum Family Tax Credit (MTFC), to net $23,036 (up by another  $624 from 1 April 2016). She can also get the In Work Tax Credit.

Most people have dosed off by now but stay with it, this is important. Only 4000 families are expected to get up to the $12 extra per week from the MFTC.  Yes, that is right. The third trumpeted part of the budget changes delivers practically nothing and despite the hype will cost the government just $1.8 million per annum.

Those who do go off a benefit and onto this very weird tax credit will find life is much less secure and the incentives are utterly perverse. She will lose the MFTC dollar for dollar if she has a pay rise or extra, earned income.  That is, she faces a  whopping 100% effective marginal tax rate. So much for work incentives.

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Ironically, the State may pay her more on the MFTC and IWTC than if she remained on a part benefit, but her situation becomes far more precarious.  She is only entitled to the MFTC and the IWTC so long as she maintains 20 hours per week. The kids get sick, or there is a downturn, she loses the security of the guaranteed income and will have to fight her way back onto a benefit. Any overpayments of the tax credits will have to be repaid. Her case manager/faceless private WINZ contracted agent will not be happy if she tries to return to the benefit system. What does she live on the meantime?

CPAG believes that the government needs to spend $1 billion per annum on fixing Working for Families, see Step change for children. These changes would greatly simplify Working for Families and make it much fairer and far more effective in addressing child poverty.

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About the author

Co-director retirement policy and Research Centre, CPAG management committee

16 Comments

  1. elle says:

    Paula Bennet has come a long way, looks the same as every other solo mum in this photograph ,stressed and not well turned out so she knows what a struggle it is to be a solo mum.

    Today see the difference,shes in thrall to John Key ,determined to cut benefits to save money regardless of the results,hungry kids, parents humiliated by WINZ for daring to ask for help,having to put children in day care to find work,detrimental for these same children, a mother who is worried sick on trying to manage,but that’s ok Paula is pleasing dear John,she has to, to get promotion.

    See Paula today height of fashion with the same smug smile as Key and English. Money and power goes to some peoples heads,shes probably told what she has to do,but she looks so damn pleased with herself for doing it.

  2. Jo Planet says:

    Thanks Susan for a detailed explanation on why the budget allowance seems really to be just another confidence trick. It’s absolute madness not to invest in the future via investment in the welfare of the under fives. As well as being cruelly lacking in compassion. We might start finding more money for the needy by decreasing military spending. Less war -more aid.

  3. Darth Smith says:

    All these benofits would been nessary if neolibralism hadn’t trashed the economy

  4. Simple Simon says:

    Baula Pennet is a Hypocrite .

    Looks like she has J Key around her little finger.

  5. Im a solo mum working 14 hurs per week after deductions before tax and after tax student loan and winz desucted it works that there is no point in me working what ever i earn goes for after school care and gas for work for the week. And do the math most solo mums dont want to work due to they are better off not working as min wage is less than solo perant benefit.

    • Jacky says:

      Yes….why is there not more talk about this, I don’t understand

      • Jacky
        It is very hard for families to work it out. They just know that for working so hard they see little for it. Worse they can get demands for repayments that they also find hard to challenge.

  6. Brian says:

    The purpose of taxation is to create unemployment.Unemployment happens when a govt. fails to spend enough into the economy to cover the tax liabilities it imposes, and any residual desire to save financial assets that are created by the tax, and other govt. policy.Said another way, unemployment,is evidence of over taxation.Motivation not withstanding,Key and his govt. have been aggressively promoting policy that creates and sustains unemployment from an ideology that was debunk back in the 30’s. The govt. chooses the unemployment rate.It should be seen as a crime against humanity.

  7. J S Bark says:

    Paula Bennett is just like the rest of us; when things change for the better (promotion, a job, inheriting wads of money or winning at Lotto) we immediately forget where we came from and align with our new peer group. Some of us may choose to share some of our wealth downward with our former group but effectively we are now part of the new group. Both Bennett and Key came from humble origins but by Christ the ain’t goin’ back there no matter what.

