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Wellbeing Budget 2019: How transformative is it?

The Wellbeing Budget is about a new approach to tackling New Zealand’s long-term challenges. It’s about a joined up government focused on building capabilities of our future generations”.

Minister for Finance, Hon Grant Robertson

Ki te kahore he whakakitenga ka ngaro te iwi - Without foresight or vision the people will be lost

Kingi Tawhiao Potatau Te Wherowhero

Tēnā koutou and welcome to the NZCCSS Policy Watch Special on the Coalition Government’s first Wellbeing Budget 2019.

The Coalition Government’s Wellbeing Budget represents a vision of a new way of working that will move away from prioritising economics, and put people, their families, whānau and communities at the centre of government priorities and spending, alongside a joined-up government approach to wellbeing.

Here at NZCCSS we are heartened by the 2019 Wellbeing Budget and see it as providing a hopeful start to building intergenerational wellbeing across all of New Zealand.

We acknowledge the complexity of this approach when applied to the budget process but remain positive about the inclusion of a wider set of factors beyond economic and fiscal measures in the Budget. When combined with the intergenerational approach, NZCCSS believes a wellbeing approach provides a solid basis for a more inclusive and equitable future for our country. This will take time to bed in.

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Our mission calls us to improve the lives of those living in poverty and at the margins of society, and to give commitment to Te Tiriti O Waitangi. We are encouraged by new funding allocations to mental health, domestic violence, children in care, Whānau Ora, and on supporting Māori and Pasifika aspirations and other areas.This funding will make a positive difference to the lives of those struggling with complex issues, and who seek support from our social service networks.

Could the government have gone further? Yes. The ongoing constraint derived from the Budget Responsibility Rules as Dr Ganesh Nash pointed out at the CPAG post-budget event, has ‘no economic rationale’ and needs to be extended to support a truly transformative wellbeing approach and address underpinning structural issues.

Real progress will be made when we, as a nation, also address the systemic drivers that lead to stress and lack of hope” Trevor McGlinchey, EO, NZCCSS

$26.7 million (over 4 years) to community organisations is welcomed by NZCCSS but is insufficient against a backdrop of decades of underfunding, and cost pressures, particularly those around wage increases. The community NGO social service sector plays a critical role in supporting the overall wellbeing of children and their families and whānau through the delivery of services that work across the continuum of need from early intervention through to complex and intensive services. Without sufficient funding, in an environment of increased government performance expectations, the sustainability of individual services will remain in question.

All Budgets have a flagship announcement and mental health and addiction services was the standout of this budget. The Government’s flagship budget announcement went to mental health and addiction services; the traditional poor cousin of health. The announcement puts money behind Government’s acceptance of 38 of the 40 recommendations of He Ara Oranga (the report of the Inquiry into Mental Health and Addiction). All up, the investment into mental health priority is worth $1.9 billion over five years and spans health, correction, housing, justice and education. NZCCSS supports this cross government approach and level of investment but remains concerned the structural inequities that underpin many personal experiences of mental distress have not been addressed in this budget.

Summary of key parts of the Budget

In our comments, we focus on three main issues covered in our submission in January on the Budget Policy Statement,

• First issue is the need to spend more now to support children and others in need through direct government transfers.

• Secondly, the housing crisis is a real emergency now and needs urgent and significant capital funding from government to support community housing developments.

• Thirdly, non-government social service organisations are the partners of government and communities in delivering wellbeing outcomes in our communities. This budget needs to increase funding because most organisations have had no funding increase for 10 years.

First Budget Day Report on Child Poverty - Government sees the reduction of child poverty and breaking the cycle of poverty as one of New Zealand’s most significant intergenerational wellbeing challenges.

The Child Poverty Reduction Act 2017 put into legislation for the first time, a requirement for the government of the day to report against set poverty reduction targets. An action acknowledged across government and communities as a real step forward in terms of an official acknowledgment of three decades of entrenched child poverty. From here, Government set a short term (3 year) and long-term (10 year) targets to reduce child poverty and the Wellbeing Budget 2019 is the chance to show how they intend to achieve this goal.

So the question is will the wellbeing spend for 2019 improve the lives of 174,000 childrenliving under the lowest poverty line (40% of the median income after housing costs poverty line)?

Overall NZCCSS is deeply disappointed for these children as the wellbeing spend will not sufficiently lift their families household income enough to improve their day-to-day lives. Their poverty and exclusion will largely continue.

