What benefit incomes really look like

The Green Party has just issued its election year Ending Poverty Plan. Supportive media reports tend to fixate on basic benefit rates. But these are just one component of benefit incomes. When politicians seek votes to solve a ‘problem’ their interest is always in casting it in the worst possible light. The Greens would have you believe that benefit incomes are at a meagre, barely subsistence level.

Here is data to help you make your own mind up.

Because beneficiary circumstances are many and varied – they might be single; partnered; with or without childcare responsibilities; living with a disability; working part-time or seasonally; studying; living at home or paying a mortgage, etc. – there is considerable variation in incomes.

To this end the Ministry of Social Development developed a new data set that, “…outlines the full range of financial support main benefit clients receive, including their base benefit payment, supplementary assistance and other ad hoc grants, financial support from Inland Revenue, and any earnings.”

In April 2022 the first report from this dataset appeared. It covered around 378,000 adults receiving an income-tested main benefit.

For background, the complexity that has developed over decades is first described:

“People accessing support through the welfare system can access three different tiers of support:

• Tier one main benefit payments, which are intended to meet the general costs of living, for example Jobseeker Support, Sole Parent Support and Supported Living Payment.

• Tier two supplementary assistance for specific ongoing costs, such as those related to housing, health, and disability, for example the Accommodation Supplement and Working for Families tax credits.

• Tier three hardship assistance that helps people meet immediate and essential costs, which cannot be met from any other income or assets, and can be recoverable or non-recoverable, for example Special Needs Grants.”

Reflecting this complexity, the following graph from the report shows the “average composition of total income by family type before housing costs.” For example, a sole parent with two or more children receives, on average, just under $1,000 weekly before housing costs. This ‘family type’ comprised 50,614 parents with 135,545 children.

(See graph source for explanatory notes)

It is impossible to say what the equivalent income for a sole parent in work would be. Her Family Tax credits would remain, but all other assistance would be adjusted or disappear. Suffice to say $1,000 weekly (or $52,000 after tax annually) is probably not what most New Zealanders regard as ‘living in poverty’. (The childless, single beneficiary is another matter.) Typical New Zealand salaries are listed at this government website and a number fall in and around this vicinity.

Yes, housing is a substantial expense, but that is so whether the renter is a beneficiary or non-beneficiary. Those who live in state houses pay only income-related rents and are relatively better off.

The next graph, which depicts income change between 2021 and 2022, shows the same sole parent with two or more children receives on average $632 weekly after housing costs, up from $548 the year before:

Sticking with the same family-type (green line), the next graph shows how their after housing income rose between 2016 and 2022 from below $400 to $632 and labels each of the Labour government policy changes along the way, for instance, the introduction of the Winter Energy Payment (WEP) causes increases in the June-September period each year:

Extra protection for beneficiaries

The report also describes how benefit incomes have been inflation-proofed:

“From 2018, increases to main benefit payments compensated for rises in inflation and housing costs over time. Since 2018, inflation (excluding housing) increased by 12 percent, while total incomes across all family types grew by 59 percent on average (after housing costs). Overall, peoples’ total incomes after housing costs are, on average, 43 percent higher in real terms now than in 2018.”

And that the Accommodation Supplement rises with rents:

“…as people’s housing costs increase, the amount of support they can receive through the Accommodation Supplement also increases, up to a maximum amount. This mitigates the extent to which increases in housing costs affect total incomes.”

The data is already obsolete with benefits having been adjusted again for inflation (7.22%) on April 1, 2023 but an updated report is yet to be released.

None of the above information is provided as proof life on a benefit is easy.

What it does show is that for beneficiaries with children, incomes are close to those from unskilled work. This means leaving a benefit - which is secure, consistent and adequate – takes a degree of motivation and self-discipline. It gets harder to leave as the benefit rises, which is why the duration of dependency is also increasing.

For those who have grown up in beneficiary households, where low-income levels are ‘normal’, the attraction of work is further undermined.

In response to my last post about new child support pass-on laws effective July 1, which will further increase sole parent incomes by an average of $47 weekly, a couple of readers pointed out that assistance beyond that provided by Work and Income has also accelerated in recent years.

Free school lunches, free period products, foodbanks and social supermarkets, very cheap accommodation in the form of emergency housing, a proliferation of charity shops selling inexpensive household wares and clothing … the list goes on.

Yet the Green Party leaders continue to lambast society for tolerating such a dreadful level of ‘poverty’ which could be fixed overnight apparently if only more money was forcibly taken from the rich and given to the poor.

Undoubtedly there are people struggling. But a policy of ever-increasing income redistribution via the tax system has been in play in New Zealand for generations.

Shouldn’t such a good idea have worked by now?

Or will it continue to be ramped up to the point where there are too few productive, independent people left to fuel it all?

I find myself wondering if the Greens ever ask themselves these questions.

Then … I hope and pray that voters do.

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.