    Time and again when I was in work this would happen to promoted co-workers. Once they became management (no matter how lowly) they were expected not to associate with their former co-workers and gleefully and smugly they would look down from their new position. Thus does capital effectively divide the working class.
    But in the words of the ever perceptive Karl Marx “Even the Queen must take a shit…”

  8. Mike in Auckland says:

    This is an excellent analysis and logical summary, thank you Susan!

    I wish the mainstream media would bother crunching the figures on that, but today they are too busy discussing the newly presented Sky City Convention Centre here in Auckland.

    As for poverty, I cam across this on The Wireless:

    “Slipping into the poverty trap”

    http://thewireless.co.nz/articles/slipping-into-the-poverty-trap

    There seem to be more younger, single people also needing to go to food banks and so, who are students, perhaps on benefits, in training or between jobs.

    That piece is also worth a read.

    Instead the MSM present us some bizarre “feel good survey”, saying that over 80 percent of New Zealanders are quite happy and satisfied with their living situations. I wonder what kinds of questions they ask them in that?

    As for that much hailed, supposed $ 25 “increase” for parents on benefits, which will not be even be noticed before 01 April next year, it will indeed not be what it seems for most out in the public. There will be abatements kicking in, like reduced Temporary Additional Support, reduced Accommodation Supplement, for some higher rent payments, for others, due to the increase in work expectations, more costs to look for work, to travel to potential jobs (or first to interviews), to dress for work, and to cover a child’s childcare.

    The very moderate increases for the latter are not going to help enough.

    And then we came across this yesterday, showing what so-called “designated doctors” (some are known to be like “hatchet doctors”, trained by a Dr Bratt, Principal Health Advisor for MSD) now get paid:
    http://www.nbph.org.nz/wp-content/uploads/2014/12/Work-Income-DD-Flyer-V3.pdf

    They now get $ 250 plus GST for “examining” a WINZ beneficiary with health issues or needing re-assessment for “work capability”, which is often done by simply asking endless questions about work, attitude to work, hobbies, activities a person does or has. Most GPs signing up with WINZ for doing this do it in 15 to 20 minutes, and then they get paid such handsome payments for that, often flawed “assessment” for WINZ. It used to be only $ 140 or so a couple of years ago.

    They are part of the drive to put additional expectations and pressure on sick and disabled, to also go and work again, even if they are sick. MSD sends out their Health and Disability Advisors, to “train” these doctors, to consult with them, and they basically tell them what MSD and WINZ “expect” of them (the doctors).

    So now they are told, do not write people sick notes that quickly, rather send them back to us, as we will find them some “suitable” work, to keep them employed, as according to twisted, poorly supported research, work is now considered “therapeutic”.

    You can imagine WINZ case managers will often not be that “fussy” about what kind of job they will consider “suitable”.

    Also have they now outsourced providers, working for fees, to get clients into jobs, and MSD has withheld figures, on how many are placed into work, so no transparency, into the “relentless focus on work”, which Paula Bennett preached from her pulpit when she was Minister.

    http://www.beehive.govt.nz/speech/speech-medical-professionals

    http://accforum.org/forums/index.php?/topic/15463-designated-doctors-%e2%80%93-used-by-work-and-income-some-also-used-by-acc/

    http://accforum.org/forums/index.php?/topic/16092-work-ability-assessments-done-for-work-and-income-%E2%80%93-partly-following-acc%E2%80%99s-approach-a-revealing-fact-study/

    http://accforum.org/forums/index.php?/topic/17163-mental-health-employment-service-sole-parent-employment-service-oia-info-implies-msd-trials-a-failure/

  9. dangerousdave says:

    “It means a huge commitment to expensive daycare. Forget it being 20 hours free that is a sorry myth. Too much time in poor quality childcare or simply when the child is not ready, is not in the interest of the child or mother.”

