Tuesday, June 06, 2023

Taxpayer to stump up another $354 million to lift beneficiary sole parent incomes

A long-standing societal expectation was that fathers should financially support their children.  Past Labour governments reinforced this principle through law. During the Clark/Cullen administration the Minister for Social Development Steve Maharey held, "...I have said time and time again in this Parliament that fathers must front up to their obligations, and we will make sure they do, as much as we can." He was arguing for an increase in the penalty for benefit-dependent sole mothers who refused to name fathers.

Today's Labour though is a far cry from past incarnations. Parental responsibility expectations have reached new lows.

Since the creation of the Domestic Purposes Benefit (now known as Sole Parent Support) the state has required the custodial parent (nine times out of ten, the mother) to apply for child support from the non-custodial parent. When the mother was granted a benefit, the child support extracted from the father was kept by the state to offset the cost. In this way the taxpayer was relieved of some of the cost.

From July 1, 2023 this will no longer be the case. Any child support collected will be passed directly on to the mother and will supplement her benefit. This will affect 41,550 caregivers who will receive on average $47 weekly more (with a median gain of $24) and is projected to cost the taxpayer $354.27 million over the next 4 years - roughly the sum fathers were paying into the Consolidated Fund.

This move allows the government to further boast it is reducing child poverty and tackling the cost of living crisis. This is Labour indulging in expensive virtue signalling and vote-buying. In reality it will simply squeeze more from the taxpayer, and make it less likely that the mother can ever afford to give up the benefit and join the workforce. Prior to the change, child support, which is paid direct to non-beneficiary sole parents, increased a benefit-dependent sole parent’s incentive to move into work. The new law removes that distinctive incentive.

Another major change accompanies the new pass-on rule. Currently, according to Work and Income, "If you get Sole Parent Support, you need to fill in a Child Support application form. This helps Inland Revenue collect child support payments from the other parent of your child." As of July 1, "Sole parents getting a main benefit will no longer have to apply for child support." In 2020 the government dropped the long-established penalty for not naming fathers; this move goes a step further. With regard to a beneficiary mother the state can now only impose a financial responsibility on the father if she voluntarily applies for it.  Intuitively one might expect this to lower the number of fathers paying support. Yet the government argues more fathers will pay child support if they know it is going directly to their children and not to the state. A skeptic might doubt this.

Regardless, the legislation will be signed-off because it has the numbers (hence the prior announcement.)

But you might wonder what opposition MPs had to say. Surely, at the very least, they would have fought for the status quo?

Disappointingly, they did not. The purported aim of the bill is that more fathers will be motivated to pay child support and child poverty will be reduced. No party wants to be seen to thwart that - not even National and ACT.

During the second reading of the legislation there were glimmers of common sense.  National's MP for Invercargill Penny Simmonds said, "We want to see fewer children in poverty, but we are never going to get children out of poverty through taking taxpayer money and putting it towards them. The only way we will see fewer children in poverty is if we support those women [mothers on benefits], particularly, to get into employment." That sounded promising.

National's Simon O'Connor from Tamaki also spoke: "... fundamentally, what's happening here is the choices of parents are being transferred to a whole lot of good, hard working, taxpaying Kiwis." Correct. Taxpayers will be stumping up an extra $354 million for other people's lifestyle choices thereby limiting their own. That is hardly fair or equitable, the constant catch-cry from the left.

But then, in a surprising twist, O'Connor concluded that the debate at hand was essentially one between "principles and pragmatism." The principle being parental self-reliance versus pragmatism - the use of taxpayer's money to lift sole parent incomes. He plumped for pragmatism, subsequently commending the bill to the house. Every other party supported the bill.

The views of people against this law change, those who believe constantly chipping away at parental responsibility will not improve outcomes for children, weren't represented by any parliamentary party.