Wednesday 1 June 2011

The changes made in this Budget tend to cement in … inequalities and build on last year’s tax cut rationale of making the better-off better off and the worst-off no worse off. The kind of change that will make a real difference to our foodbank, budgeting, family counselling and social service clients is an increase in the minimum wage, benefit levels and access to income related rental accommodation. This will create hope and provide a pathway forward for the most vulnerable in our communities – NZCCSS Budget Press Statement

Opportunity to Reduce Inequality – Closer Together Whakatata Mai

On Thursday 2nd June, leaders of our churches and their social services will be joining to launch the Closer Together Whakatata Mai - reducing inequalities information programme. NZCCSS is asking all people to sign up to show their support for reducing inequality by signing the Closer Together Whakatata Mai Choice ( and encouraging others to do the same. All it takes is a click here to support the information programme.

Treasury is worried about the gap between the ‘haves’ and the ‘have nots’

There is more to good life than growing GDP - the Treasury recognises we need wider measures which include including reducing the income gap. This can be done through better distribution of wealth and income, and measures of sustainability. Treasury Secretary John Whitehead comments on the Wilkinson and Pickett argument in The Spirit Level “I think the general point is right – that if you get highly unequal societies, it becomes really difficult to sustain your economic performance, so that is something I think most New Zealanders would want to think about.” Read the Treasury release here and watch the interview on Q+A here.

He hath filled the rich with good things; and the hungry he hath sent empty away

There is a piece in one of the gospels that goes like this: “He hath filled the hungry with good things; and the rich he hath sent empty away” (Luke 1.53). Somehow, we seem to be inverting it, so it goes like the heading above.

Let’s start with the budget. The budget could have used debt to revisit the tax cuts. But it didn’t. The top 2% got 11.5% of the total and the 76% of us who earn less than $48,000 a year, got only 31% of the total. Budget cuts to Working for Families will affect those on higher incomes, but will also impact on households earning as little as $35,000, who are already paying a greater proportion of their household income in higher levels of GST and increased prices for basics. They will also lose the higher allowance for children aged 16 to 18. Anyone who has ever fed a 16-18 year old will know how many basics they eat. Families on benefits get nothing. Employees will also have to pay more for Kiwisaver, and may get lesser pay increases as employers claw back their own higher Kiwisaver costs from their future wage bill.

Meantime, those already wealthy will be able to invest in power companies and Air New Zealand that currently we all already own. Our government appears to be underwriting 67 per cent of Rugby World Cup costs including budgeting $10 million for something called a Rugby World Cup Guest of Government Programme. It is only budgeting half as much for hosting the Pacific Islands Forum.

Welfare reform for whom?

Welfare reform is set to be an election ‘biggie’ with the Prime Minister’s announcement about "ambitious" improvements in a social welfare system referred to as "broken" and "unsustainable". He believes welfare changes will get people into jobs. We are not sure how cutting welfare will create jobs. For example, we cannot see how less welfare might save jobs in say DesignLine or Yarrows.

Social assistance expenditure is forecast to increase by $3.1 billion compared to the year ended June 2011. Most of this increase, in fact around 90%, relates to New Zealand Superannuation ($2.8 billion). It is due to increased numbers of recipients and the effect of wage and CPI indexation. Superannuation will cost $9.6 billion in the next year. The extra $742 million going into superannuation represents an 8% increase.

Are we looking after our older people (sort of)…

It is almost as though our older people are being pitted against our younger people. Nearly half of new Government spending over the next four years will go into health services –largely toward needs of our ageing population. The health budget includes: $130 million for more disability support services; $68 million extra for elective surgery; $44 million for people with dementia, including money for an extra 200 dementia beds in rest homes; $80 million for new medicines, including the first Alzheimer's disease’ drug. Other new medicines not subsidised previously include new cancer treatments, and diabetes medicines. While we are taking some expensive measures, it does not appear that there is any additional funding for measures such as home support.

… at the expense of our young people?