As the majority of the 174,000 children live in benefit dependent households, the Welfare Expert Advisory Group (WEAG) report: Whakamana Tāngata: Restoring Dignity to Social Security in New Zealand and its 42 recommendatons offers some much needed hope to these children that their lives might improve.

The extent of the disparity between benefit payments and an adequate income was thoroughly covered by WEAG. The report found the adequacy of income support (for a variety of different family circumstances), had a shortfall from $50 per week to $230 per week. This is a significant inequity, and reinforces the need to lift main benefit levels, alongside other recommendations discussed in the report (page 94-118). The cost of not doing so is far higher over the long run.

So what did the Wellbeing Budget offer up?

The first Budget Day Child Poverty report continued to draw on the Family Package from Budget 2018 as the basis of reaching its 3 year child poverty target. “The Child Poverty Report indicates that, due to our policies, by 2020/21 we will reduce the number of children in poverty on the before housing cost measure by between 41,000 and 66,000 children, and between 50,000 and 74,000 children on the after housing cost measure”.

The Families Package:

• increased the Family Tax credit

• increased the Accommodation Supplement

• Introduced the Winter Energy Payment for those on a main benefit and people who receive Superannuation or a Veteran's pension

• Introduced the Best Start payment for all families in the first year, followed by two or more years support for middle and low income families.

While the Family Package has brought some much needed relief to struggling families, NZCCSS members have consistently reported it is not enough on its own to lift incomes to a level that will address persistent household poverty, and enable full participation in society.

The Wellbeing Budget did announce main benefits will be indexed to average wage increases. We see this as a good step and a WEAG recommendation but, as Dr Michael Fletcher an expert advisor to the WEAG comments, Working for Families tax credits and the Accommodation Supplement would also need to be indexed otherwise people on benefits will continue to fall behind.

Other government actions taken from the WEAG report that may reach those 174,000 children via additional household income include pre-Budget announcements:

• the removal of the sanction on women who do not declare the name of the child’s father.

• increasing abatement thresholds in line with increases to the minimum wage (worth between $10 -$15 over the first year and between $25-30 over four 4 years)

In addition, the Wellbeing Budget includes a range of small changes that my impact on household income i.e voluntary donations to be dropped for decile 1-7 schools, and removal of NCEA education fees.

All up however NZCCSS agrees with Dr Fletcher, the Child Poverty Action Group and other child poverty advocates that these small changes are unlikely to be sufficient to significantly impact on the lives of our poorest children and families and impact on the 2020/2021 target.

NZCCSC strongly believes Budget 2020 must be more courageous and address child poverty through fully simplementing the 42 recommendations of the WEAG report.

Children in care

A further $524.7million is going to Oranga Tamariki (OT) over the next 4 years. This will be used to increase OT staffing by 350 to 410 places and to fund a range of new programmes, particularly in the Transitions, Youth Justice and Intensive Intervention spaces. Of particular interest is $70 million to ensure kids in care get everything they need to become successful young people and adults. This will make a huge difference for these children and young people, supported by resourcing for successful transitions from care. The Minister for Children, Tracey Martin, announced at the social services budget lock-up that about 900 new jobs would be created in the next 4-5 years with about half of these being in the NGO sector.

It is hoped the growth in the staffing levels at OT means more effective service leading to a reduction in the numbers of children in care – not an increase in children being uplifted. The current issues around the numbers being uplifted and the manner in which this is happening needs to be addressed now.

In comparison to the adjustments being made for community-based service providers quite a large proportion of the additional funding over the next four years will be going to OT to address such things as the pay relativities arising out of their recent pay equity settlements, increases in their corporate costs and other cost and demand pressures. A considerably smaller level of funding is also being used to address cost and demand pressures for currently contracted NGO services ($26.7million over 4 years). Unfortunately, this won’t cover the pay-gap between wages paid by community providers and wages paid post-pay-equity OT worker. Nor will it compensate for the years of under-funding and ever-increasing demand and complexities of our members’ clients and communities.

We are told that the new programmes, Transitions, Intensive Care and Youth Justice will be funded in such a way that the old pay differential of about 20% between community and OT social work pay will be restored. NZCCSS believes there is an expectation that these better funded new programmes will be used to cross-subsidise existing programmes. Interestingly enough, the additional $26.7 million for cost and demand pressures is to be used for existing programmes, “while we (OT) review policy around early intervention”. So, watch this space as new policy emerges and impacts on current service provision.

There is, as previously signaled, a big commitment to iwi and Māori organisations. There is an expectation that many of the new services will be delivered by these groups, along with a long-term commitment to specialist roles such as kairarānga and iwi/Maori Family Group Conference co-ordinators. Although, it appears many of these roles sit inside OT rather than contracted to iwi/Māori.

