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

 

Labour's 'Future Of Work': Major Reform Of Careers And Apprenticeships

The next Labour Government will transform careers advice in high schools to ensure every student has a personalised career plan, Leader of the Opposition Andrew Little says. More>>

ALSO:

State Investments Management: Treasury Likes IRD, Not Education Or Corrections

The Inland Revenue Department has scored an 'A' in the first tranche of the Treasury's investor confidence rating for state agencies that manage significant Crown investments and assets, gaining greater autonomy as a result, while the Corrections and Education ministries gained a 'C' rating. More>>

ALSO:

Govt Goal: NZ To Be "Predator Free" By 2050

Prime Minister John Key has today announced the Government has adopted the goal of New Zealand becoming Predator Free by 2050... “That’s why we have adopted this goal. Our ambition is that by 2050 every single part of New Zealand will be completely free of rats, stoats and possums." More>>

ALSO:

Gordon Campbell: On The IOC’s Treatment Of Russian Sport, And Lone Wolf Terrorism

A blanket ban on Russian athletes would also have exposed the IOC to criticism that its treatment of Russia would have been marked contrast to its treatment say, of the track and field team from Kenya – a country about which the IOC has very similar doping concerns. More>>

ALSO:

Sounds Like A Plan: Auckland Council Receives Unitary Plan Recommendations

A key milestone in New Zealand planning history was reached today when the Independent Hearings Panel delivered the reports containing its recommendations on the Proposed Auckland Unitary Plan. More>>

ALSO:

National Park Expansion: Forests And Coast Of Kahurangi Protected

Five parcels of high value land totalling more than 890 hectares have been formally gazetted as part of the National Park. More>>

ALSO:

PPP Go-Ahead: SkyPath Gets Unanimous Support

Auckland’s SkyPath project has been given the go-ahead to be delivered through a public private partnership, after a unanimous decision at today’s Finance and Performance Committee. More>>

ALSO:

Gordon Campbell: On The Reserve Bank, The UN Shortlist, And Trump

Can there really be there any link between the US presidential elections and yesterday’s RBNZ signals on interest rates and the NZ dollar? Well, maybe. And it would be this: the improving US economy is reportedly putting a tailwind behind the US dollar, and rendering the actions of our Reserve Bank virtually irrelevant. More>>

ALSO:

Gordon Campbell: On What John Key Should Be Asking Joe Biden

No doubt, US Vice-President Joe Biden will be updating Prime Minister John Key on the chances of a TPP vote taking place in the ‘ lame duck’ session of Congress that’s held between the November’s election and the inauguration of a new President in January. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news