David Cormack: It's expensive being poor

People on benefits can't afford to save money because being poor is expensive. Photo / File / 123RF

Labour's Families Package has just kicked in, giving more money to people not earning much. Of course they're taking some back with their regressive petrol tax, but the overall effect is supposed to be positive.

Every time National looked like taking a dip in the polls they'd wheel out a policy designed to inflict pain and misery on those right at the bottom: beneficiaries. When Paula Bennett was Minister for Social Development she even turned the tap off that had helped her younger self out of what they like to call the "welfare trap". Her Government ended the Training Incentive Allowance for post-high school training which helped people through tertiary education and into roles like nursing and teaching.

'When Paula Bennett was Minister for Social Development she even turned the tap off that had helped her younger self out of what they like to call the "welfare trap".' Photo / Andrew Warner

And every time National would come up with a new punitive measure, so many of us would roar with approval: "How dare those damn bludgers steal my taxpayer money!"

And yet, who are the real bludgers?

Are they the people who get miniscule government handouts because they do not have much money? An amount that was designed to be less than what you could afford to live off. An amount that is completely returned into the economy through living hand-to-mouth. Or is it the people who don't seem to understand the transactional nature of society? Who hoard their money in overseas accounts, or spend money on foreign goods and holidays?

These are the people who hide their incomes away or exploit loopholes, so they pay less tax than they should. The corporations who do creative accounting and show that they made zero profit here in New Zealand so effectively pay zero tax.

This group will still quite happily take what the state has to offer, healthcare, infrastructure, roads - big Government bailouts if it comes to it - but to hell with the state when it comes to paying back. Even beneficiaries pay tax on their meagre incomes. Seems like we're calling the wrong people "bludgers".

Bludging is to shirk your responsibilities and live off the backs of others. People on benefits are not bludging. They are trying their damn hardest to get by on bugger all. They also can't afford to save money because being poor is expensive.

You get cheaper public transport if you buy a ten-trip or a monthly pass, but if you can't afford that then you're paying the most expensive one-trip fare. Buy that washing powder in bulk! You'll save heaps. Unless you can't afford to. Then you buy the smallest amount because you're living pay cheque to pay cheque and you need to stretch what little income you have. Same with the internet - buy bigger data packages, pay a comparatively cheaper rate. The more money you have, the more opportunities you have to get richer.

We created tax breaks so film studios would shoot their films here, while at the same time defanging film workers' rights so they couldn't get the usual protections that being an employee gets you.

And yet despite this we still go after poor people with a zeal we don't usually express unless we're asking men about women's rights.

Victoria University's Lisa Marriott did some research that showed that we prosecute beneficiary fraud ten times more often than tax evasion, while tax evasion costs us at least $1 billion a year and beneficiary fraud costs us $30 million a year.

Over a six-year period, the average offending for tax evasion was $229,000. Those who were prosecuted were imprisoned less than 20 per cent of the time and about 5 per cent was repaid.

Over that same period, the average prosecution for welfare fraud was $76,000 while 67 per cent got a prison sentence, and offenders were far more likely to pay all of the fraud back.

Without Labour going after the poor like National loved to, maybe their changes will bring about a polling dip, or maybe they'll be the first people in history to get a baby bump after the birth.

David Cormack.

David Cormack is the co-founder of communications and PR firm, Draper Cormack Group. He has worked for the Labour Party, the Green Party and for National.