Overall, for those organisations able to be secure contracts for new services and programmes, this Budget offers an opportunity for growth that is adequately funded. But for those who are unable to attract significant new funding, the existing contracts will not receive sufficient additional funding to address years of under-investment and the increases in demand that have been and are continuing to be experienced.

To be truly transformational, to strongly reduce the numbers of children going into care, then we needed a Budget which supported early intervention more, that put greater resources in the hands of communities and community-based organisations. We also needed to see the underpinning drivers of poverty-level incomes and low quality and expensive housing addressed. While the funding going into family violence, drug and alcohol rehabilitation and mental health services will all help take some of the load experienced in our communities, it is addressing the drivers that will make the lasting long-term difference. As discussed above, the Whakamana Tāngata report of the Welfare Expert Advisory Group has set the template, we need to see action on its implementation.

Breaking the Cycle of Family Violence

NZCCSS applauds the government’s investment of $320 million over four years to break the cycle of family violence. However, as NZCCSS has consistently noted, while family violence is experienced at a personal level and should be support at an individual level, it also occurs within a social context that is influenced by a range of external (poverty) stressors: poverty, overcrowding, substandard housing conditions, unemployment, inadequate household income (waged and benefit-dependent). Again it is critical government invests in solutions to support personal distress alongside solutions to make necessary structural change (adequate household income, quality housing, work and training opportunities).

Health and Older People

While the Wellbeing Budget included great needed additional funding for mental health services, other community services such as aged care residential care that are funded out of DHBs’ operational funding have reason to be concerned.

Lyndon Keene from the Association of Salaried Medical Specialists (ASMS) said that their analysis suggests that the total of just under $14 billion that DHBs have received in funding is around $300 million less than the $14.28 billion ASMS estimated before the Budget that was needed to keep up with population growth and cost pressures.

This means that community based services funded by DHBs may actually have less money available to them, as DHBs are forced to further prioritise the urgent and critical hospital and clinical services. Keene points out that targeting more funding for community mental health services is much-needed, “but doing so at the expense of other services that are already under sustained pressure is highly disappointing”.

Older people did not feature much in Wellbeing Budget announcements. The Office for Seniors was able to pull together three small initiatives that directly benefit older people. An upgrade of the SuperGold Card was announced, to include a digital platform for card holders and businesses including developing an app to help seniors find discounts and services more easily. A small amount of money ($600,000) is allocated for computer literacy and training for seniors. The other announcement is that older people who are still employed and seriously injured can now claim ACC and continue to receive their NZ Super for up to two years. Previously they had to choose to either continue with NZ Super or rely on ACC.

The lack of attention to older people’s issues led to Alzheimers NZ concluding that people with dementia obviously do not count.

Housing and Inequality Barely Mentioned

Recognition of socio-economic impacts on mental health in the Budget is an example of a new perspective on the causes and drivers. Funding for Housing First, transitional housing and housing support products to help people access and retain tenancies, as initiatives to reduce or prevent homelessness are included in measures announced in as part of the Mental Health package.

Apart from the homelessness announcements, the striking feature of this Wellbeing Budget is the lack of any further announcements on housing. Housing Minister Phil Twyford had nothing to say on housing on Budget night itself (the Housing First and transitional housing package was announced earlier in May).

It was left to Finance Minister Grant Robertson to say in an interview on RadioNZ that an announcement on the KwiiBuild re-set from Phil Twyford is coming up “soon”. It is to be hoped that this upcoming announcement will include paying attention to community housing, which Community Housing Aotearoa points out is good for wellbeing too.

CEO Scott Figenshow points out that they have long been calling for an Affordable Housing Fund to make further capital investments through affordable rentals and the KwiBuy progressive home ownership model delivered through the not-for-profit community housing sector.

Inequality barely rated a mention in the Wellbeing Budget announcements (one mention on p.5 of the Wellbeing Budget 2019 document). Mentions of equality are focused on meeting the Te Tiriiti commitment to equality for Māori. The Whānau Ora funding, Te Reo and Pacific language programmes, Pacific employment support and rheumatic fever funding.

NZCCSS and many others make it clear that the Government’s poverty reduction targets are unlikely to be achieved unless there is a significant reduction in income inequality. With no changes to taxation in this Budget and only minimal increases in welfare benefits, incomes for the lowest income earners will not move closer to those in the middle and upper income levels.

For a full breakdown on the Wellbeing Budget 2019 go to The Treasury website here.


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