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Source: Child Poverty Action Group (CPAG)

Incomes are scheduled to be cut by up to $63 a week for many of New Zealand’s lowest-income households in less than a month, but Child Poverty Action Group (CPAG) and Auckland Action Against Poverty (AAAP) are both urging the Government to immediately raise family incomes instead, as an ongoing crisis-response measure.

Families and couples receiving benefits and New Zealand Superannuation are set to get $63 less a week, and singles $41 less a week, from 1 October when the Winter Energy Payment (WEP) period ends. But new CPAG research shows the effect of that cut will be dire on already inadequate incomes, and CPAG and AAAP are calling for the Government to continue WEP as an immediate crisis-relief policy, and also extend a further $72.50 a week in tax credits to all families on benefits with children.

In March, Minister of Finance Grant Robertson announced that doubling the WEP was part of the Government’s COVID19 support for “vulnerable” New Zealanders.

“The Government recognised that COVID19 would increase need – but the economic fallout from COVID19 will continue for years due to the continued global pandemic and this COVID-related payment is due to end in less than a month,” says CPAG researcher Janet McAllister. “Incomes were already too low before COVID, and this upcoming payment cut will not be accompanied by a similar reduction in bills for whānau and families who are already struggling.”

AAAP spokesperson Agnes Magele says that even current income support levels, including WEP, aren’t enough for many people to live on with dignity. “We’re seeing an increase in the number of sole parents in desperate situations coming to AAAP volunteer advocates for support,” she says. “For me personally, and my children, cutting $63 out of our current income will mean having not having enough kai for the house so we can pay the bills; for many others, they’ll have no internet or phone, so won’t be able to talk to their kids’ school or to possible employers. Others will be taking out high-interest loans. At a time of uncertainty it would be particularly cruel to lower already inadequate incomes for people on the benefit.

“If we could keep the WEP and have an additional $72.50 a week for our children, that would allow us to eat better, plan ahead and buy some staples in more bulk – making our groceries cheaper overall,” says Magele.

“It still wouldn’t be enough for everyone but it would give our communities a bit of breathing space while we all continue to wait for long-promised welfare reform,” says Magele. “Our whānau and families shouldn’t have to wait any longer for liveable incomes.”

The $72.50 a week represents the amount of the In-Work Tax Credit – a Working For Families tax credit currently only available to families who receive some income from paid work. CPAG and AAAP are calling for it to be extended to families who receive benefits.

New CPAG research using estimates for New Zealand’s official child-poverty measures shows that completely cutting WEP could tip many more families receiving benefits into dire poverty.

“We are extremely worried that stopping the WEP will increase toxic stress, debt, isolation, community disconnection, feelings of despair and shame and other harms that will waste whanau creativity and energy, and detrimentally affect children,” says McAllister. “Without WEP, couples on Jobseeker with children will require up to an additional $250 a week to get out of poverty on primary official measures. A sole parent with one child receiving core benefit entitlements and paying low rent in Auckland is currently around $25 a week below a primary poverty line; come October, that family will be $90 a week below that poverty line.  It’s appallingly low.”

“It shouldn’t be this way – and it doesn’t have to be.”

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Background:

  • In July, over 355,000 New Zealanders received a main benefit, and an additional 21,000 received the COVID Income Relief Payment.
  • Of those 355,000, those on Sole Parent Support (with children aged under 15) numbered 64,500; those on Supported Living Payment numbered 94,000.
  • CPAG and AAAP recommendation to Government: Immediately extend the Working for Families In-Work Tax Credit to all low-income families, and continue the current WEP past 1 Oct 2020 as a stop-gap measure, at least until the welfare system is reformed following Welfare Expert Advisory Group (2019) recommendations and family incomes are increased to adequate levels.
  • The CPAG report “Sheltering our children from COVID-19 fallout: New Zealand must raise incomes for the financially vulnerable instead of cutting their incomes on 1 Oct 2020 as planned” compares the following weekly incomes for model households with children:

o   Current (incl WEP) receiving benefits

o   Post-Oct 1 (excl WEP) receiving benefits

o   COVID19 Income Relief Payment

o   Recommended (incl WEP & IWTC) receiving benefits

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