Ministry of Social Development in Whanganui. Photo / Bevan Conley
Ministry of Social Development in Whanganui. Photo / Bevan Conley
The Herald’s political and specialist reporters examine the big issues facing New Zealand and how the main political parties plan to deal with them. Michael Neilson looks at social development policies.
A key difference between the two main parties is typically found in their approaches to the welfare system, and the 2023 election is no different.
Just like with crime, labels such as “soft” and “tough” get lobbed around.
Indeed, claims of “beneficiary bashing” are already emerging from Labour to describe National’s policies, while National and Act have ridiculed Labour as “soft” and contributing to record high numbers of people on benefits (they are not record high when adjusting for population: the peak was in December 2010 with 13 per cent of the working age population on a benefit after the Global Financial Crisis).
There are no parties on track to enter Parliament advocating for anything radically different to the system - such as Labour’s “Rogernomics” neoliberal reforms of the 1980s or National’s “Ruthanasia” that followed, that dramatically stripped back the welfare state.
Instead, parties on each side of the political spectrum, left and right, are proposing variations of much of the same system, albeit with different ideological drives and justifications.
The two terms of the Labour Government, and in particular the most recent, have seen relatively low levels of unemployment but at times high levels of people on the Jobseeker benefit, with the obvious influence being the Covid-19 pandemic and subsequent economic impacts.
The number peaked in December 2020 at 212,466 people, before dipping in 2021 and 2022. There are currently just over 170,000, people which while down is still about 50,000 people higher than when Labour came into Government in 2017.
This rise in benefit numbers alongside a significant decrease in sanctions, now being applied at about half the rate as the previous National Government, has been a key source of criticism from right-wing parties National and Act. National has also been highly critical of the fact the number of people who have been on benefits for long periods of time is growing.
Labour has responded there are record numbers of people coming off benefits and into work and argues that there is no evidence sanctions are effective.
Labour is largely proposing to continue the work it has done over the past six years in what it claims to be an overhaul of the welfare system.
Indeed it would have been if all 42 of the recommendations received in 2019 from its Welfare Expert Advisory Group had been immediately enacted.
Officials had warned child poverty could see a slight increase due to the economic situation with high inflation and cost of living issues. The Greens and Te Pāti Māori want to get rid of sanctions altogether, as per advice from WEAG that there was no evidence supporting them.
Labour has pledged to continue enacting recommendations of WEAG, including a Welfare Overhaul Bill to reset the social security system, while National says it will not continue with the approach.
National wants to introduce a traffic light system to make work obligations clearer for beneficiaries and target long-term benefits while Act wants also address people on health and sickness-related benefits.
NZ First wants to cap access to Jobseeker benefits at two years across a person’s lifetime, which it says strikes a balance between providing a “hand-up” while also keeping an incentive for people to find employment.
Overall, Labour has dramatically increased benefit levels to where they would have been prior to major cuts in 1991.
In its first Budget after the 2020 election, it lifted all core benefits by $20 from July 1, 2021, eventually boosting all benefits by $32 to $55 overall, costing $3.3 billion over four years.
Treasury actually recommended that the $20 lift go further - as high as $50 - costing an additional $1b.
Labour has pegged annual increases to average wage rises - with exceptions in 2021 and 2022 when inflation was higher.
Since 2018, benefit income levels have risen by 43 per cent after accounting for inflation and housing costs.
These payment hikes are not on the line this election, with no one promising to cut levels of payment.
However, one of the key differences between the two major parties is that National will peg annual increases to inflation, meaning across four years an effective cut of $2 billion than what would occur under Labour.
The current rate of Jobseeker for an individual over 25 is $337 a week. The Greens want to replace Jobseeker, Sole Parent Support and the student allowance with a single payment of $385 a week, with an extra $135 each week for people caring for children on their own.
Te Pāti Māori wants to double baseline benefits and also peg the minimum wage to the living wage, currently at $26 an hour.