It’s not that we should not care for our older people. It’s that we are ignoring our young people at our peril. They are our future. Around 44% of our unemployed are young people looking for work. Almost one third of those on the unemployment benefits are aged 18-24. When jobs are around, the number of people on unemployment benefits plummets. Policies for youth include some odd youth militarising things, like, $12,444,000 from the Defence (!) budget allocated for "government initiated youth development schemes in New Zealand", i.e. the Limited Volunteer Scheme and $3,559,000 for the NZ Cadet Forces.

What about the things that could really make a difference?

There are all sorts of threats about getting people off benefits, but little in the budget about some things that could really make a difference to our most vulnerable. Nothing about improving the lot of one fifth of our children who grow up in poverty. Nothing about encouraging early attachment via encouraging breastfeeding which would not even cost anything. Nothing about improving attachment via improved parental leave.

Government did hear the Medical Association’s concerns about rheumatic fever with $12 million over four years included in the budget to tackle the disease. The money goes to school-based sore throat clinics, more front-line community staff and research and training programmes for health workers. This is a good thing, but a better thing would be doing something about the causes of the rheumatic fever problem in the first place, i.e. incomes, poor housing and overcrowding.

Are we doing anything about low incomes? No. What about housing? On the one hand, Government has set aside a contingency fund of up to $45 million so it can respond to recommendations from the Housing Shareholders’ Advisory Group. On the other hand, Government has halved its funding for acquiring and improving HNZC state houses from $18 million to just over $9 million.

There seems to be quite a lot of giving with one hand and taking away with the other

Like, there is an extra $33.2 million over four years for regular clinical reviews of all births, increasing the number of midwives in hospitals, and medical specialists on call, improved new parent information services, helping vulnerable mothers access a wider range of health services and improved DHB data collection. There is also a further $21.3 million for extra WellChild services, with a particular focus on first time mothers.

Then there is $550 million for early childhood education. It sounds a lot until we consider this is after taking more than $400 million out last year. Also, early childhood education charges increased by 11.7% in the last year with Statistics New Zealand commneting “this is the largest increase in ECE charges since the services began in 1988.” Schools get around  a $2.9% increase in their operational funding, but with a CPI forecast of 3.1% this does not even match the rate of inflation.
Social Development Minister Paula Bennett announced $43.7 million for children in care. The money is over four years and will go to

• Extra Gateway Health and Education Assessments $15.324 million

• Mental Health Services for Children in Care $14.513 million

• Early Childhood Education for Children in Care $11.467 million

• Parenting Support Services for Foster Carers $2.400 million

However, the Green Party’s analysis suggests the Budget has cut both public health services and primary care by 14pc and 2pc in nominal terms – the very services designed to keep people well. Health Ministry staff look like they do not do very well out of the budget. The plan is that redundancies in the Ministry of Health will save government $20 million.

Social service assistance

Community social services will get $25 million from the Government's Community Response Fund (CRF). Three funding rounds will be held next year, each of about $8m. NZCCSS has commented that while the retention of the Community Response Fund for an additional year is very positive, there is no funding set aside for a Cost Price Index (CPI) increase. This represents a significant cut in real funding to community organisations at a time of very high demand. NZCCSS members actively called for a CPI increase in this Budget; the lack of this increase will result in some services being cut back as providers try to adjust their service costs to a zero increase in income.

Employment assistance programmes will get an extra $15m, to help more people into jobs. However, social development savings total $67m (even though superannuation gets an 8% increase), and another $245m will be reprioritised. Wider state services are to produce $980 million in savings, which will go towards reducing debt and improving front line services.

So, whose debt is it anyway?

The debt problem is the current mantra. The GOVERNMENT debt problem is the mantra. Trouble is, it is not the government debt that is the problem. Government debt is low by OECD standards. In fact, we have the third lowest government debt amongst the OECD counties.

So it is a bit odd that there is a major focus on reducing government debt, while doing nothing to reduce private debt. A recent Guardian Weekly article made the following comment:

“… a jihad against government borrowing is being implemented in the aftermath of a credit crunch that has left too many countries with too much private debt owed by too many companies and individuals who cannot service it. Countries, with Britain and the US in the forefront, had to use the state to prevent a first-order financial collapse, but now the very financial system they saved is rounding on governments, pillorying them for having the very public debt that saved the banks” (Guardian Weekly, 15 April 2011, p.5).

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