www.geocities.com/nzwomen/SusanStJohn/20010514HeraldChildren.html

published NZ Herald 14 May 2001
 

Budget day looms, but how good will it be for our children? Will there be some dramatic improvements for families and children such those evident in the recent Budgets in the UK?

Tony Blair has made eradicating child poverty by 2020 one of the UK Government's top priorities. The UK Child Poverty Action Group claims that by the time of the 2001 election there will be a "substantial reduction in income poverty, particularly child poverty". They also claim that the reduction could and should have started earlier and proceeded faster, and that the first two years of Labour's term in office "were dire for poor children". It is to be hoped that this is not the judgment to be made on the first two years of the New Zealand coalition government.

The rise of significant level of child poverty in NZ began in the late 1980s as unemployment began to bite and a higher proportion of all children were found in families supported by a welfare benefit. Then, in 1991, benefits were cut severely and conditions for eligibility tightened, but with less rather than more opportunities for full-time work. Furthermore, the casualisation of unskilled work and growing insecurity in the market place produced further downward pressure on low wages. Being in work was no longer a guarantee of having sufficient money to bring up children without recourse to a food bank or going in debt. As Tim Bale said in the Herald (27/4/01): 'Sooner or later it won't be just us who notices our poor child health and education statistics, our tragic rates of injury and abuse, teenage pregnancy and suicide'.

Despite the welfare cuts in 1991, the numbers of people supported by benefits continued to rise. With increasing numbers supported on reduced benefits, low wages for unskilled work, and increases in serious housing need, the pressure on voluntary agencies and food banks rose inexorably.

When the economy picked up in the mid-1990s, it might have been expected that families that bore the brunt of the 1991 benefit cuts would be compensated. But the tax cuts in 1996 and 1998 were of little, if any benefit to these families, or to working families with two parents on low wages.

New Zealand assists low income families with a tax-based credit called Family Support that goes to the principal caregiver on the basis of the number of children and the level of parental income. In the 1996 tax package, Family Support was lifted by just $5 each per child per week. While older children are more favourably treated now than they were in the early 1990s, the purchasing value of Family Support for young families has fallen markedly.

To the rescue, a new payment was introduced in 1996, but only for families who fulfilled the requirement of being 'independent from the state'. While in effect, this Child Tax Credit (CTC) of $15 per week per child helps restore the real value of family assistance for those who qualify, the financial support for the around 300,000 children who miss out continues to slip.

Reflecting its confused objectives, the CTC was supposed to provide an incentive to be in work. It was, and remains very poorly designed to meet this goal. It does not reward an extra hour's work as a family either qualifies or it does not. The CTC is clumsy and costly to administer as it can be received only for the number of days of the year that families are not getting any state payment such as a benefit, a state pension, ACC for more than 3 months, or a student allowance. Those on and off benefits during the year are likely to miss out even for the times they do qualify.

In 1996, the Child Poverty Action Group NZ wrote to the Human Rights Commission pointing out that the CTC discriminates against children on the grounds of the employment status of their parents. There can be no justification for denying $15 a week to a child because a parent has the misfortune to be sick or unemployed or simply old. Ironically, the architects of this anomalous provision, National politicians, are now themselves complaining to the Human Rights Commission that recent adjustments to the community services card discriminate on grounds of employment status. Given National's stance on this issue, the government can expect wide parliamentary support for an end to this discrimination. It is to be hoped that this budget will see the CTC extended to all low income children. This should even please the advocates of targeting as it would deliver extra income only to the most needy, as those are the ones who currently miss out.

While the cost of extending the CTC to all families is high, even that would do no more than restore the real value of state assistance to low income children. Once catch-up is achieved in this and other areas, this budget should ensure that all aspects of the welfare system that affect children are properly linked to an inflation index. For instance, if proper indexation had been operating since 1988, the top threshold of $27,000 of joint parental income from which Family Support abates at 30% would now be nearly $37,000. Community card subsidies for children over 6 would be round $24 not $20. We do inflation adjust state pensions for all over 65, including the most wealthy even if they are still in the workforce. It is well past time in this budget to give children the same consideration. We can then move on to making children our first not last priority.