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Budget Comment - Poorest Miss Out


23 May 2008
Budget Comment - Poorest Miss Out

The way society responds to the needs of its poor through its public policies is the litmus test of how just or unjust a society it is.
New Zealand Church Leaders, 1993

New Zealand’s poorest citizens continue to miss out in the Labour Government’s ninth Budget, according to Catholic social justice agency Caritas Aotearoa New Zealand.

Caritas Director Michael Smith said the agency is judging this year’s Budget primarily in terms of outcomes for New Zealand’s poorest citizens – those living on benefits. He said it is particularly cruel that the Finance Minister’s speech indicates that tax reductions for the lowest tax bracket will not be passed on to beneficiaries, as benefits are set as net rates. “We understand this to mean gross rates will be revised so that beneficiaries receive the same amount in the hand after October 1 as before.”

Mr Smith said the Catholic agency had made a written submission to the Finance and Expenditure Select Committee in January, supporting the Government’s four tests for tax cuts, but asking that priority be given to ensuring that tax cuts would be undertaken in a way that did not lead to greater inequalities in our society. “We told the government in January that this would be very difficult to achieve if personal tax cuts were not passed on to beneficiaries.”

Mr Smith said Caritas accepts that there is a need to address household incomes of all families. “Increasing prices for food, fuel, housing and energy costs – all essential items – are biting into the living standards of even middle and high income households.

“However, if these groups are finding it a struggle to manage, it needs to be recognised that for the lowest income families, whose income levels were already recognised by the Ministry of Social Development as precarious, the hardship is even more intense.”

Mr Smith said although beneficiary families will receive some additional support from the increase in the Family Tax Credit component of Working for Families, those families who meet the criteria for the In Work Tax Credit will continue to be better off. “The government is still discriminating against children on the basis of their parents’ employment status.”

Caritas is currently preparing for the Catholic Church’s social justice week focus, which takes place each September. This year the focus is on Poverty in New Zealand. Mr Smith said Caritas staff have been speaking to a range of low-income families, and Catholic organisations that work with people in need. “We have heard many stories of the ongoing hardship being experienced by New Zealand’s poorest families, especially in meeting basic needs such as healthy food, and adequate housing.”

The recently released Ministry of Social Development report Pockets of significant hardship and poverty briefed the Government last June that beneficiary family income had fallen to half of the 60 percent poverty line recommended by Church agencies.

“The 2008 Budget does nothing to address benefit levels to deal with this basic issue,” said Mr Smith.

Catholic social teaching judges public policies and economic decisions by the effect they have on the poorest and most vulnerable members of our society. Mr Smith said Caritas had originally welcomed Working for Families in 2004 as the first major attempt to address family incomes in decades.

“But after five years of asking the government politely to address the needs of beneficiary families, our patience has worn out. In a Budget already labeled by commentators as a ‘big spend’ budget, the most needy members of our community have once again missed out.”


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