www.geocities.com/nzwomen/SusanStJohn/2001613IndependentChildren.html

It was expected, but desperately sad that the budget completely failed to grasp and deal with the issue of child poverty. A close reading of the budget implies that we can expect little to change over the next five years.

Yes, there is some utterly necessary bottom of the cliff expenditure for some families at the end of their tether, and a welcome improvement in early childhood education funding. But nowhere has the government understood the need for poverty prevention measures in the form of restored spending on family assistance.

The budget tables show that family support, the main mechanism for assisting families, is projected to change only $1m to $911m over the next five years. In the meantime nominal GDP is expected to increase by 26%. Other welfare payments including the state pension, have an automatic allowance for inflation built into the projections. Why are families treated differently? They can be ignored, it seems. Children do not vote and no one much understands the way their tax credits work, nor seems to care about them.

Not only is there no catch up in the family tax credits to allow for past inflation, but the real value of assistance is destined to sink yet further. This will occur through a double whammy as the purchasing power of a fixed weekly amount erodes, and the eligibility of families reduces as inflation carries their nominal incomes further into the income range from which the assistance bleeds out sharply.

The top threshold from which the abatement of family support is 30% has remained at a joint income of $27,000 since 1988. Earning above this amount can mean a effective marginal tax rate of over 60%, once tax, ACC and student debt repayment are also accounted for. Thus a low income of $10 an hour can yield less than $4 in the hand, and families can find it impossible to work their way out of hardship.

There has been lip service paid to the need to support mothers who leave work and have their first babies. A few weeks of paid parental leave is however a drop in the bucket compared to the need for ongoing support. Take a low-income, one or two-parent family, with one child that qualifies for the maximum amount of family assistance. Since 1986, when family support was introduced, there has been a tiny $5 a week increase in the per week payment for the first child from $42 to $47. In real terms this amounts to 34 % fall in purchasing power. Had family support been properly adjusted, today the maximum for the first child would be $72 a week.

The situation is more serious however once the effect of the abatement is taken into account. Full entitlement is only for joint parental income of less than $20,000 per annum. In 1986 a low income one-child family on 3/4 of total average weekly earnings was entitled to $35 a week. For the coming financial year, a similar family on an equivalent income ($26,700) is estimated to be entitled to $23.60, representing a fall in real value of 60%. If they are lucky enough to qualify for the Child Tax Credit there will be an extra $15 a child per week, but they will still be 36% behind. Yet over the next five years government seems content to let the erosion continue.

At an income of $31,000, (or $33,500 if the parents qualify for the child tax credit) the one-child family, even when there is a parent caregiver at home, pays the same tax as a single person. This is incredibly harsh and unusual compared to other countries where the shared costs of parenting are recognised to a much greater extent.

In the meantime, no matter how wealthy and whether still working or not, everyone over 65 is guaranteed an inflation-adjusted pension. The most affluent retired couple, even if both are on the top tax rate, get an extra weekly payment in the hand of at least $261. The poorest one-child family gets at very most, $47 from family support.

To assure this situation continues for all time the budget puts aside money for the new super fund. Ironically has been left to National to raise the flag for poor families. Bill English highlights the restricted spending choices implied by the government's super fund and wonders why the poverty lobby is 'breathlessly silent'.

The reason is plain. Ten years on from the mother of all budgets, another round of Charles Murray inspired welfare bashing from right wing parties is too painful to contemplate. There is a lot of good will towards the coalition government. This however does not mean acquiescence in the face of manifest injustice, neglect and the sheer folly of not adequately supporting parents in the job they do on behalf of society in caring for children.