By CHARLES WALDEGRAVE*
For those many people who have been deeply concerned about the persistent growth of inequality, tomorrow marks a watershed in New Zealand social history. About 50,000 poor families in state houses will start to pay a rent they can afford for the first time in nearly a decade.
This
substantial investment in struggling families can be expected to reduce both the severity and the number in poverty. The move from market rents to income-related rents on state houses marks a country that is fundamentally changing its social policy direction.
More than 130,000 people will have 75 per cent of their after-tax household income to buy decent food, pay debts, get the kids to a school camp and contemplate a visit to the doctor when they are sick. For many, this will be the first time in years.
About 30,000 of these families will be better off by an average of $36 a week. This constitutes a major offensive against poverty.
Our research in the New Zealand poverty measurement project has shown that of those on the bottom fifth of household incomes, about 49 per cent skip at least one meal every month because they can't afford it.
Over the course of a year, 56 per cent do not visit a doctor when they need to because they cannot afford to, and 64 per cent carry debts, over half of them owing more than $1000. Forty per cent live in overcrowded conditions.
Of course, these lower state-house rents will not solve the total poverty problem. There are many poor households in private rentals. But a Government has to act prudently in the context of all other commitments.
This, by any standard, is a major social investment of more than $250 million over three years. Who can remember when this sort of investment was last made in the future security of poor households in New Zealand?
Housing is absolutely basic to family life. Without affordable housing, people live in fear and get sick. Children cannot be expected to achieve at school if they are hungry or trying to do homework in overcrowded conditions.
It wastes the talents of 10 to 20 per cent of young New Zealanders at a time we should be providing security and educational excellence for the next generation if we want to become internationally competitive. We simply cannot afford to waste talent.
The movement to market rents on state houses during the early 1990s was devastating for the families affected. Despite the payment of the accommodation supplement, the Ministry of Social Policy's own figures show the impact.
Whereas no state house beneficiary or a very low-income worker paid more than 25 per cent of his or her income in rent before the policy, now over 10 per cent of state-house tenants pay over half their income in rent, and about a quarter pay more than 40 per cent.
These figures underestimate the full impact. First, they do not include many in overcrowded houses.
And secondly, the ministry itself acknowledges there is a low take-up rate, particularly with low-wage workers for a range of literacy and other reasons.
When housing costs eat up that percentage of a very low income, the residue is left over for all other spending.
This, of course, includes food, household items such as soap and toilet paper, transport, clothing and unexpected medical expenses. It makes for a really tough life.
In our focus group research, parents have told us of the sacrifices they make for their children, the sicknesses that deteriorate because they cannot afford a doctor's visit on a given week, and the continuous budgeting nightmares.
No reasonable person would wish this sort of misery on another family, yet tens of thousands of households were pushed into this position throughout the 1990s.
It has become the symbol of the imbalance of social and economic policy.
Nevertheless, the original legislation was rammed through Parliament against the constant advice of tenants and housing workers, who predicted accurately the consequences for low-income households.
Housing costs are the substantial underbelly of poverty in New Zealand. In the poverty measurement project, we estimate that poor people lack a total of $1 billion if you add up all the dollars they are short. About $600 million of that is because of housing costs. This, of course, includes households renting in the private sector and those with mortgages.
It is important to acknowledge the significance of today's policy shift. In a decade or so, we will look back on the experimental housing policy of the 1990s as one of the cruellest social policies since the development of the welfare state.
Tomorrow marks a critical new social investment that will not only increase social equality but can be expected to be economically efficient. Families require many things to grow but after love, a secure and affordable house must be fairly high on the list.
For 50,000 households, that condition should be met tomorrow.
* Charles Waldegrave is a researcher with the Family Centre social policy research unit.
By CHARLES WALDEGRAVE*
For those many people who have been deeply concerned about the persistent growth of inequality, tomorrow marks a watershed in New Zealand social history. About 50,000 poor families in state houses will start to pay a rent they can afford for the first time in nearly a decade.
This
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