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Why Labour’s tinkering of our welfare system just isn’t enough

Significantly reducing poverty in New Zealand needs serious commitment and investment, something which Child Poverty Action Group’s Janet McAllister says she’s yet to see from the party of Jacinda Ardern. 

“We can’t just tinker with the so-called social welfare system … it’s just not going to cut the mustard.” – Professor Cindy Kiro, chair of the Welfare Expert Advisory Group, May 2019. 

Imagine March 2020 in a parallel universe: the pandemic hits Aotearoa, but because the government has already overhauled welfare, we don’t have to worry quite so much about our most vulnerable whānau. In this parallel universe, all of us are proud and relieved that child poverty is fast becoming a thing of the past. Nearly everyone in the country feels happier, knowing we’re all secure and collectively caring, come what may. 

That’s the vision, and maybe – if we hold politicians to account – it’ll be a reality the next time a different pandemic hits. But for now, the piecemeal scramble to plug the gaps since Covid-19 struck simply hasn’t been enough. Many incomes for families on benefits are still below poverty lines, diseases from overcrowding are on the rise, and Work and Income continues to expect people to beg over and over for discretionary support. Treasury predicts there’ll be more children in material hardship, and it’s clear that too many are already there (around 23% of Māori children and 29% of Pacific children). While doubling the Winter Energy Payment this year for Covid relief was a useful band-aid, it wasn’t enough to get core income entitlements over poverty lines for most families, even temporarily. 

Meanwhile, the government took sensible ideas like individualising and increasing benefits and, instead of applying them to everyone, used them to create discriminatory two-tier welfare system with racist consequences. While more Māori than Pākehā receive “Jobseeker (Work Ready)” benefits, more than twice as many Pākeha than Māori have received the higher-paying Covid income relief payment.

For me, this was the ultimate disillusionment – the mark of a regressive regime, the end of being led up the garden path (next report, next budget, next election…). This sort of temporary two-tier welfare is what you do if your aim is to never reform the system: you keep the middle class relatively sweet and make them feel special in a crisis, preventing the Pākehā middle class from personally experiencing despair at the welfare system (in case they call for widespread change?). Despite some criticism, Labour has committed to the two-tier welfare system as an election policy rather than, say, allowing all those on benefits the same 12 weeks of reprieve that those on the higher-tier get.

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So has the current government really done anything for our poorest children? Yes, quite a bit, but our welfare system is so broken and under-resourced that “quite a bit” just isn’t enough. We need massive investment, but all we’ve got so far is milquetoast – a bit of tinkering around the edges.

The government has increased the incomes of poor families, but because we started at such a low point it makes up only a fraction of what’s needed to get people above water. Incomes for families on Sole Parent Support have increased by $101 per week on average, not taking inflation into account, but not including the Winter Energy Payment either (another $13 or so per week averaged over the year in non-Covid times). This will certainly have helped, but much of the increase was the Families Package inflation catch-up on both family support and on housing costs (remember the now chronic housing crisis?). Even National was going to increase the Accommodation Supplement if it’d gotten into government in 2017.

Worryingly, the $101 per week average income increase is expected to cost somewhere in the ballpark of $500 million a year (assuming families supported by other benefits have enjoyed similar increases), but the Welfare Expert Advisory Group (WEAG) says an additional $5.2 billion a year would be necessary to make our welfare system fit for purpose. In other words: we need to increase our efforts ten-fold, by an order of magnitude. 

That’s a lot of money, but that’s what it takes to stop being one of the stinkest places in the affluent world to be a child. It’s money that the rest of us have been taking out of the pockets of our poorest families since Ruth Richardson’s “Mother of All Budgets” – child poverty almost doubled overnight when the Bolger government cut benefits in 1991, something which we’ve still yet to reverse.

As well as raising incomes, this government’s small yet useful free menstrual products programme set to roll out next year, while the school lunch programme – to be expanded to 200,000 children by term three next year – is excellent news. New tenancy protections are also a great step towards healthy and stable housing, while benefits have been indexed to wage rises (which would have been more meaningful if benefits were adequate).

Children whose parents are in low-paid work have fared much better than children in families receiving benefits this electoral term. Not only did this government continue the shockingly discriminatory and tired “work incentive” of giving children supported by paid work an additional $72.50 family support a week (for which families on benefits are ineligible), but it also provided a far better incentive – a 20% increase to the minimum wage since 2017 which would’ve been extremely useful to many families.

But again, it’s not enough. Incomes are still far too low, leading to toxic stress, isolation, poor health and food insecurity among a whole list of things. When it comes to election promises, The Māori Party has a useful welfare wish list and the Greens have an impressive, carefully-thought-out and costed plan that would have a good chance at significantly reducing child poverty. NZ First wants a universal family benefit (although it’s hard to know how they want to pay for it, perhaps by reducing other family support?) while National wants to regress to a more punitive 2010s system. Act wants to turn the clock back further, benefit-bashing like the cruel and foolish 1990s never ended. 

And Labour?  It’s all about “jobs, jobs, jobs”, according to social welfare spokesperson Carmel Sepuloni. As far as I know, at no point in this election campaign have I heard Sepuloni or National’s Louise Upston acknowledge that paid work is not appropriate, or even possible, for all families with children (for example, a sole parent who has a child with high needs or who is unable to work due to disability or illness). Apparently, these families are to be kept in poverty. Winning hearts and minds is important for political sustainability of any transformational change, and so this omission in the rhetoric is deeply troubling.

Labour has promised to expand training allowance eligibility and increase the amount of money people can earn before their benefit starts abating. They’re both excellent policies that will start to clean up the gaps and traps in the messy interaction between the benefit system and paid work. However, both needed to be implemented three years ago, not dangled as an election bribe.

And, if Labour is reelected, who knows when these changes will happen? Labour has a track record of dragging its feet – it only implemented its 2017 promise of scrapping the sanction on sole parents who don’t name their co-parent in April this year. In fact, by themselves, these policies are disappointing. It’s still just tinkering around the edges and far from big, bold moves to cut the mustard. They’re of no use to many of our poorest families.

With the party riding high in the polls and the pandemic throwing the usual spending rules out the window, why hasn’t Labour carried out its leader’s dearest professed professional wish and stuck it to child poverty? Why isn’t it busy establishing a mandate for the transformational welfare change that our children need? Is it worried that people only say child poverty is a concern while prioritising their dreams of making untaxed money off property?

Don’t give us excuses when it comes to welfare reform, give us billion-dollar action instead.



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