Labour has introduced a Best Start payment for new parents of $69 a week, which is universal in the first year and then means-tested. The Greens want to double it and expand to all parents.
Labour has introduced a Best Start payment for new parents of $69 a week, which is universal in the first year and then means-tested. Photo / 123rf
Labour also introduced the Winter Energy Payment for everyone on a main benefit, including superannuitants. National wants to keep this but likely support partner Act wants it means-tested for superannuitants.
Labour is pledging four weeks’ paid partner leave, to be taken concurrently or after the 26 weeks primary carer leave.
The main credits are the family tax credit (FTC) of $136.94 a week for qualifying families, with an additional $111.60 a week for every subsequent child.
On top of this, there is the in-work tax credit (IWTC) of $72.50 a week for families with one to three children (with an extra $15 a week for each fourth and following child).
Labour’s policy, which came out in August, has subsequently been matched by National.
Their changes would see a $25-a-week increase to the IWTC by April 1 next year. That means about 160,000 moderate-income families would get a boost.
Then, in 2026, both parties would raise the abatement threshold from $42,700 to $50,000. This means that, instead of starting to lose their tax credits once their incomes hit $42,700, families will begin to lose them at $50,000. The change would mean families keeping about $2000 if they earn above the threshold.
Sepuloni said Labour was not immediately looking at increasing the family tax credit, which would go to all families, not only those in work.
Labour had commissioned a review of Working For Families and recommendations were due to be delivered to the Cabinet in November. Sepuloni said that, if re-elected, Labour would consider any proposals.
The Greens want to replace WFF with a new scheme and lift the abatement threshold from the current $42,700 to $60,000, which is where it would be if adjusted for inflation over time.
The Greens are also promising a single payment for caregivers of $215 every week for the first child and $135 a week for every other child, replacing both the FTC and the IWTC.
The Greens and Te Pāti Māori also want to cancel all beneficiary debt, increase hardship grants and ensure beneficiaries don’t get into debt.
The total amount of money owed to the Government - which includes loans for essentials ranging from clothing to household appliances and bill payments - has ballooned to $2.4b as of March.
More than $250 million is also owed to Inland Revenue by families who were overpaid their Working For Families tax credit.
The top 10 per cent of people with debt are paying on average $26 a week out of their benefits - higher than the Winter Energy Payment support - and with disproportionately higher rates of repayment for women and Māori.
Māori women owing debt to the Ministry of Social Development have a balance on average 50 per cent higher than Pākehā women and more than twice as high as Pākehā men.
Both main parties are also committed to retaining the child poverty reduction targets, introduced under former Prime Minister Dame Jacinda Ardern.
On children in poverty before housing costs, for 2021/22 it had dropped to 12 per cent from 13 per cent. The percentage of children in poverty after housing costs was now at 15.4 per cent - up slightly from 15 per cent the year prior.
And the percentage of children experiencing material hardship had also dropped from 11 per cent to 10.3 per cent.
Officials had warned child poverty could see a slight increase due to the economic situation post-pandemic with high inflation and cost of living issues.
These are based on what is available online and provided by the parties. It will be updated as more policies are released.
