Week in Review

In our welfare system, it’s ‘us or them’

Dr Louise Humpage was hoping Covid would help Kiwis better understand how tough it is to live off the benefit, but the newly unemployed are not being treated like main beneficiaries at all

Foolishly, I had thought one serendipitous outcome of the Covid-19 crisis would be that many New Zealanders would finally understand how hard it is to live on a welfare benefit.

Benefit recipients and welfare advocacy agencies have long argued benefit levels are too low and that work and social obligations, along with the financial sanctions imposed for not meeting them, have a negative impact on the well-being of main benefit recipients.

Last year’s Welfare Expert Advisory Group confirmed these views, finding benefit recipients are routinely treated as ‘undeserving’ of either assistance or respect by government agencies – including Work and Income, which exists to support those in need – and the broader public.

But I knew that many people would not believe such arguments unless they, too, experienced the drudgery of reporting how many jobs they had looked for that week, the shame of being forced to take jobs they were clearly over-qualified for and the frustration of having to prove – over and over again – that they are a fit parent or sufficiently disabled or otherwise in need of financial assistance.

Yet, lo and behold, the newly unemployed are not being treated like main benefit recipients at all.

First, there was the wage subsidy, a flat rate payment of $585 for those working over 20 hours per week and $350 for those working less than 20 hours. Although I baulked at how much higher the subsidy was compared to existing main benefits, I understood that the latter was needed for protecting jobs by keeping employees connected to employers and, for many employees, this was a significant pay cut. I could even see a rationale for extending the subsidy given some industries will be affected by Covid-19 fallout for months to come.

I became more suspicious of the Government’s intentions when it announced that 35 new unemployment centres would be established across the country, along with an employment service specific to those directly impacted by Covid-19, who are not on a main benefit.

Why? Work and Income already has offices in most towns and cities across New Zealand which focus on finding employment. Could it be that they are either a) not very good at their job; or b) that the ‘toxic culture’ endemic in these offices is so awful that we couldn’t bear the shame of letting ‘ordinary’ (i.e., working) New Zealanders experience it?

To be fair, some elements of that toxic culture have been temporarily modified as a result of Covid-19: stand-down periods have been removed until November; new obligation failures and medical certificate requirements have been deferred and annual reviews of income and other circumstances, alongside yearly reapplications for Job Seeker Support and Sole Parent Support, have been delayed.

These changes demonstrate that the Government’s heart is not completely made of stone, but they came when a global pandemic required the country to essentially shut down for several weeks, not when the Welfare Expert Advisory Group highlighted that such requirements have a corrosive impact on the security and well-being of benefit recipients. Indeed, the Government has studiously ignored most of the group’s 42 recommendations for the past year.

Most recently, the Government announced that those ‘newly jobless’ due to the Covid-19 crisis will be able to get $490 a week tax-free for 12 weeks if they had been in full-time work and $250 if they had worked part-time.

To put this in perspective, the base rate for the existing Job Seeker Support is $250 a week (after tax – yes, it is taxed) for a single person over 25, with those younger getting less. This rate includes the permanent $25 increase made to all benefit payments in response to Covid-19.

While it is true that other supplements, such as the Accommodation Supplement, increase this base rate for most and that benefit recipients on Sole Parent Support or Supported Living Payment receive higher base rates, it is clear that the newly unemployed are getting a better deal.

The question is why? Finance Minister Grant Robertson says the payment will help the newly jobless adjust and find new employment or retrain, but that is the purpose of the current Job Seeker Support benefit. While it is possible the newly jobless might have higher current expenses (mortgage payments, for example) than existing benefit recipients, this is only because New Zealand’s poor have been effectively excluded from home ownership by low benefit payments and an insecure labour market over several decades.

Such moves suggest the Government is pandering to the middle classes who never thought they would be unemployed; indeed, being ‘newly jobless’ and receiving an ‘income relief payment’ rather than an unemployment benefit avoids this branding. At least until the recession kicks in, their unemployment becomes less transitory and they then discover the realities of the welfare system. Of course, by then the election will be over.

There is no doubt the Government has shown much bravery over the past few weeks, rapidly responding to an unprecedented and forever-changing global crisis in forthright and yet compassionate ways.

However, a truly brave government would look voters in the eye and say “we want to treat all unemployed people, no matter when or how they came to be jobless, with the same dignity and respect that all New Zealanders deserve”.

This does not mean paying the newly unemployed less, but ensuring that main benefits provide an adequate income and that no one is denigrated for being in the position of needing state assistance at a difficult time in their lives.

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