Policy Watch

Quote of the week: “130,000 children were lifted out of poverty with Working for Families, but our work’s not finished. We’ve got another group of kids who haven’t benefited from that at all. And that’s people who are on benefits. We’ve got to rethink our policy in terms of how do we have an element of universality for our children in the way we give it to our old people. It’s unfinished business.” Annette King (Listener, 8 August 2009)

Law should stay as it is, Children's Commissioner

Following the Citizens Initiated Referendum result at the weekend, the Children's Commissioner Dr John Angus said the Referendum was a strong indication that New Zealanders are "thinking hard about how we bring up our children". He stated that his advice to Government will continue to be that the current law is good for children. In his media release he ended by stating: "The change to the law in 2007 was an important step towards keeping children in New Zealand safe and secure".

Working for Families doesn’t always work

It appears some families (9700 to be precise) are manipulating their incomes to maximise their Working for Families entitlements according to a recent front-page article in the Dominion Post. In yet another front page article we find out that 35 households earning $150,000 get tax credits. While I personally find it abhorrent that some people actively ‘rort the system’ (as does John Key who criticised it mildly as ‘unfair’) I think the numbers need to be kept in perspective. 75% of NZ families receive at least one component of the Working for Families package either tax credits, accommodation supplement or childcare assistance. As at September 2008 (the latest figures I could find) there were 292,500 recipients of tax credits alone. Those using rental property losses or trusts and companies as tax shelters in order to access WFF constitute less than 1% of the families benefiting from this support. It would be a shame to let a few opportunists undermine of policy that has helped to lift a great deal of people out of poverty.

Beneficiaries under the microscope

The nature and tone of recent media coverage of welfare issues has been quite alarming. The Minister is to audit the 50 beneficiaries who receive the most money. Apparently about 300 people receive more than $1000 a week in different forms of financial support. Many of these people are caring for large numbers of children. The number of emergency Special Needs Grants (SNGs) is also to be looked into since there were 58,000 applications in July alone. Sickness and Invalid’s beneficiaries are also under close scrutiny. The high uptake in SNGs can hardly come as a surprise given the recession, low benefit levels, the removal of the Special Benefit and a halving of the time period for applications for SNGs introduced last year. The only purpose to be served from publicising audits and reviews is to stir up public discontent about welfare, a perspective shared by the Greens who are calling for the government to ‘come clean on their plans for benefit reform’.

Youth Opportunities - volunteer or else

Following on from the last Policy Watch discussion on the Youth Opportunities package it has been confirmed by the Minister that the Limited Service Volunteer (LSV) for 18 to 24 year olds, to be expanded under the new Youth Opportunities package, is to be work tested. this means those young people who don’t take a LSV place when one is available will not get their benefit. Doesn’t sound like volunteering to me and was an important detail absent in the announcement of the package.

We also remain concerned at the government’s intention to remove 16 and 17 year olds from the Independent Youth Benefit because ‘all young people not at school should be in training or employed.’ It’s starting to look like their will be a temporary policy reprieve due to the lack of training places available. Simon Collins explains this further in his article Jobless teens keep benefit, for now. Also check out the links to short video clips at the end of Simon’s article, the first of which gives young people a chance to talk about how hard it is to get a job in the current climate.

ACC Stocktake

Nick Smith, Minister for ACC recently announced a committee to undertake a stocktake of ACC. In a press release the Minister said that they had inherited a cost blow out in the non earners account and now “our immediate focus must be on cost containment.” Immediately after the announcement of the stock take the CTU came out with a stinging press release describing the steering group as “an insult to workers, women and the CTU”.

A couple of days after announcing a committee to undertake a stocktake, and no doubt before the committee had met, ACC announced that it was cutting its funding of ACC clients for physiotherapy by a third, effective from November. As you would expect various physiotherapy bodies have expressed their displeasure with the new policy and will need to pass on the shortfall in funding via part-charges (a bit like GPs do). We share a concern that the part charge could mean that low income people are no longer be able to afford to access treatment. An unfair outcome given that most of the uptake in free physio (that has caused a budget blowout) was from higher income groups. Also worrisome is the general direction of ACC policy. Is this the thin edge of the wedge?