Labour:
Continue working through recommendations from the Welfare Expert Advisory Group, including a new Welfare Overhaul Bill
Index benefit increases to average wage increases
Continue with the Winter Energy Payment at current settings
Consider increases to family tax credits, based on Working For Families review recommendations due in November
Increase abatement thresholds for people on main benefits to incentivise people to take up part-time work, with annual increases on $160 from 2025 based on minimum wage rise
Increase the in-work tax credit by $25 per week (from $72.50 to $97.50), from April 1, 2024, and increase abatement thresholds from $42,700 to $50,000 by 2026
Introduce four weeks Paid Partner’s Leave, to be taken concurrently or after paid primary carer leave of 26 weeks
Leave is additional to current statutory entitlement of two weeks unpaid leave
Keep superannuation at 65 and continue indexing to wage growth
Review the impact of relationship status on benefit entitlements
Make the Apprenticeship Boost Initiative permanent
Continue commitment to child poverty reduction targets
National:
Won’t continue working through recommendations from the Welfare Expert Advisory Group
Target young people on Jobseeker benefit for at least three months with assessment and contract not-for-profit community providers, with sanctions if they fail to undertake activities
In tackling long-term benefits, National will also introduce a bonus payment of $1000 for under 25-year-olds who have been on the Jobseeker benefit for longer than a year who find work and remain off benefit for 12 months
Increase the value of the in-work tax credit by $25 a week (from $72.50 to $97.50), from April 1, 2024, and increase abatement thresholds from $42,700 to $50,000 by 2026
Keep the automatic increases to Working for Families payments that currently exist in law
Keep the Winter Energy Payment at current settings
Increase NZ Super payments every year each year based on the after-tax average wage
Continue commitment to child poverty reduction targets
Peg benefit increases to inflation rather than average wage rise as currently
Gradually increase the age of eligibility to 67, with adjustments not beginning until 2044
Greater focus on benefit sanctions to move people into employment, introducing a traffic light system and non-financial measures like community service
Green Party:
Committed to working through recommendations of the Welfare Expert Advisory Group, including a Welfare Overhaul Bill with a focus on ending hardship, not just alleviating it
A guaranteed income of $385 to anyone out of work or studying, and an $135 a week top-up for sole parents. This will replace Jobseeker, the Student Allowance, and Sole Parent Support - with full individualisation; and universal eligibility for students.
Provide payments of at least 80 per cent of the full-time minimum wage to anyone limited in their capacity to work due to a disability or health condition through expanding ACC into the Agency for Comprehensive Care.
Overhaul recoverable assistance so that grants are available as an alternative for urgent needs. This will prevent people going into debt when they are seeking help; and work towards writing off existing debt to MSD.
Reform the Social Security Act to uphold the dignity of those who need support
End all sanctions applied to beneficiaries and cancel beneficiary debt
Double the Best Start payment from $69 a week, to $140, and make it universal for all children under 3 years
Keep the Winter Energy Payment at current settings
Act Party:
Introduce a range of policies to help sick and drug-addicted people off benefits and into work
Require benefit case managers to consider whether all reasonable treatment options have been pursued before deciding whether a medical condition should be accepted as permanent
Expand the roles of regional health advisers and “designated doctors” to pick up on fraud and ineligibility, ensure people are on the correct benefit, and are supported to meet any job-seeking obligations
Enable doctors to complete work capacity certificates privately to avoid having to provide advice under duress
Require electronic income management for long-term dependents.
Restrict the Winter Energy Payment to over-65s who hold Community Services Cards and recipients of main benefits.
Leave annual benefit increases indexed to average wage rises
Gradually increase the NZ Super age to 67, at a rate of 3 months per year from fiscal year 2024/25. Once the age reached 67, it would be indexed to life expectancy, ensuring that each generation was entitled to the same proportion of their life on the pension as previous generations.
There will be no change to the age of eligibility for Superannuation under New Zealand First and will remain pegged to average wage increases
It will introduce a range of extra benefits for superannuitants, including rates relief, two free doctor visits a year and increase accommodation supplements
Cap access to Jobseeker benefits at two years across a person’s lifetime, which it says strikes a balance between providing a “hand-up” while also keeping an incentive for people to find employment
Te Pāti Māori:
Immediately raise the minimum wage to $26 per hour and legislate to index it to the living wage
Eliminate starting-off/youth rate wages and benefit rates
Remove financial penalties, sanctions and work-test obligations for beneficiaries
Double baseline benefit levels
Individualise benefits
Increase the amount people can earn before benefits are cut by raising abatement rates
Cancel income support-related debt and ensure that additional grants do not need to be paid back in future
Ensure the special needs grant recognises additional cultural costs such as with the tangihanga process
Create a universal student allowance and double student allowance rates, in line with benefit increases
Restore full student allowance eligibility for postgraduate, part-time, and long-course students
