Wednesday, January 14, 2009

Increased welfare payments impact on fertility

New British research, from the Institute of Fiscal Studies, has shown that increased welfare payments have coincided with a boost in births and drop in contraceptive use among the group most affected by the higher payments. New Zealand fertility trends reflect those in Britain and it is entirely possible that the same trend is occurring here.

New Zealand’s birth rate grew from an average of 2.00 births per woman in 2004 to 2.11 in 2007; the UK rate over the same period increased from 1.68 to 1.79. In both countries, efforts to reduce child poverty have included increased income support payments. In New Zealand, Family Support (now renamed Family Support Tax Credit), available to working and non-working low income families, increased in 2005 and 2007. Similar increases were introduced in the UK, albeit earlier than here.

The UK research also found that the increase in government support coincided with a rise in births among the low-education group relative to the high-education group. In the absence of comparable New Zealand information, those mothers who predominate amongst the poorly-educated and low income – teenage, Maori and Pacific – have all experienced increased representation in welfare dependence statistics. New Zealand’s teenage birth rate has been rising steadily since 2003, as has the number of teenage mothers claiming a benefit. In 2006, almost forty percent of all births were to mothers who live in the three most deprived deciles.

The UK researchers also found evidence from the UK General Household Surveys that there was an increase in the proportion of women in the low-education group reporting that they were not using contraception because they were trying to get – or already were – pregnant. In 2006, the New Zealand Medical Association deputy chairman, Don Simmers, told a conference that too many women are contemplating pregnancy on a benefit.

This research raises an important question for all developed nations with generous income support regimes. Do efforts to ensure income adequacy simply increase fertility rates among low-income and poorly educated women, thereby counter-productively increasing the size of the poverty problem?

In light of recent local political developments here, the release of this research is very timely. In New Zealand, lobbyists are currently making submissions to government to increase payments to beneficiaries with children. The Child Poverty Action Group (CPAG) recently took a case to the Human Rights Tribunal claiming that not paying the In-Work tax credit to parents who are beneficiaries was discriminatory. The Tribunal has ruled that while there is an element of discrimination operating , it is justified in order to achieve the government's goal off getting people off welfare and into jobs. The Tribunal accepted that work has long-term benefits for families and is the best way out of poverty for parents and their children.

Undeterred, CPAG are now making submissions directly to the new government to achieve their goal. This is understandable given there is a new Associate Minister for Social Development, Tariana Turia, who had previously been very supportive of their case.

The implications of this new research, in the absence of our own, should, however, be carefully weighed by policy makers before responding to these calls.

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