NZ lags behind in family support

New Zealand has been the least generous of five often-compared Western countries in the level of family support payments.

One study has compared the help a sole parent looking after two children earning NZ$12.50 an hour receives in New Zealand, Australia, United States, Canada and Britain.

In New Zealand the parent, working up to 50 hours a week, got the least - around $4500 a year - compared with $12,500-$20,000 in Britain, the most generous of the five countries.

However, once the Government's flagship Working for Families package for low to middle-income earners fully kicks in, the comparison improves.

The comparison of each country's differing tax credit and social assistance systems was done in a paper by Patrick Nolan, Bob Stephens and Paul Callister of Victoria University.

Mr Nolan says New Zealand is even less generous than the United States, something he was surprised to find because the US is a country with a "reputation for having a miserly welfare system".

"The package is going to mean that we do catch up on countries like the United States and Canada," he says.

But we still have a long way to go before catching up with Britain and Australia who lead the world in this area. Mr Stephens, an associate professor at Victoria University's School of Government, notes in a 2003 paper New Zealand's lack of generosity compared with 17 other OECD countries.

He rates the leaders as Austria, Luxembourg and Finland with New Zealand lagging way behind in a fourth-ranked group - with Spain and the Netherlands.

"For a country that has a long history of legitimate pride in its welfare state, the position of New Zealand is disappointing and helps explain the paucity of recent child outcomes," he says. "Until there are increases in the level of generosity to families with dependent children, adverse outcomes for children are like to bedevil the country for years to come."

Each country has different ways of targeting tax credit assistance.

The major feature of Working for Families, announced in the 2004 Budget, is that it targets working families with children - not beneficiary families with children.

This discrimination based on a family's income source has got the Child Poverty Action Group angry. In the group's paper Cut Price Kids released last November, Susan St John and David Craig laud the Australian and British systems which feature much more universal payment systems.

"In both those countries per-child weekly payments are the same for all children, regardless of the source of their parents' low income, just as they were in New Zealand before 1996."

That year National introduced a child tax credit - specifically for low-income families who were in work. On April 1 2006 Labour will replace that tax credit with an in-work payment - perpetuating the discrimination.

The paper says the Australian system is "far simpler, more generous and humane".

Mr Nolan says the base level of family tax credits in Australia has risen from less than A$600 per child in 1996 to about A$1700 per child in 2004. In contrast since 1999 the Labour-led government has only made one small change to family assistance programmes until Working for Families.

In Britain, meanwhile, family assistance was rationalised in 2003 to provide a single seamless payment for low-income children regardless of the source of the parents' income.

The Government says Working for Families will slash child poverty by 70 per cent when fully implemented in 2007. It will do this by cutting the proportion of children in homes earning under half the median income from 14.7 per cent this year to just 4.3 per cent by 2007. Social Development and Employment Minister Steve Maharey is particularly keen for negative reporting of New Zealand's family assistance system to end. He says the package puts New Zealand into the "respectable" category among developed nations and the country's international image suffers through studies which use old data.

He cites one report released in March by the Innocenti Research Centre, established by the UN Children's Fund (Unicef).

It found that 16.3 per cent of New Zealand children in 2001 lived in homes earning less than half the national median income. Only Mexico, the US and Italy had higher child poverty rates. So senior government officials have gone to Paris to present the most up-to-date data incorporating the latest improvements to a two-day OECD meeting on employment and social policy today and tomorrow.

But as the paper comparing New Zealand to the US, UK, Australia and Canada notes, Working for Families will only claw New Zealand back up to match the bottom two - America and Canada.

* And the Child Poverty Action Group says we are only playing catchup for inflation. Susan St John, an Auckland University economist, says although there is significant real redistribution by 2006 and 2007, this needs to be seen in the context of no inflation adjustments since 1996 except for a pitiful amount in the 2003 Budget.