The New Zealand Child Poverty Action Group (‘CPAG’) took the Government to the Human Rights Tribunal over the Working for Families package in 2008 (which was introduced by the Labour-led Government in 2004 and has continued under the National-led Government). CPAG alleged that the In Work Tax Credit (‘IWTC’) that comprised part of the Working for Families package (‘WFF’) discriminated against children on the basis of parental income. The IWTC is available to those families with parents in work, but not families whose parents receive a government benefit. The case was appealed to the High Court, and, despite CPAG losing, the lobby group has now secured its place as an authoritative voice on child poverty in New Zealand.
CPAG released a report in September 2011 entitled ‘Left Further Behind’. The Report lists seven major recommendations focused at addressing child poverty. Two of the policies advocated by CPAG are general: increased measurement of child poverty indicators, and the creation of a senior Cabinet position with responsibility for children. In-depth measurement of how many children live in poverty seems uncontroversial when the goal is to try and eliminate child poverty. Governments need to know whether their actions are actually achieving anything (however, see both Rebecca’s
columns on the controversy around the measurement of childhood poverty).
The impact of a senior Cabinet position with responsibility for children is dubious. I would be interested to see a report on the Ministry of Women’s Affairs’ efficacy at reducing disadvantage for women in New Zealand (which, come to think of it, sounds like something the Ministry would be excellent at writing). The most recent concrete legislative policy suggestion aimed at tackling the gender pay gap has emerged not from the Minister of Women’s Affairs, but from opposition party MP, Catherine Delahunty. Given that we already have a Children’s Commissioner, a Families Commission, and a Ministry of Social Development (which includes the Child, Youth and Family division, and a specific Ministry of Youth Development), the problem does not seem to be a lack of roles that sound as if they would include responsibility for children living in poverty.
The reports other recommendations focus on:
o education (high quality early childhood education, training allowances to support sole parents’ education, and adequate funding for low decile schools);
o health care for children under six; and
o providing affordable, insulated, and adequate housing.
I note that (currently): the Labour Party advocates 24/7 free healthcare for children under six; the National Party advocates free after hours health care for children under six; the Green Party and the National Party worked together on insulating houses in the previous parliamentary term; and that nearly all of the parties standing in the 2011 election have policies aimed at increasing educational outcomes and standards. However, the real win for CPAG is the Labour Party’s about-turn on the IWTC (to the extent that the policies of parties unlikely to form the next government can be considered ‘wins’).
Labour has announced that it would extend the IWTC to families on benefits (a policy already supported by the Green Party). The policy has been criticised for removing the incentive the IWTC was supposed to provide – to reward those who enter the work force. The closer the gap between an income received with few obligations, versus an income received with work obligations, the less incentive there is to enter the workforce. The same effect can be observed when marginal tax rates are high; the incentive to enter a high income bracket is lessened when the last dollars earned attract such a high tax rate. The extra effort does not become worth the after tax income. That being said, having no government benefits at all would provide an excellent incentive to enter the workforce (or perhaps an incentive for higher charitable giving) although none of New Zealand’s electable political parties advocate such a policy.
The debate is around where the balance lies. Even CPAG agrees there should be a gap between work and beneficiary income. CPAG’s beef is with “creating such a work incentive by denying the children of beneficiaries a significant amount of financial support.” If the IWTC is not connected to work, then a better ‘carrot’ needs to be found (perhaps legitimately generating high value jobs that are tantalising even when compared to a decent benefit).
Alternatively, the government can use the ‘stick’ of work requirements with the ensuing administrative costs, and difficulties of applying general rules to specific cases. Trying to say how old a child should be before their parents are required to work, or what physical or mental health problems or disabilities dictate working ability, are difficult questions to answer. That is particularly so if policy is made at a central, general level and then applied to a range of families with unique needs and circumstances. One of the biggest complaints of those who deal on a day-to-day basis with the administrators of government benefits, is that there is often no continuity between case managers. Having to explain time and time again the unique (and often unhappy) circumstances that apply to you or your family is frustrating.
Policies that create very specific obligations, when applied to a range of situations, will necessarily be complex. Similarly, those who are already eligible to receive the IWTC (and those who administer it) have complained about its complexity. CPAG’s recommendations as to the machinations of the scheme, indicate that WFF may be more appropriately re-acronymised as ‘WTF’. The complexity of the system deters some from applying for the IWTC, and some end up with very unexpected increased tax liabilities.
I support finding a better carrot, and don’t envy those who are charged with tracking it down. How to create an environment where employers are willing to employ workers at high wages (and not just because they would be breaking a minimum wage law if they didn’t) is difficult. The number of high paid jobs available in New Zealand is intractably linked with the global economy, and any policy maneuvering involves careful consideration of the impact high economic growth has on our way of life in New Zealand, and our quality of life. However, ensuring that there are well paying jobs available is the only way that child poverty in the long term will decrease. In the short term, I am more than happy to redistribute part of my income to those who genuinely need it, regardless of whether they live in a household with someone who is employed, and particularly when they have no choice in the matter.