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Low Income Families Are In Crisis

Helping Low Income Families cope in this time of crisis is critical to their survival says Peter Malcolm Spokesperson for Income Equality Aotearoa NZ Inc—“Closing the Gap”

Families on low incomes need and deserve all the financial help they can get to support their children during this distressing time. We endorse Susan St John’s call for urgent adjustment to policies that will support low-income children (see Newsroom, Covid-19: A catch-22 for our most vulnerable 29/03/2020)

Susan St John pointed out low-income workers whose jobs have disappeared will increasingly need to access benefit income. When this happens, they lose the In Work Tax Credit for dependent children under 18 years of age. The IWTC is just part of the Working for Families weekly payment to the caregiver for their children.

‘The obvious way to help the worst-off children, easily and immediately is to deliver the IWTC to all low-income families, including those receiving benefits. This group will soon include thousands who have lost their jobs due to Covid-19. The cost of doing this for those who currently miss out is around $0.5 billion.’

Other commentators have made the same demand see Michael Fletcher in The Spinoff, ,March 24 2020 https://thespinoff.co.nz/politics/24-03-2020/the-case-for-a-huge-covid-19-benefit-reform/#.Xnk_69_LK5o.twitter:

“In the package last week Government dropped the minimum hours worked test for the In-Work Tax Credit but retained the ‘off-benefit’ rule. That should be removed too so that everyone eligible for Family Tax Credit gets the extra $72.50. Implementation time: about 24 hours. These families already get the Family Tax Credit, all that is required is to add in the extra amount.”

He also calls for doubling of core benefit in line with Australia’s decision; individualise benefit entitlements, rather than assessing them on a couple basis and cease applying the relationship status rules.

Low income families already faced considerable stress trying to make ends meet prior to COVID-19 due to well-known high housing costs, low wages, insufficient benefit amounts and a complicated welfare system to negotiate (Ref: Whakamana Tāngata: Restoring Dignity to Social Security in New Zeland, Executive Summary, Welfare Expert Advisory Group, February 2019). According to analysis of the government’s household Living Cost Price Index in January 2020, people who receive benefits spend an average of 59% of their income on housing, electricity, and food. That compares to 36% of income spent on these three essentials by median income households, and only 26% by the wealthiest 20%. (Ref: Fincap Press Release: Govt’s own data shows low income driving more benefits.’9 January 2020).

In the year ended June 2019, 13.4 percent of children in New Zealand lived in a household experiencing material hardship (Ref: Child Poverty Statistics, Year Ended June 2019, Statistics NZ 25 February 2020). Examples of material hardship include being unable to afford to eat fresh fruit or vegetables, putting off a visit to the doctor, or not being able to pay the electricity or gas bill on time; items most people regard as essential. Māori (23.3 percent) and Pacific peoples (28.6 percent) had higher rates of children living in households that experience material hardship than the national average (13.4 percent).

Families living on low income are now under even more uncertainty and stress in the current climate. As countries react in trying to limit the impact of the virus, we have already seen enormous disruption to work, livelihoods and incomes; a situation that is set to continue for some considerable time.

The well off are better placed to ride out the difficult times ahead and may even prosper. As Max Rashbrooke says in his article in The Guardian on 25 March 2020 ‘New Zealand must ensure coronavirus crisis doesn’t become an inequality crisis.’ See https://www.theguardian.com/commentisfree/2020/mar/25/new-zealand-must-ensure-coronavirus-crisis-doesnt-become-an-inequality-crisis

“We will not all be equally affected. Some lives could be forever damaged; others will emerge relatively unscathed.

“This crisis is shot through with inequality: it is revealing existing imbalances, and risks creating new ones. Every part of the government’s response must acknowledge that this is an inequality crisis. Some people will require especially urgent aid, while others may in the long run have to contribute more to the recovery.”

Now more than ever is the time to look out for and look after the most vulnerable says Malcolm

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