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Child poverty linked to welfare dependency

Child poverty linked to welfare dependency

Muriel Newman Speech extract to Child Poverty Action Group Forum, St Columba Centre Ponsonby, Tuesday 14 June, 7.30pm

Child poverty has become a problem in New Zealand, largely as a result of the growth of long-term welfare dependency that has brought about a corresponding decline in living standards, ACT Deputy Leader and Welfare spokesman Dr Muriel Newman told the Child Poverty Action Group Forum today.

Back in the fifties and sixties poor families were able to get ahead through hard work, thrift and enterprise. Families with children paid almost no tax and there was no intergenerational welfare dependency.

The Kirk Labour Government changed all of that through the introduction of the Domestic Purposes Benefit in 1973. Increasingly excessive regulation of the labour market during the seventies and early eighties exacerbated the problem.

Welfare no longer provided only short-term financial support for families in need, but instead enabled able-bodied people who were quite capable of working to stay dependent on benefits in the long-term and child poverty escalated. Yet instead of addressing what is essentially a welfare problem by changing the system to fast-track families with children back into the workforce, successive governments have allowed the problems to grow.

In spite of the reassuring rhetoric from the Labour Party, child poverty in New Zealand is alive and well. That’s not just poverty in a monetary sense but in a moral and spiritual sense as well. Too many Kiwi children are being brought up in families where no parent works for a living, there is little understanding of the value of education and all too often no father to provide the love, support and guidance that children need.

Tragically, while the Government’s own research has shown that long-term welfare and sole parenthood are risk factors for children, Labour has changed the welfare laws in such a way that these two problems will get worse.

There are presently about 250,000 children living in welfare dependent families, including one out of two Maori children.

The Government’s response has been to make welfare more generous. The problem with that approach is that many families are now becoming better off on welfare than they would be in work, creating a strong incentive for them to remain on welfare in the long term instead of getting a job.

This creates an extremely worrying conundrum – the family is trapped into long-term benefit dependency, their children’s future is limited by government policy and taxpayers are locked into paying high rates of tax in the long-term.

The only winners are the Labour Government that believe in high taxes to fund cradle-to-the-grave welfare.

ACT’s vision for New Zealand is of a prosperous nation with a high standard of living and low rates of welfare dependency, except of course those people who will never be able to support themselves and need long- term security.

To achieve that goal, as a first step ACT will be proposing that a proportion of the governments’ tax surplus be returned to the workers who earned it in the form of tax cuts – a 15 cent tax rate for anyone earning up to $38,000 and a 25 cent rate above that for individuals and companies.

Treasury predicts that a lowering of taxes to this level will create a 1 to 1.5 percent increase in economic growth, which will help New Zealand close, the 30 percent standard of living gap with Australia.

ACT’s plan to lower taxes, reduce the crippling bureaucratic red tape that holds back small business and introduce an effective plan of welfare reform that will raise New Zealand’s standard of living which will virtually eliminate child poverty.

Families who are financially independent generally raise their child well, which leaves the state to focus on the small number of families who are in real need.


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