An increase to the base rate of benefits is welcome, but it comes with nasty fishhooks. There is the usual (for this government) increased pressure on beneficiaries (source):
• Most sole-parents, and partners of beneficiaries, will have to be available for part-time work once their youngest child turns three, rather than the current age of five.
• All beneficiaries with part-time work obligations would be expected to find work for 20 hours a week, rather than current 15 hours.
• Beneficiaries receiving Sole Parent Support will have to reapply for their benefit every year.
As the CTU point out, for beneficiaries with young children the increased work requirements are going to absorb the increase: “This will effectively become an extra ECE cost that easily swallows the extra $25 per week”. (Plenty of good discussion in that CTU document, check it out.)
Also, abatements / clawbacks reduce the impact of the increased rate. From the factsheet:
What else changes when benefits increase?
The interconnected nature of the welfare system means that the $25 a week per family increase in benefit rates will have an effect on some of the supplementary payments that families may be receiving.
Beneficiary families who pay income-related rents for social housing will pay slightly more in rent than they otherwise would. Their rent is set at 25 per cent of their income, so a benefit increase of $25 a week means their rent will go up by $6.25 a week.
Beneficiary families who are renting privately, getting the Accommodation Supplement, and receiving less than the maximum subsidy for their area, are expected to get $4 a week less in Accommodation Supplement than they otherwise would.
People who are receiving Temporary Additional Support on top of their benefit may also find this reduces slightly because of the increase in their income.
These flow-on effects mean beneficiary families will receive, on average, an in-the-hand income gain of just over $23 a week.
Naturally the major “take” in the budget, cutting Kiwisaver, takes effect immediately, while the increase to benefits is scheduled for April next year. And, as usual, health and education go backwards in real terms:
Today’s budget is a dismal affair, as the government shuffles money around and announces new spending while conveniently forgetting to mention that its a sub-inflation rise and that health and education are going backwards – as they have every year under National (Education has even been cut in nominal terms, falling from $11.5 billion in 2009 to $10.8 billion today).
This budget shows that National is in a panic, forced by widespread public pressure to address leftie / progressive issues – a capital gains tax, Auckland housing, and poverty. In each case, however, they have done it as weakly as they could. We the people need to keep the pressure on.
Update: I’m copying the comment from Mike in Auckland up here into the post:
I dare to say that there will be little extra spending by this government on benefits, contrary to the perception by many in the mainstream media and public. It sounds great this talk of 25 dollars extra for low income, benefit receiving sole parents.
In reality the existing abatement system will result in cuts to temporary additional support and the accommodation supplement for many, they get more base benefits, but it will in too many cases be clawed back from other benefit components, thus leaving the affected no better off.
So sole parents will have to look for part time work once the youngest child is 3 years old, and that means they will be moved to the lower Jobseeker benefit and no longer get sole parent support, and then no longer get the increased base benefit for that. Also will they have to work at least 20 hours a week, so they are likely to get less top up from WINZ once in that category, if at all.
What seems a top up of a benefit will only really leave few better off, and most no better off. It is just another English con job by our Finance Minister and this government.
And in other areas they move even sick and disabled into work, by putting some forms of expectations and pressures on them, they have even started putting pressures on people’s doctors, to not sign them off as unable to work, despite of sickness, injury and disability:
Yet work in not always “good for health”, despite of supposed “evidence” WINZ now rely on:
And discretely MSD has made it harder for beneficiaries making appeals against WINZ decisions on health grounds, or grounds relating to work capability, to get a fair hearing at Medical Appeals Boards:
Some new OIA info raises serious questions about the success of their use of contractors to get sick and disabled, same as sole parents, into work:
I call this step by the government much BS and propaganda, it is not what it seems, dear folks.