Article Four Activism

Massey University issued a draft Tiriti O Waitangi Policy in May 2022 to staff, students and stakeholders which expresses its "commitment to uphold Te Tiriti o Waitangi and its associated principles". It was prepared by the Office of the DVC Māori (Deputy Vice Chancellor Māori) to update an existing document and remains under consultation.

In 2012 the policy was a relatively brief, comprehensible statement:

The overall aim is that Massey University should be: 

•      a Māori-relevant university 

•      a place where Māori language and culture can flourish. 

•      a place where Māori students are likely to graduate. 

•      a university where Māori will obtain relevant higher degrees. 

•      a university which has the teaching and research capacity to make a substantial contribution to Māori development. 

•      a university that provides academic leadership for Māori to make a substantial contribution to the growth and development of Aotearoa New Zealand.

•      a university that provides academic leadership for Māori development.

The proposed replacement is six pages as opposed to two. It is long-winded and repetitive in describing how it will give effect to the Treaty and steps well outside of specific University relevance. For instance, it commits the university to “realisation of tino rangatiratanga nationwide” and “working towards achieving equal outcomes for Māori in society” with “ongoing investment in practices and activities known to improve outcomes for Māori.”

But the stand-out feature of the policy is the discovery of a fourth article in the Treaty: 

"The University acknowledges the following Te Tiriti o Waitangi provisions and associated principles - From Article Four: the provision of Te ritenga Māori (Māori customs) and the principle of Honouring Māori cultural-spiritual values and practices."

Definitionally, the policy purports to use "the Te Reo Māori (Māori Language) text of the treaty between hapū and the British Crown first signed at Waitangi in 1840."

But historian and former Waitangi Tribunal member Michael Bassett says, "The Treaty appears in the Treaty of Waitangi Act 1975, both English and Māori versions, and in 1986 Sir Hugh Kawharu re-translated the Māori version which was accepted by the government and became the version used by the 1990 Commission that celebrated 150 years since the Treaty was signed. I know of no further version of the Treaty that has had official recognition. The Kawharu translation and indeed the 1975 version have only three short clauses."

And on page three of the policy the relevant legislation is indeed cited as "Treaty of Waitangi Act 1975." The discrepancy is unexplained.

Where then does the idea of "Article Four" come from?

Dr Alistair Reese, a historian and public theologian, describes the treaty as a "living taonga" and has lodged a claim with the Waitangi Tribunal and petition to parliament arguing a fourth article exists. According to Reese a belated request prior to the signing of the treaty saw missioner Henry Williams (under instruction from Hobson) write the following addition to the Treaty: “The Governor says the several faiths of England, of the Wesleyans, of Rome, and also the Māori custom, shall alike be protected by him.” This statement apparently represents the fourth article.

It seems his argument is not a new one. The concept has previously found its way into public service documents.  In 2003 Hon Bill English, then Leader of the Opposition, asked the Associate Minister of Justice, Margaret Wilson: "Does the Government accept that there is an Article Four to the Treaty of Waitangi; if so, how will it be recognised in the Government’s partnership with Māoridom?" Her reply was "No." In parliamentary discussions at that time it was agreed that religious freedom and belief were protected by Article 3 of the Treaty and the modern Bill of Rights.

Writing in the NZ Herald, journalist Tim Watkin explained that English was concerned about a claim before the Waitangi Tribunal by Archdeacon Harvey Ruru arguing “the Crown had not kept Hobson's promise and it should fund Māori priests to continue their faith traditions.” Hobson’s promise was interchangeable with the fourth article. Michael Bassett, then a member of the tribunal, worried Ruru was attempting to expand the Treaty. As Health Minister in 1985 he had been criticised by Titewhai Harawira who asserted an obligation to improve Māori healthcare under ‘article four.’ The link being made between religious freedom and health care was unclear.

Canvassed more recently on the topic Bassett says: "There have been efforts over the years to talk up the idea of an Article Four with various Māori trying to insert something favouring their current fanaticism, but they won’t ever get off the ground because there were only three articles that the Crown and Māori signed on 6 February 1840, and no law has ever been passed recognising more than what appears in the Treaty of Waitangi Act 1975. Just imagine if internationally treaties between parties could be unilaterally added to by one party over subsequent years and treated as though they had always been part of the original document. Absolute chaos."

He adds: “…no government worth its keep is ever going to agree to a widening of the original document.” Unfortunately, these words might not reassure given the possibility of a radical Labour/Green/Māori party government forming later this year.

Establishing a fourth article clearly brings new grounds for resource demands. Perhaps this is the reason Massey University has included it in their proposed updated treaty policy. Why else when religious freedom is already protected?

Regardless of the answer, Massey University management is practising activism (which was once the realm of students). Its Deputy Vice Chancellor Māori is asserting the existence of a fourth article in the Treaty. Who are impressionable students to believe? Are universities bastions of truth or fantasy?