Disability and poverty don’t have to be linked
The median payment rate for disability-related allowances is almost three times higher in the United Kingdom than in New Zealand, Samuel Murray writes.
In New Zealand, disabled children are more likely than non-disabled children to live in a one-parent household, and the primary carers of disabled children have a higher unemployment rate than one-parent households in general. As a result, households with disabled children are significantly more likely to experience income poverty.
This greater risk of poverty is not the case in the United Kingdom. A key factor is that the median payment rate for disability-related allowances there is almost three times their New Zealand equivalents.
The link in New Zealand between disability and poverty can, and should, be broken. We need to increase the payment rate for disability-related allowances and overhaul support for households with disabled children to better enable carers/parents to work if they want to.
The United Nations’ Committee on the Rights of Persons with Disabilities notes that financial support for family carers is crucial to counteract limited access to work and the greater risk of poverty. Its Committee on the Rights of the Child similarly stresses the importance of children with disabilities being allocated adequate money as well as having access to poverty reduction programmes.
More than 10 percent of children are disabled: survey
The most recent New Zealand Disability Survey, conducted in 2013, estimated there were around 95,000 disabled children up to the age of 14,. That is 11 percent of all children in this age group.
There are two disability-related allowances available for children in New Zealand: the disability allowance, which is also available for adults, and the child disability allowance. The disability allowance is means-tested and designed to meet specific disability-related costs, such as doctors’ fees, heating or medical alarm rental. The amount each child gets depends on the relevant costs identified, up to a maximum rate. The child disability allowance is not means-tested and is a fixed amount.
The UK equivalent of these allowances is the disability living allowance (DLA), which is divided into a care component and a mobility component. Neither component is means-tested. The care component has three payment rates and the mobility component two. There are also disability tax credits for which disabled children and their families can qualify. For a household that qualifies for both types of tax credit elements, this could add another $144.56 a week to its income.
There is no equivalent in New Zealand to these tax credits; whānau with and without disabled children qualify for the same Working for Families tax credits.
A higher percentage of children in New Zealand receive at least one type of disability-related allowance. But the allowances in the UK are far higher. In 2013, a disabled child in New Zealand could receive a maximum of $106.16 from disability-related allowances a week – of which $60.54 was means-tested and only for specific purposes – compared with a maximum of $244.06 a week in the UK. With both disability tax credit elements, the maximum in the UK was $388.62 a week.
Further, very few children in New Zealand receive both allowances or anywhere close to the maximum amount for the disability allowance. In March 2013, 39,795 children received at least one of the allowances, but only 4710 children both. The median rate of payment for children who received both allowances was just $60.12 and for the disability allowance component just $14.50. Seventy-six percent of the children who received a disability-related allowance received just the child disability allowance of $45.62 a week. As a result, $45.62 was the median payment a week for children who received a disability-related allowance in New Zealand.
A key factor that increases the risk of disabled children experiencing poverty in New Zealand is the disproportionate number in one-parent households.
By comparison, in May 2013, 95 percent of children in the UK who received the DLA received $76.26 or more a week; 80 percent $114.39 or more; 34 percent $181.89 or more; and 12 percent the highest amount of $244.06. The median payment was $134.36.
In the 2012/13 financial year, the DLA reduced the percentage of UK households with disabled children below the ‘60 percent of median household income before housing costs’ poverty measure by four percentage points. This meant the gap between households with and without disabled children was less than one percentage point.
A key factor that increases the risk of disabled children experiencing poverty in New Zealand is the disproportionate number in one-parent households. In the 2013 Disability Survey, 30 percent of disabled children were in one-parent households, compared with 17 percent of non-disabled children.
We should consider the increased chance of being in a one-parent household alongside data on carers’/parents’ wellbeing. In the Disability Survey, 60 percent of carers/parents of disabled children reported not having enough time for themselves and 42 percent reported often feeling stressed in the past four weeks; a further 38 percent reported sometimes feeling stressed in the past four weeks.
One-parent households with disabled children make up most of New Zealand’s low-income households with disabled children: 86 percent of disabled children in households earning less than $30,000 a year are in one-parent households.
In the Disability Survey, an estimated 17 percent of primary carers of disabled children were unemployed. This is a higher unemployment rate than for one-parent households in general or mothers in two-parent households. Having a disabled child appears to have a similar effect on a primary carer’s employment prospects as being a sole parent. A high number of carers of disabled adults and children report that providing care has had an impact on their employment. Carers also report that employment is valuable for them, both for its ability to improve their material wellbeing and for the social benefits.
More income needed to have the same opportunities
The available evidence is clear that having a disability generates significant extra financial and time costs for disabled children and their whānau.
Extra costs mean more income is needed to have the same opportunities as non-disabled people; they also mean households with disabled children may be effectively in poverty and/or material hardship at higher income levels than households without disabled children. UK estimates are that families with disabled children need 10–18 percent higher incomes than similar families without disabled children to have the same living standard.
While we lack data on extra costs for New Zealand disabled children, in the Disability Survey carers/parents were asked about income adequacy. Some 20 percent of households with disabled children said they did not earn enough money, compared with only 14 percent of all households saying so.
The UK data shows sufficient disability-related allowances and disability-specific tax credits can sharply reduce the increased risk of income poverty. There is a clear case for increasing the payment rate of the current New Zealand disability-related allowances and exploring disability-specific tax credits. Alongside higher disability-related allowances, we need to improve help for carers/parents to work and provide more support to reduce the stress of carers/parents and/or give them more time. This, in turn, should reduce the unemployment rate of carers/parents, as well as help prevent relationship breakdowns or enable sole parents to find new relationships.
The key to reducing inequality between households with and without disabled children is to enable carers/parents of disabled children to benefit more from improving opportunities either through support to work or greater income redistribution – or preferably both.
This is an adapted version of an article in the latest issue of Policy Quarterly, published by the Institute for Governance and Policy Studies and School of Government at Victoria University of Wellington.