Comment

Poverty: not an earthquake but still a crisis

The crisis of poverty and inequality is shaking our values to the foundation and creating long-term damage.

How bad does it have to get before we wake up and name New Zealand’s shameful poverty and inequality as a national crisis?

Does it take families queuing from 2a.m. in the freezing rain outside Manurewa's Work and Income office to get one of the only 65 advocate places allotted to assist them get the emergency help they desperately from an alien and intimidating agency?

What about the Auckland City Mission food parcels figures for 2018/19 going up 44 percent over the past year? This is an astonishing increase and other food banks around the country also report higher demand despite much higher expenditure on hardship grants from WINZ. 

Asking for food is demeaning and time consuming and so should be viewed as an act of last resort. The record numbers are the tip of a very large iceberg of unmet need.

Or does it take official data like the latest Ministry of Health’s report on food insecurity that shows 20 percent of New Zealand’s children live in families that are struggling to get enough basic food? Food is the one item in the budget that can be cut but at what long term health expense for our children and parents?

The symptoms of poverty are reflected in soaring suicide rates for youth; in high rates of preventable third world diseases; in decaying teeth of young children; increasing and alarming debt levels especially to fringe lenders; homelessness and low quality, damp, cold and insecure rental housing and children who cannot learn because they are hungry and too often disturbed and anxious.

The rapid expansion of private charities such as KidsCan is hardly keeping up with the escalating demands for help with the very basics that children need.  We are now dangerously close to looking like a World Vision country where children have to be sponsored to get the essentials of life .

In the early 1990s, Child Poverty Action Group (CPAG) was established to counter the extreme policies put in place in the 1991 Budget that caused an explosion in family and child poverty. Nearly three decades on, the social deterioration we predicted has sadly come to pass. The entrenched nature of it and the run-down in people’s balance sheets is a very challenging problem for the Labour Government.

It may be laudable for the Government to be fiscally responsible, but not in the very narrow ways it has chosen.

Worryingly, the swelling demands are occurring despite the full implementation of the Families Package the Government is relying on to meet its child poverty targets.

Data from the current household economic survey won’t be reported on until 2021. If the Government waits until then to see that its targets are not met it will be too late.  It needs to pay attention to the signs that are all around us.

The $2 million Welfare Expert Advisory Group report: Whakamana Tāngata says we should be spending an additional $5.2 billion per annum to fix the broken welfare system. CPAG has highlighted that the 175,000 children under the lowest poverty line were not helped much at all by the Families Package and suggests that $3.2 billion is needed annually to lift all families to a modest poverty line.  

The tiny changes made in the 2019 budget will miserably fail to make a difference to the immediate problem. Worse still they don’t come in until April 2020.

The Government is working on a three to five year plan in response to the Whakamana Tāngata report but this might not be released until later this year. Hopefully the final plan for the welfare system will be a good one but what of the immediate need?

By then, the queues for food at the City Mission will be building. Each year they have become worse at Christmas time and after a cold winter we are heading for a record demand once again.

It may be laudable for the Government to be fiscally responsible, but not in the very narrow ways it has chosen.

The nation is facing a crisis, it’s like a slow earthquake shaking our values to the foundation. You don’t store up goodies for the future when faced with life damaging catastrophes, you invest in reversing the damage and in preventing further damage.

There are three things that could be done immediately. An emergency package might include:
1.Payment of the full Working for Families tax credits to all low-income families. At a cost of $500m the very worst-off families would gain an immediate extra $72.50 a week. That’s a lot of food and it is the most cost-effective tool as it goes only to the lowest income families.

2. An increase in the allowable income before any benefit is lost to 10 hours at the minimum wage or $170 per week. This would pay for itself in tax paid and fewer demands for hardship grants.

3. A suspension of all student loan repayments for families who get Working for Families. This would not affect the current net debt target but would help many in low paid work. MSD should also write off debts from past loans and allowances.

Nothing here is instead of a thorough response to the WEAG report, but these changes will be consistent with the direction envisioned and will help alleviate immediate hardship.

The Government seems to be afraid of its own shadow in the form of the accounting rules it has imposed on itself. If the net debt target was inclusive of the assets in the New Zealand Super (NZ Super) Fund net debt will disappear as an issue to worry about. There is no logical reason not to view net debt this way.

Here’s another thought- suspend the contributions to the NZ Super Fund and spend the money now. We can’t afford to squirrel away an extra $8.5 billion by 2023 when the social deficits are so large. Maybe only resume contributions when they can more clearly be seen to come from those with wealth. That requires letting go of the apparent aversion to improving the taxation of capital.

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