    Amongst some excellent analysis, this is the elephant in the room. ECE is free for 20 hours per week per child, no strings attached. The standard of care in NZ ECE/Daycare etc centres is generally very good, and the benefits to children experiencing a ‘pre-school’ experience significant.

    That said, your point about the abatement rates is very sound. In my view people graduating to work from welfare should have a transition period where the abatement is incremental, both as an incentive and as a ‘hand up’ to make the transition more manageable. Particularly where there are children involved.

    • Andrea says:

      Has anyone else noticed how urban-centric this all is?

      Does each rural town have a ‘child care centre’? Or is care given by grandparents, or friends for free or for income?

      If you’re out in the sticks – how do you get to town with or without your child/ren if you don’t have personal transport? Catch the school bus?

      ‘Child poverty’ is “good” marketing, yet the reality is FAMILY poverty because of structural reasons that have yet to be remedied. Those remedies must be applied by ‘management’ – there is nothing workers can do to make those fundamental changes, no matter how many floggings and hangings are provided pour encourager les autres.

      National self-promote as the party for business. Perhaps. Yet their management skills are far below competence.

      • dangerousdave says:

        Many rural towns do in fact have some form of pre-school care, and the ones that don’t are likely to be so small there wouldn’t be jobs anyway. Yes this discussion is urban-centric, most likely because that’s where most people live.

  10. Kate Davis says:

    Excellent blog & a great analysis!

  11. wild katipo says:

    What has always stuck in my craw about so many of these areshole politicians is that a fair few of them were the beneficiaries of our welfare system BEFORE it was slashed during the 1990’s.

    If there’s one thing I cant stand its a hypocrite.

    John Key and his state house solo mother on a benefit. Recipient (him ) of the taxpayers largesse.

    And then what does he do?….

    Travels over to the USA with a burning ambition to stick it to those schoolyard kids who teased him about being in a solo parent home back in that era.

    Well , he excelled himself, didn’t he – becoming complicit as the right hand man to the biggest Forex heist in history that threatened the NZ economy , no less.

    And then gives hearty approval to an ideology that crushes people who were JUST LIKE HIM when he was a young child.

    Man….how much hatred he must have for New Zealanders buried down deep. Perhaps that’s where the psychopathy comes from.

    Then we have this Paula Bennet.

    No small reason she got the nickname Paula Benefit.

    So many of these women when single parents go onto courses ,- diplomas , degrees whatnot….and I don’t blame them either.

    ANYTHING to avoid working on a menial slave labour job and minimal wages such as so many have been caught in the poverty cycle with – especially with this govt.

    And yet ….this Paula Bennet….not only was a solo parent…she simply did what so many others were prudent to do.

    And yet…Knowing full well what it was like to have to scrimp and save – which is impossible in those situations…went on…perhaps with the same sort of psychopathy as John Key …to not just join politics…but the NATIONAL PARTY !!!

    The very party who historically have been down on the poor !!!!!!

    And not only that ! – she becomes Minister of Social Welfare!!!!!

    And fully endorses policy’s that oppress the poor even further!!!!

    That evil , nasty hypocritical bloated cow!!!

    Bloated with the fat of the land and drunk with the power of vengeance!!!

    And no conversation is complete in this regard without reminding New Zealander’s about the true motives and attitude of the Double Dipper from Dipton Bill English who proudly stated ….

    ”We should be glad we have a LOW WAGE ECONOMY because THAT encourages foreign investment ”.

    Put all this together and we have a picture of the most warped ,anti social and morally corrupt individuals running this country we have ever had barring Ruth Richardson , Jenny Shipley , Roger Douglas and all the other neo liberals who have plundered this country for 35 years.

    It is time New Zealanders woke up to the fact that these types of people care not one jot for the people of this country.

    They have willingly become but one small branch and part of a globalist cabal of right wing neo liberals sucking the very blood out of the populations that have had the dire misfortune to have been deceived into letting them gain power over them.



Authorised by Martyn Bradbury, The Editor, TheDailyBlog, 5 Victoria St East/Queen St, CBD, Auckland, New Zealand.