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Why families are better off with a Labour-led Govt

June 1

Why families are better off with a Labour-led government

Comments at an event marking Five Years of Strengthening Families in Dunedin. Dunedin Public Library.

Introductory comments

Thank you for the invitation to join you as you celebrate 5 years of Strengthening Families here in Dunedin. I'd like to acknowledge the Mayor, Sukhi Turner, and the chairperson of the Dunedin Strengthening Families Management Group, Vaughan Milner.

I'd also like to acknowledge the wide range of social sector, government and community organisations who are represented here today. Strengthening Families would not work without your input and support. You can all be proud of this fifth birthday celebration.

Last week Michael Cullen presented the government's fifth Budget. It was a big week for the families you all deal with every day. So today I thought I would talk about the government's hopes for this package and our commitment to ending child poverty.

But first a little story.

You might know the old story they tell about the tourist who gets lost somewhere in the countryside of Ireland.

A farmer comes along in his tractor and he waves him down, and asks him how to get to Dublin.

The farmer tells him "If I were going to Dublin I wouldn't start from here."

There's a big gap in our economy between where we'd like to be and where we are, and if we were all completely honest, we'd have to admit that we'd rather not be starting from here.

But like the tourist in the story, we've got no choice about that.

Addressing the social deficit

Now, the free-market ideologues are quite sure about the best way to get from where we are to where we'd like to be.

They talk nostalgically about that 1991 Mother of All Budgets.

We all know from the people living in poverty that we meet with every day that slashing benefits and cutting taxes were hardly the high water mark of the 1990-1999 National governments.

It's worth noting that this view is not universally held. The Opposition would have us back there again before lunchtime - to coin a phrase - if they had the chance.

They say we should try a bit of economic tough love - starve people out of poverty and threaten them into jobs.

As you'll have seen in last week's budget, we don't go much for that kind of thinking.

If that really was the prescription for revving up the economy and getting us back up to the top of the OECD league tables, then something must have been wrong with the dosage.

By the end of the 1990s, the patient was, by most vital statistics looking sicker.

The poverty levels were rising, unemployment was high, and many, many families were under stress. You saw for yourselves what that meant.

There are different ways to tackle these problems.

You can say "Let the market signals deal with it" - and for a good part of the 1990s, that was the ideology that held sway.

The whole point of view was hands-off.

But this sink-or swim approach didn't work out quite the way the ideologues hoped.

And if you worked in mental health, or alcohol and drug care, or housing, or education, or counselling, or women's refuge, or any of the many agencies that take part in this Strengthening Families protocol, you'll know that there were a lot of people in deep water who were just going under.

And the more-market philosophy didn't just have a human cost.

It also had an institutional cost.

Throughout those years, as we kept our hands off, our knowledge and expertise in social policy suffered as well.

We dropped out of the loop, and international thinking and practice moved ahead.

By the time this administration took office, we had a lot of catching up to do.

The good news is that we have.

We've been studying, learning and exchanging ideas with practises in social policy worldwide, and much of what we're doing today is world best practice.

The creation of the Ministry of Social Development has led to something of a revolution in social policy in this country. In the two-and-a-half years it has been going it has established a solid reputation for producing the kind of social research government's need if they aspire to build an inclusive society - as this government does.

Examples include its Living Standards research and the two Social Reports - which provide a frank assessment of how New Zealand families are coping and whether efforts by the government to improve their lives are actually working.

These are world leading pieces of social research and they tell you that this government wants to be held accountable not just for how well the books look each year, but we also want to be judged on how we have improved people's lives.

Poverty will never be a word any government I am a part of bans from official reports.

That is why, when we talked in the Budget about breaking new ground in moving people into work, we weren't exaggerating.

You know, I know, and anyone who works with people in any aspect of social development that you can't be mechanistic about any of this.

People aren't all the same, and you can't treat them all the same way.

So when you talk about developing policies for providing pathways to opportunity and helping people into work, you're talking about something that's never going to be as simple or as straightforward as some of the ideologues would like you to think.

You do want to develop your policies so that you end up with something that works simply, but getting something to work simply is often a very careful and elaborate task.

A lot of careful thought has gone into the strategies we've developed.

Budget 2004: Working for Families

The papers and the radio and the TV have been full of the budget. I'm sure you've had a chance to get familiar with it, so I won't rehearse it all here

But I do think it's worth summarising one very important part of it, because it feeds directly into what you're all trying to do together under the Strengthening Families protocol.

So let me give you a quick summary of our Working for Families package.

It reforms and simplifies social assistance for all New Zealanders.

It will make it easier for hard-working parents on low incomes to make ends meet.

It will make it easier for them to go out and earn an adequate standard of living and still be able to provide the time and care their children need.

Once you take into account the costs of working - childcare and the effects of benefit abatement and tax, for example - many families with children are little or no better off in low paid work than they are on a benefit.

Some families are worse off.

We're fixing that.

This package has looked at those problems and impediments, and made the corrections you need to get the barriers out of the way.

