Paying too much to keep us warm?
The Winter Energy Payment (WEP) provides older people extra income to keep warm during the winter. It sounds kind, but is it a glaring example of wasteful expenditure and poor allocation of scarce resources?
While an automatic increase in benefits is a good way to pay the WEP to beneficiaries it should have been designed as an opt in not an opt out for superannuitants.
The WEP is a payment of $450 a year for single people, and $700 for couples. Two singles sharing get $450 each because the MSD can’t work out how to pay them each half the married rate. It is not taxable so that there is no clawback from higher taxes on the better off.
Many superannuitants would not even notice that their pension had increased. They didn’t ask for it and don’t need it. The MSD figures show that last year only 2000 opted out. That’s right, not 20,000, not 200,000 but 2000, a tiny proportion of 770,000 superannuitants.
Overall the annual cost of the WEP for superannuitants is around $308m.
Yet superannuitants overall have low rates of fuel poverty suggesting that it would be better to pay the WEP only to those on additional hardship payments such as the accommodation supplement or temporary additional support, and allow others to opt in (no questions asked) if they felt they needed it. It would still be universal and it would still be kind.
Under an opt in policy around 40,000 superannuitants receiving the accommodation supplement would get the WEP automatically. Allowing for others on hardship support and some others to opt in, about 70,000 may benefit from this policy.
That would mean a saving of $280m for the 700,000 out of 770,000 superannuitants who currently get it but don’t need it.
$280m could do a huge amount of good in the hospitals where superannuitants are denied, or face unacceptable wait times for life enhancing operations like cataract removal and joint replacements.
Completely agree, your system for allocation much should have been the one government used. Who among them sorts how funds are implemented?
The policy did not seen to have a proper policy analysis before implementation.
You have not factored in to your argument, how much the health system may be saved without admission to hospital, or constant visits to the doctor, by those who could not afford to buy fuel for the fire, or use the heater to stay warm. Most of us are pretty grateful for the extra money.
I agree that keeping warm is an important preventative. There should be no problem or stigma or complexity to filling in a form or ringing up to opt in. People could be encouraged to do so. Even if there is another 50,000 who opt in over my calculations opt in policy would still save a very significant sum.
Susan, you failed to mention the 10s of 1,000s of victims that I perfectly represent. I’m one of those poor souls who is completely denied my rightful WEPs since Section 70 claws baeck my entire NZS payments. It’s more salt in my open wounds! Yet any person who gets even as little as a $10/mo top up receives the WEPS in full! I contend that Section 70 is the world’s cruelest unfairest law!
Jim
my apologies. This is an appalling aspect of the policy as it stands.
I totally agree Jim. As a couple who are denied the WEP due to not receiving NZS on account if our overseas pensions,this benefit is most unfair.
As a superannuitant, I fully agree. We spent last winter on the Gold Coast. I tried to opt out but the process is lengthily bureaucratic in the extreme, much the same as if I were applying for a benefit. I had thought I’d just send a message saying “we don’t need it” and they’d say “thanks for telling us” – no such luck.
Malcom
you are so right and many who knew they didn’t need it simply couldn’t be bothered to go through that rigmarole
The fact that we even need this extra payout to assist people to keep warm goes right back to Max Bradford, the National Party and the electricity reforms of the 1990s.
Privatisation would bring cheaper prices they said (yet we already had some of the cheapest power in the world before the changes).
Max assured us that competition would result in better deals for consumers.
What happened? The electricity supply was sliced up and sold to provide increasing profits for shareholders.
I find it annoying when organizations tout the phrase “we have to provide better returns for our shareholders” when they’re trying to justify something that usually leaves their customers in a worse position.
Again it comes back to GREED. Much like a ponzi scheme, a few get rich while the rest starve or are forced to pay higher prices for the same product.
Electricity supply (and other essential services) should be brought back under state control. Private companies have only one vision and that is to make as much money as possible at the expense of those who can often least afford it for a fundamental need.
The money saved from having to pay out a WEP could then be directed towards more important issues.
Great point you make Train to Nowhere
TRAIN TO NOWHERE ?
You’re another one after my own heart.
100% agree and there’s not a lot to add to that post.
One of the very many extra costs, of the 90’s privitisation mania.
Should come out of the pockets of the politicians responsible.
The pensions question of whether or not retirment savings can be sustained or not really is up to how involved the pensions client wants to be. By far self managed savings funds (SMSF) are the worse because they’re all the people that sign up to different retirement funds every time they start a new job thus doubling up on benefits. A lot of people are not aware that signing a retirement contract also comes with life insurance and when you sign up to to multiply schemes that cancel one or all life insurance policies. So just compounding fees through not really knowing what to do. I’d like to blame politicians as well for creating a haphazard system but it takes two to tango.
Oh , and that’s actually quite a delightful picture scene, SUSAN ST JOHN,… two older gents , one with a stout in his hand, both enjoying a roaring fire on a cold wintry night…and I think I see a cat lazing luxuriantly in front of the warmth…or maybe its just a pair of wet socks put there to dry…
🙂
**PLEASE** refer to the graph in this link titled, “Gross Weekly Income Comparisons”
https://thestandard.org.nz/poverty-and-disability/
It clearly shows that benefit rates for SLP (without children) have dropped in real terms by about $20 a week since 2009. That is a shitload of money when you are on a benefit.
It’s money that I believe the government should calculate and then add to the Kiwisaver accounts of those affected + add a $500 bonus for each of the years those people couldn’t save.
Hearing pensioners and parents whinge about how hard it is when you the system already privileges them is insulting. The energy payment should have been second priority to getting basic payments restored to 2008 levels for those benefits.
Oh, hey forgot the link
https://thestandard.org.nz/poverty-and-disability/
Thank you Z for reminding us how the last government and this one have crapped all over those on the Supported Living Payment.
Transitioning onto the Super was a true Event. Not only a little more dosh, but a Special Area in the WINZ office to wait to see the Specially Assigned Seniors’ Case Manager.
Woudn’t want the now Worthy to have to sit on the same seats as those on the SLP now would we?
https://www.express.co.uk/news/science/1114503/weather-forecast-long-range-nasa-noaa-news-solar-minimum-space-weather
WEP is too little too late, bye the 1st day of winter ive already brought 5 meters of wood and used it all, we all lost 25% of benefits in 86 and never regained that loss, since then politicians have significantly increased their pay scale while steadily reducing ours, they have raped our community owned assets, parceled out our community owned land and raffled off our community owned resources.
All while spouting bullshit about global markets and global warming, now they are nervous and want to take our guns and free speech away to make themselves feel more secure.
They are the only winners in all these actions, what happened to Government by the people for the people?
This just looks like feudalism, get into line serfs, obey or be re-educated.
Time for a change