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Opinion: The Unspoken Issue

The Unspoken Issue

By Susan St John of the Child Poverty Action Group*

Something a little odd is happening in election year in New Zealand. There is an issue that is not supposed to be talked about. The astonishing thing is that the banned subject is not something radical and outrageous. It is about the way children are treated in the income distribution in New Zealand.

The NZ Child Poverty Action Group has repeatedly argued for this issue to be taken seriously, as does its counterpart in the UK. However in the UK, the message is heard and acted on in successive budgets as a matter of course. In New Zealand a conspiracy of silence reigns.

In a recent speech to the Seafarers Union, Laila Harre pointed out that Family Support has been neglected and that 30% of New Zealand children live in poverty. Her observation that the basic shape of the income support system was much as Roger Douglas and Ruth Richardson had left it, was labelled by Steve Maharey’s Office as 'gratuitously offensive' and her speech removed from the government’s web site.

The truth she spoke of is indeed quite offensive in that it is a blight on our sensibilities. If anything, Laila Harre understated the position for many low families compared to the late 1980s. At least in Roger Douglas’ days the principle of treating all children the same for supplementary income from the state was established. In 1986, he replaced a range of complicated rebates for low income families with Family Support; a single tax credit to assist all low income families regardless their source of low income. It is true that a little later in 1988 he tried to sabotage this beneficial contribution, but his infamous flat tax and guaranteed minimum family income package was quickly abandoned by the Lange government

In 1991 Ruth Richardson’s contribution was profoundly negative for children as she abolished the universal family benefit. Family Support became the sole form of weekly income supplement for children. But at least low income families had their family support increased by the value of the foregone family benefit and all low income families were still treated the same.

Worse was to come. In the mid 1990s, instead of properly adjusting Family Support to compensate for inflation, the Child Tax Credit was introduced. The Child Tax Credit is added to Family Support, but only for those children whose parents are deemed ‘independent from the state’. The rest, about 300,000 of the most needy children in New Zealand, miss out on this $15 per child per week payment.

It may be because they have a parent on a benefit, or on ACC for more than 3 months, or on New Zealand superannuation, or student allowance. A sole parent with a part-time job and child caring responsibilities works harder than just about anyone, but if they are on a part-DPB, their children too are ineligible for the Child Tax Credit.

Families with young children who do not get the Child Tax Credit have had a serious loss in purchasing power because their Family Support has only been increased minimally from when Roger Douglas put it in place in 1986. For a young one-child family it has risen by only $5 in 26 years, moreover to get the full amount of $47 a week, joint income must be under $20,000.

A one-child family on a low income of around $26,000 gets only $24 a week. This buys 60% less than the family support paid to a similar family 26 years ago. Even if the Child Tax Credit is included, the loss is still 35%. It is not just that regular CPI adjustments have failed to occur, and that catch-ups have been totally inadequate and spasmodic, but that the levels of income from which the claw-back occurs have been largely fixed for more than 10 years.

So what are we to make of the amnesia of the Labour government? When in opposition in 1996 they said that if elected they would immediately add the Child Tax Credit onto Family Support for all children. There appears to be no provisions for any inflation catch-up for either Family Support or the Child Tax Credit in the fiscal projections out to 2006. In the meantime the prices of housing, milk, fruit and vegetables continue to rise relentlessly and the city foodbanks see no let-up in the demands of low income families with young children.

The government protects even the wealthiest of those aged over 65 with generous universal indexed pensions, so why not low income families with children? Our standard of living as the population ages will depend critically on the investment society makes in these children today. It is time we heard why the government is reluctant to discuss these issues.

* - Child Poverty Action Group is a non-aligned independent body seeking better policies for children. Susan St John is a senior lecturer in the University of Auckland Business School

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