This isn't just a question of jobs, though. It's also a question of basic living standards.

We know from our Living Standards research that not every family has enough money to make ends meet. Some families have to delay or go without things like visits to the doctor or dentist, new clothing or footwear, and fresh fruit and vegetables.

It's what some of you probably see more often than you'd like amongst the families you deal with.

And you'll know that sometimes clever budgeting or belt tightening just isn't going to be enough to fix it.

Working for Families puts more real dollars in the pockets of low-and-middle income families.

That means more financial support for parents to raise their children.

It means fewer of the fractured lives you have to spend time mending.

You might wonder if these are just broad sweeping promises that fall short on specifics.

They're not. Let's get down to detail for a moment.

In this package, you get a substantial increase in Family Support and other Family Income Assistance, including a new In-Work Payment that replaces the existing Child Tax Credit.

You see more help with housing costs through increases to the Accommodation Supplement.

You see more help with childcare costs through significant increases to Childcare Assistance.

And you see initiatives to make social assistance easier to access and understand.

In 2004/05, we'll invest a total of $221 million in Working for Families.

That investment will build to $664 million in 2005/06, and $900 million in 2006/07.

In 2007/08, the total investment in Working for Families will reach around $1.1 billion a year.

This is huge, and its effect will be huge.

Let's look at some examples:

· Len is a manufacturing worker on the North Shore. He earns around $39,000 (depending on overtime). With four children aged six to 12, he and his wife currently struggle to pay the bills. They're getting some family assistance now, but are worried that they are not able to put any money aside for emergencies, let alone for their retirement.

Len and his family will gain an extra $150 per week. The extra assistance starts on 1 April with an extra $70 more a week in Family Support. This increase to $95 per week the following April and he also qualifies for the new In-Work payment of $15 per week. Then on 1 April 2007 his Family Support increase by a further $40 per week.

· John is a storeman and brings home $480 a week. His wife, Rachel, earns $200 a week. They have two teenage children. At the moment they get no state assistance at all, yet by the time they pay their rent of $220 a week, put petrol in their car, feed their two teenaged daughters and pay the power bill, they have nothing left. They don't know how they are going to be able to afford to send their daughters to university or to save for their retirement.

John and Rachel, the storeman and his wife, gain $115 per week. In October they qualify for another $5 Accommodation Supplement a week and next October their Family Support payments increase by $35 per week. On 1 April 2006 their Family Support increases a further $25 per week and they qualify for the new In-Work payment of $30 per week. On 1 April 2007 their Family Support increases again by $20 per week.

· And finally, let's look at Josie, a widow trying to support five children on the $34,000 she earns in an administration job. With rates, power, doctors' bills, school uniforms, school fees of $900 a year, and a grocery bill of $150 a week, she's struggling to find the money to pay the mortgage and maintain the house.

Josie will gain $12 more Accommodation Supplement a week in October. Next April her Family Support increases by $46 per week. On 1 April 2006 her Family Support increases by a further $25 per week and she also qualifies for the new weekly In-Work payment of $15. In April 2007 her Family Support increases by a further $28 per week. All up Josie and her family will be better off by $126 per week.

All these families will see their situation significantly improved by the Working for Families package. Nearly 300,000 families overall will benefit.

The package has been staged to increase support for low-and-middle income families each year over the next four years, with most in the next 18 months as we can afford it.

Depending on which international poverty measure you use, Working for Families will reduce child poverty by either 70 or 30 per cent. Those are substantial gains.

The problems you're dealing with won't melt way, but the prospects for many of the families you're seeing are going to be improving day by day, and week by week as these policies start to work their effect.

Other support for families in Budget 2004

While the Working for Families package received most of the attention last Thursday, the Budget also contained a $75 million package of other initiatives to help families.

The package includes: · An expansion of Family Start from the 16 communities it currently operates in to 24 communities by 2007. At least 2,200 more families will receive help from the programme; · Funding to employ another 38 social workers for the Social Workers in Schools programme. This will enable the number of low decile schools with access to the programme from 220 to approximately 330 by 2007; and · A new home-based mentoring programme where we match the skills and experience of older New Zealanders with young families who need help. We know that many young families do not have a grand-parent or older person around. What we hope is that by matching older New Zealanders who want to pass on their life skills with struggling New Zealand families we can improve their household and parenting skills - as passing on basic cooking, budgeting, parenting and DIY skills. The programme will gradually build and by the fourth year we aim to be helping 2,000 families.

Concluding remarks

What you have done over the past five years has been tremendous.

What you want to hear, I would think, is that as time goes on, the problems you're dealing with will become fewer and the lives of the people you see will be getting better.

This is the kind of policy that will make that happen. It's a huge change, and it's going to make a big difference to the lives of thousands of New Zealand families.

Like that tourist In Ireland, we might still be a long way from where we want to be, but there's absolutely no question that, over the past five years, we've been heading in the right direction and this government has just put its put on the accelerator to get us there faster.


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