KEY POINTS:
The Government's Working For Families policy discriminates against beneficiaries' children by mixing work incentives with payments designed to help families raise children, the Human Rights Review Tribunal was told today.
After a six-year battle to be heard, the Child Poverty Action Group opened its case against what is now called the in-work tax credit before the Human Rights Review Tribunal in Wellington, in a landmark case that is set down for four weeks.
The group claims that the in-work credit of $60 a week breaches the Human Rights Act and the International Covenant on Civil and Political Rights by discriminating against people because of their employment status.
Counsel for CPAG Catherine Rodgers said the so-called in-work tax credit confused the work incentives and family assistance policy objectives.
She said the most common rationale for excluding beneficiary families from the payment was that it was an incentive to work by creating a larger pay gap between the benefit and employment.
However, she said even some families earning relatively high incomes received the payment, suggesting for them it was a payment designed to help them pay the costs of raising children.
If that was the logic, the payments should also extend to beneficiary families.
Miss Rodgers said the costs of excluding beneficiary families were high.
About 220,000 children missed out on the payments, about 150,000 of whom were living in severe hardship, she said.
The credit is given to single parents who work at least 20 hours a week, and two-parent families who work at least 30 hours between them, provided neither parent receives any income-tested benefit.
The Government plans to call six witnesses to defend the tax credit, including two experts from Organisation for Economic Cooperation and Development in Paris who will speak by video link on similar in-work payments in other OECD countries.
Both sides of the legal argument are being financed by taxpayers - the action group's case through the Office of Human Rights Proceedings and the Government's defence through the Crown Law Office.
It is only the second time a law has been challenged in the review tribunal since Helen Clark's Cabinet made the Government subject to the Human Rights Act in 2001.
The only other case was two weeks ago, when the tribunal found that an accident compensation law barring rehabilitation to accident victims after age 65 was inconsistent with the act.
The only legal remedy available is a declaration of "inconsistency".
The Government declined to allow courts to overturn laws as in the US and Canada.
Auckland University paediatrician Innes Asher will tell the tribunal today that "diseases of poverty" among children have increased as benefits to non-working parents have fallen further behind average wages.
Hospital admission rates for babies with bronchiolitis and children with serious skin infections roughly doubled between 1990 and 2003, when the domestic purposes benefit plus family support for a sole parent with two children dropped from about 77 per cent to 59 per cent of net average earnings.
Payments to sole parents with two children went back to about 60 per cent of the average after the Working for Families changes in 2005-06, but hospitalisations for bronchiolitis and skin infections have fallen only slightly.
A Ministry of Social Development spokesman said families of about 200,000 children were on income-tested benefits on March 31 - 18 per cent of all children.
Child Poverty Action said more than 80 per cent of children in beneficiary families were in sole-parent homes.
Professor Asher said poverty affected children's health in three ways:
* Nutrition, because poor parents could not afford good food.
* Environment, because poor parents could not afford to keep their homes warm and dry, with good facilities.
* Healthcare, because poor parents could not afford to take their children to doctors, especially after-hours.
"The children of beneficiaries are lower than they used to be," she said.
In its initial response, the Government says that, although beneficiaries can't get the in-work credit, they usually get more state assistance than working families who do get the in-work credit.
It says that, even if the tax credit is discriminatory, it is justified under a clause in the Bill of Rights Act that allows rights to be overridden by "such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society".
"Research shows that incentives such as [the in-work credit] are effective in encouraging people into work," it says.
As well, children did better in families where income came from work rather than benefits.
* LEGAL TEST
What's the case about?
Child poverty campaigners are challenging the Government's decision to give families a bigger tax credit if the parents work.
What's wrong with that?
They say child poverty has become worse since 1990 and the Working for Families payments have made little difference to the poorest families. They say the "in-work credit" of $60 a week discriminates against unemployed parents.
What does the Government say?
Beneficiaries still get more state assistance overall than working families. In any case, the Bill of Rights allows the Government to discriminate for good reasons in some cases.
- With NZPA