Tax Reform Committee

As many of you will be aware the government has set up a tax review committee and there are lots of ideas being considered. It seems that the government is concerned that Australia will lower their taxes further and more NZ businesses and people will flee our sandy shores – so the answer is to lower our personal and business tax rates to stay competitive. But alas, we have to raise more revenue and one of the easiest and fairest ways to do this is to raise GST. I refer to this as the reverse Robin Hood approach. I agree to the ‘easy’ bit, as we already have GST in place, but fair? Low income people spend all of their income on necessities like food, power and petrol whereas wealthier people spend proportionately less. Low income people will also miss out on tax cuts (again) because only the two highest tax brackets would be lowered (to 30%). Raising GST to finance tax cuts for the rich is just plain wrong.

Also on the table is the introduction of a capital gains tax on investment houses. We are a bit of an OECD oddity in not having this tax already with the US, UK and Australia seeing such taxes as “indispensable parts of the tax system”. As many middle and high income New Zealanders have gained significant wealth via the absence of such a tax it’s unlikely to be popular, as would be taxes on property and land . In the words of columnist Vernon Small “it is hard to...see National – the natural home of the landed – slap a new tax on the land beneath their voter’s feet”.

Buying a first home to be a bit easier

It’s time for a bit of good news – the government has announced an expansion of its Welcome Home Loan mortgage insurance scheme. The cap on the amount that can be borrowed has been lifted from $280k to a more realistic $350k. This will help families in metropolitan centres; however it’s still contingent on people being able to service a mortgage of that size.

20 Hours Free ECE – not improving participation for low income communities

There was an interesting feature article called Winners and Losers in a recent issue of Your Weekend (1 August). The discussion focussed on the impact of the 20 Free Hours Early Childhood Education (ECE) in achieving its objective of getting more 3 and 4 year olds enrolled into ECE for sufficient hours (at least 15 per week) to ensure good education outcomes for them in the longer term. Introduced in 2007, it appears to have made a marginal difference to participation rates in low income communities for those children with the lowest enrolment rates. 10% of Maori children still start school with no ECE. Part of the problem is due to market model – commercial providers of ECE have tended to avoid setting up centres in low income and or rural communities, making access inequitable and leaving large numbers of children on waiting lists. What the article doesn’t mention is that the funding levels offered by government appear to be insufficient with many centres charging significant fees on top. The free hours therefore acts as a subsidy with only more advantaged parents being able to afford to pay the difference. Some commentators are reporting a need for the policy to be more targeted, a position also advocated by some government officials. It will be interesting to see what the future direction of ECE will be.

Rest Home Certification Audits

The Ministry of Health has since March 2009 been listing all certified aged residential care services providers on its website with information about their certification status. In addition to this the Ministry is gradually adding summaries of the latest audit reports to the website. A process for carrying out spot audits is currently been developed by the Ministry and it is expected that this will be piloted with some DHBs in the near future.

Legislation Update

Unfortunately the Green’s Social Security (Benefit Review and Appeal Reform) Amendment Bill, which had its first reading on 20 August, did not get sufficient votes to proceed. It was not supported by National because of cost and the belief that it would add another layer of bureaucracy (and a National Health Board doesn’t?).

Summit on the Impact of the recession on children

Children's advocacy groups will stage a "summit" at a Mangere marae next month about the recession's impact on children. The Summit is being organised by Every Child Counts. Workshops will be held on children's first five years, health and food security, education, housing, family violence, justice and social exclusion, and Maori. Prime Minister John Key has been invited to receive the plan at the end of the day. Paul Barber from NZCCSS will be part of the workshop on housing.

CPAG hui to build activism to end child poverty

The Child Poverty Action Group (CPAG) has organised Na Ta Tatou Rourou: with our baskets the children will prosper – a hui to build activism to end child poverty in Aotearoa, Manurewa marae, 7-8 October 2009. Visit the CPAG website for more detail.

Your voice in political decision-making

Sandra Grey and Charles Sedgwick from the School of Social and Cultural Studies, Victoria University of Wellington, are carrying out a Survey on “The role of NGOs in political decision-making”.

NGOs are incredibly important for a healthy democracy, both for the work they carry out on the ground with communities and for the active political voice they offer on behalf of the most marginalised in our society. They want to hear from NGOs large and small about any actions taken to influence politicians, political parties, local bodies, and public servants. The aim is to better understand the successes and failures that have to be coped with when undertaking active participation in all levels of political decision-making.

In order to make this research as useful as possible to the NGO sector, they would like Policy Watch readers who are involved in Non government organisations to complete the survey available at: www.victoria.ac.nz/sandragrey
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