Life on a benefit about to get more impossible

Making ends meet on a benefit is already next to impossible, and will get even harder if tough recommendations expected from the Welfare Working Group this week are adopted, the Green Party said today.

“John Key said last week that people on the benefit make a lifestyle choice, and would be fine if they just budgeted properly. I put this to the test, and I challenge the Prime Minister to show how proper budgeting could make life any easier for the people in these two examples,” Green Party Work and Income Spokesperson Catherine Delahunty said.

“The first example is a solo mother living in Porirua with two children aged five and one. With the Domestic Purposes Benefit, Accommodation Supplement, and Family Tax Credit, her weekly income is $495. Using conservative estimates, her weekly food, rent, and power costs are around $380, leaving her just $115 to cover all her other expenses like phone, bus or train fares, school fees, doctor’s visits, and clothing.

“The second example is of a single 18-year-old man living in Auckland on the Unemployment Benefit. With the benefit and Accommodation Supplement his weekly income is just under $200. Using the same conservative estimates, his weekly food, rent, and power costs would be around $175, leaving him just $25 of discretionary income each week. This would be eaten up in a few days on transport costs required to fulfil his jobseeker requirements.”

Ms Delahunty said the Prime Minister’s comments showed how out of touch he is with the reality of life for New Zealand’s most vulnerable citizens.

“It is particularly concerning to hear comments like this from the Government in the week before the Welfare Working Group’s final report,” Ms Delahunty said.

The report is widely expected to recommend harsh welfare changes like further work testing the Domestic Purposes Benefit, new work tests for the Sickness and Invalids’ Benefits, and time limits on the Unemployment Benefit.

“Given the Prime Minister’s comments last week and the indication in his opening statement to Parliament to expect welfare restrictions this year, there is every chance that the Government will adopt harsh policies like this,” Ms Delahunty said.

“This would be bad news for all New Zealanders. At a time of rising unemployment and double-dip recession, harsh welfare changes will just widen the growing gap between those who have the most and those who need the most.

“Inequality hurts everyone, and there are better solutions. We need real job creation, and investment in skills and training for young people, not harsh policies that punish the vulnerable,” Ms Delahunty said.

Benefit budget examples
Solo mother in Porirua with two children aged five and one

Net DPB, with GST assistance: $283.66
Source: Work and Income, http://www.workandincome.govt.nz/manuals-and-procedures/deskfile/main_benefits_rates/domestic_purposes_benefit_sole_parent_tables.htm

Accommodation supplement at maximum rate for the area: $65
Source: Work and Income, http://www.workandincome.govt.nz/manuals-and-procedures/deskfile/extra_help_information/accommodation_supplement_tables/entry_thresholds_and_maximum_rates-01.htm

Family Tax Credit: $146
Source: Inland Revenue, http://www.ird.govt.nz/calculators/tool-name/tools-c/calculator-wfftc-estimate-2010.html?id=righttabs

Total income: $494.66

Weekly food costs for a basic diet in Wellington: Mum, $58, 5 year-old $34, 1 year old $27. Non-food household costs on a basic budget: $16 per week. Total groceries: $135.
Source: Otago Food Costs Survey 2009, http://www.familybudgeting.org.nz/documents/2009FoodCosts.pdf

Rent for a 2-bedroom flat in Porirua (bottom quartile) $200.
Source: Emigrate New Zealand average accommodation costs, http://www.emigratenz.org/flat-rents-wellington.html

Estimated weekly power bill for a 3-4 person home in Porirua with someone home during the day and electric hot water heating and appliances: $46
Source: Consumer Powerswitch: http://www.consumer.org.nz/powerswitch

Total costs: $381
Weekly surplus: $113.66

Young man in Auckland on the unemployment benefit

Net Unemployment benefit for single 18-year-old away from home, with GST assistance: $165.03
Source: Work and Income, http://www.workandincome.govt.nz/manuals-and-procedures/deskfile/main_benefits_rates/unemployment_benefit_tables.htm

Accommodation supplement: $33
Source: Work and Income, http://www.workandincome.govt.nz/manuals-and-procedures/deskfile/extra_help_information/accommodation_supplement_tables/entry_thresholds_and_maximum_rates-79.htm

Total income: $198.03

Weekly food casts for a man on a basic diet in Auckland: $61. Non-food household costs on a basic budget: $4 per week. Total groceries: $65
Source: Otago Food Costs Survey 2009, http://www.familybudgeting.org.nz/documents/2009FoodCosts.pdf

Rent for a room in a three-bedroom flat in Avondale (bottom quartile): $96
Source: Emigrate NZ average accommodation costs, http://www.emigratenz.org/flat-rents-auckland-central.html

Estimated weekly power costs for a three-person flat in Auckland with someone home during the day and electric hot water heating and appliances, per person $13.80.
Source: Consumer Powerswitch, http://www.consumer.org.nz/powerswitch

Total costs: $174.80
Weekly surplus: $23.23

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