Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 


Times of low inflation requires a better response

Times of low inflation requires a better response for families

New benefit rates for 2016 announced by the Government reflect that measured inflation is practically zero over the last year.

This means that core benefits will not increase.

As a short-term one off policy, as promised a year ago, beneficiaries with children will have an extra $25 in their net benefit rate from April 1. After offsets to other assistance, sole parents are expected to be about $17.50 per week better off. For a couple, each will see an increase of $8.75. These increases represent about an 8% increase in the adult benefit, but are given selectively to only those with children. As the OECD recommended in 2015, all benefits needed a boost as they had fallen so far behind growth in wages.

"Children’s hardship in low-income families still needs to be addressed. The best way this can be done is by lifting Working for Families Tax Credits," says CPAG Economics Spokesperson Susan St John.

Because of a change in policy in 2011, Working for Families (WfF) tax credits are not adjusted annually for changes in the Consumer Price Index (CPI). Adjustments only occur when cumulative inflation reaches 5%. This is particularly invidious in times of very low inflation, and means that since 2012 there has been no CPI increase. Now, none is likely until 2017 or 2018. The Government has saved costs at the expense of the worst-off families.

In contrast, the latest announcement sees NZ Super (NZS) increasing by 2.73% in spite of zero inflation because NZS is linked to average wages. Using the example of a single person living alone, NZS rises to $384.76, a gain of $10.23 per week. Over the years, such a link has seen older people well-supported in times of low general inflation and helps older people remain able to participate and belong to the communities they find themselves in when wages for others are rising.

Families on low wages, or on benefits because they are sick or can’t find employment or because they are caring for others, know that their money is not going as far as it did last year. Many can’t afford nutritious food, or power to heat their homes in winter. Many children in these families have to choose their subjects at school based on cost, and can’t even think about going on school trips. Rent increases matter more than many of the items included in the basket of goods that are used to calculate CPI inflation. While the official rate of inflation is -0.25%, rents increased in Auckland in 2015 alone by 10%.

These families are unlikely to get the In-work tax credit (IWTC) of $72.50 per week and so do not benefit from the Government belatedly increasing this fixed, unindexed amount by $12.50 per week. All this increase does is to recognise the lack of indexation since 2006 when the IWTC was introduced. In turn, for middle-income families the $12.50 will be clawed back by policy changes to the rate of abatement and a lower threshold for WfF over time.

Under current policy settings, despite the one-off increase to benefits, low income families have been left to lag further behind. Some very low income families get nothing from either the $25 or the $12.50 increase.

Child Poverty Action Group (CPAG) believes that the fragmentary exclusionary and confusing policies on the financial support for children need simplification and improvement if the most serious child poverty is to be reduced.

To view a chart which shows the ten-year picture for selected core payments, please download the attached file.

ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell:
On War Crimes And The Afghan Insurgency

Truly, with friends like former defence Minster Wayne Mapp, the SAS does not need enemies. At the very least, the Hit and Run book has raised the possibility that the New Zealand SAS committed war crimes in the attack they led in Afghnistan upon the villages of Naik and Khak Khuday Dad...

Mapp’s attempted defence of the SAS on RNZ this morning unintentionally indicated that collective punishment was baked into the planning exercise for the raid, and also into how the raid proceeded on the ground. More>>

 
 

Little Heading For Court: Apology Over Donation/Hotel Contract Claims Not Accepted

Today I want to publicly apologise unreservedly to Mr Hagaman for any hurt, embarrassment or adverse reflection on his reputation which may have resulted from my various media statements. I have offered that apology to the Hagamans. More>>

ALSO:

Biscuit Tin Of Democracy: World Heritage Site Protection, Ombudsman and Equal Pay Bills Drawn

On Thursday, 23 March 2017 three places are available on the Order Paper for the first reading of a Member’s bill. The ballot was held, and resulted in the following bills being drawn... More>>

ALSO:

Emissions Plan: NZ Needs More Science, More Trees, Fewer Beasts

A combination of technology breakthroughs, much more plantation forestry, and a big switch away from pastoral, particularly dairy farming, are identified as the key elements of any approach New Zealand takes to reducing its carbon emissions to a net zero level, according to a new report sponsored by the New Zealand chapter of GLOBE, a multi-party, global parliamentary grouping. More>>

ALSO:

"Backed To Win Seats": Labour Māori Seat MPs Won't Stand On List

The Labour Party is backing a request from its Māori seat MPs to stand as electorate MPs only, says Labour Leader Andrew Little. More>>

OutsKey: John Key's Valedictory Speech

I rise to address this House for the very last time. It has been a huge privilege to have served the people of Helensville as their member of Parliament, and, of course, the people of New Zealand as their Prime Minister. More>>

ALSO:

Productivity Commission: New Models Of Tertiary Education Are Coming

The report is a broad-ranging inquiry into how well New Zealand’s tertiary education system is set up to respond to emerging trends in technology and the internationalisation of education, and changes in the structure of the population, and the skills needed in the economy and society... More>>

ALSO:

PM's Press Conference: Water Everywhere

Monday's Post-Cabinet press conference focused on water, with the Prime Minister fielding questions about the possibility pricing water taken for export. Mr English said the government was directing their water allocation technical advisory group to include export water in considerations. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news