Benefit levels too low and system needs reform
8 October 2020
A national survey led by a University of Auckland academic shows that main benefit levels are too low and should be increased.
A collaboration between the University of Auckland, Child Poverty Action Group, Auckland Action Against Poverty and FIRST Union, the survey compares the experiences of those on the new Covid-19 Income Relief Payment to those on main benefits.
Associate Professor Louise Humpage, a sociologist in the Faculty of Arts, says nearly half of the respondents on main benefits reported they were less able to meet basic household costs since the Covid-19 lockdown. And six out of ten of all respondents receiving main benefits indicated that they needed around $250 more per week to cover basic household costs.
“Other research – including that conducted by the Welfare Expert Advisory Group in 2019 – has found main benefit recipients struggling to meet basic needs," says Dr Humpage. "What the survey highlights is that these needs have increased since the Covid-19 lockdown and that people on the higher Covid-19 Income Relief Payment are not struggling as much."
This system is outdated and negatively impacts many low-to-middle income households.
Those on the Covid-19 Income Relief Payment get $490 per week and are not subject to obligations or sanctions, while some main benefit recipients are paid only $250 per week. Both groups can access other forms of financial assistance such as Accommodation Supplement.
Respondents receiving main benefits who had at least one dependent child in their household were around 15 times more likely to report they were unable to meet basic costs in the last six months than those without children.
And respondents receiving the Covid-19 Income Relief Payment with at least one dependent child were around seven times more likely to report they were unable to meet costs than those without dependent children, says Dr Humpage.
“We have a government that says it wants to reduce child poverty. The survey data suggests that increasing main benefits would help households meet basic needs, reducing the impact on dependent children. Increasing financial assistance to low-income families, including those receiving benefits, would also make a big difference.”
The survey also showed that although many Covid-19 Income Relief Payment respondents were living on substantially lower incomes than they had had prior to Covid-19, they were less likely than those on main benefits to report unmet needs.
However many of the resources (including savings, redundancy and payouts) supplementing their income could prohibit them from accessing a main benefit and/or other income support such as the Accommodation Supplement when the Covid-19 Income Relief Payment ended.
"Additionally, an individual transitioning to a main benefit who has a working partner may also be affected by joint income testing in the benefit system; eligibility for the Covid-19 Income Relief Payment is calculated individually while main benefits are subject to a joint income test," says Dr Humpage.
“This system is outdated and negatively impacts many low-to-middle income households."
She says that across the sample, 38 percent of respondents had been forced to access a Special Needs Grant four or more times since the lockdown. "This means we are requiring people, over and over again, to explain why their benefit does not stretch far enough”.
The survey also found evidence that Work and Income obligations were counter-productive. Some 18 percent of respondents on main benefits reported that the removal of work-related obligations increased the time available to look for employment, while the lockdown-related easing of such obligations led to less stress, more time for family and less stigma and shame in dealing with Work and Income. Covid-19 Income Relief Payment recipients did not consider the new employment services they were able to access to be useful.
“This adds to the already-large body of evidence that significant reform of Work and Income procedures, policies and culture is needed," Dr Humpage says.
Julianne Evans | Media adviser
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