Policy Watch

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Radio interview on the ‘New Poor’

On 15 July RNZ's Katherine Ryan interviewed Michael Barnett (Auckland Chamber of Commerce), Diane Robertson (Auckland City Mission) and Susan St John (Auckland University Economist – and member of the Child Poverty Action Group) on the issue of the ‘new poor’.

The discussion focused on the impact of the recession on middle income individuals and families, who, due to high debt levels and sudden job losses are finding themselves in need of help. Barnett explained how the Auckland Chamber of Commerce has helped many people into employment over the last 10 years but is finding itself now dealing with more skilled individuals who have never had contact with Work and Income before. Interestingly, he observed that these people tend to try to find new work via their networks first and exhaust their savings in the process. By the time they approach Work and Income they are financially stressed.

Diane reported that demand for help is up 50% at Auckland City Mission compared with a year ago and they are seeing people who they would not normally have contact with. Double income couples with mortgages and young children who find themselves now with only one income are struggling and having to make significant adjustments. She noted how some parents, who have acted as guarantors for their adult children’s mortgages, could no longer provide this security because they had suffered significant investment income losses themselves.

Susan talked about how the recession was highlighting the need for welfare reform. The system was designed for a different era when the nuclear family structure was predominant, when one income was generally sufficient to support a family and there was better access to secure full time employment. CPAG argues that while overall reform of social assistance is needed, there are changes that can take place in the short term, such as removing biases in welfare policies. For example why should the benefit abatement rate be the same for a couple as for a single person? For more detail check out the Radio NZ podcast.

New MSD Household Economic Survey (Income)

The Household Incomes Report provides information on the material wellbeing of New Zealanders as indicated by their household incomes from 1982 to 2008. The report uses data from Statistics New Zealand's 2007-08 Household Economic Survey (Income) to update the previous report in the series which had information to 2007. The findings in the report therefore capture the full impact of the Working for Families package, but not the impact of either the October 2008 tax cuts or the current economic downturn. The next update is planned for mid 2010 using data from the 2008-09 HES. In addition to the Full Report and Summary there is also a Short Summary which gives a quick overview in the publications section of the MSD website.

The report shows that for the first time in 25 years the incomes in lower brackets grew more quickly than those on higher income. While numbers of working poor have decreased this is likely to be ‘as good as it gets’ as economic conditions post the research period have deteriorated. The Child Poverty Action Group [links to PDF] is calling for the benefit abatement threshold to be raised to $150 in response to the high child poverty rates reflected in the report.

An Ageing World 2008

New Zealand is not alone in facing the challenge of planning for our ageing population and not as far down the path as other developed countries such as Italy and Japan. A newly released report of the US Census Bureau sets out comprehensively how the world is being affected by the demographic changes that make up our ageing population. A feature of the report is that the NZ approach to universal non-contributory old age pension is in fact almost unique with only nine other countries offering anything like it. No other developed country has followed our example and the report describes some of the ways that countries are seeking to meet the costs of social security for older people into the future. The full 204-page report can be downloaded from the US Census Bureau website. [links to PDF]

Caregiver Migration and Ageing Population

Many of the caregivers currently working in NZ have migrated to NZ from overseas and it is expected that this trend will continue into the future. The Institute of Policy Studies (IPS) has released a working paper looking at the issues around migration and care work and provides some Census-based predictions about the future demand for caregivers. The numbers used seem a large under-estimate when compared to the Ministry of Health Quality & Safety Project estimates for current workforce numbers but the trend of a near tripling of the workforce needed over the next 30 years is clear. The report discusses the options for migration policy in “low-skill” areas such as paid caregivers including designing permanent migration systems. The aim must be, according to the report, to achieve a “triple-win” – for the sending countries, the host country as well as the migrants themselves, their families and the older people they will be caring for.

Corrections response to the rising prison numbers

And on a completely different subject , in a recent press release entitled 'Prison numbers set to be the highest ever', Judith Collins outline’s the government’s three stage approach to deal with the ‘capacity crisis’ – double bunking and prefab cells, extending existing prisons and building new prisons.

With a prison population of nearly 8,500 people (having doubled in 10 years and projected to increase to 10.700 by 2016), a recidivism rate of 68%, and an average annual cost of $90,746 per prisoner, NZCCSS is asking if this spend is Value For Money? The policies implemented by both the Labour and National governments have contributed to what the Department of Corrections describes their great challenge: “the unrelenting growth in the numbers of offenders Corrections is required to manage”. While the drivers of crime, the topic of a summit earlier this year, are varied and complex, the same can’t be said of the drivers of criminal justice policy. This issue will be explored in more detail in the August issue of our newsletter Kete Kupu.

IHC Employment Court decision has implications

Recently there was an Employment Court ruling whereby it was found that IHC staff who are ‘sleeping over’ are deemed to be working and therefore should be paid the minimum wage. IHC has responded in a media release that they will need a significant increase in funding to cover this cost – estimated to be in the millions. The ruling affects approx 7000 IHC staff. It could also impact on other social service providers such as the retirement sector.

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