Spending monitor seeks better deal for taxpayers but a blogger begs for bigger boost for beneficiaries

Whoopee!  A pay rise.

No – to be precise, a rise in the national super which is paid to some of the team at Point of Order.

Super was mentioned in the boost to benefits announced yesterday by Social Development Minister Carmel Sepuloni.

Fair to say, this boost did not go down well with the monitors of public extravagance at the Taxpayers’ Union.  The indexation of benefits to wages means taxpayers are treated less fairly than ever, they say.

Martyn Bradbury, on the Daily Blog, is critical too – but his grouch is that the government has been much too stingy.

Point of Order checked social spending as a percentage of total government spending in the latest six-month Crown financial statements.  We were surprised to find it is a smaller portion of than it was 20 years ago.

But first, the announcement.

Main benefits will increase by over 3 per cent, instead of 1.66 per cent, on 1 April with the government’s decision to annually adjust benefit rates to increases in the average wage.

Sepuloni said 310,000 families will be better off from this change and the move to index main benefits to increases in the average wage was fairer for those needing help.

“This is the largest increase outside of one-off adjustments in nine years,” she said.

“We take a similar approach to adjusting Superannuation, so it’s fairer, more consistent, and will help reduce poverty amongst our most vulnerable.

“Adjusting rates to increases in the average wage ensures we share the benefits of a strengthening economy, and means those on benefits don’t fall further behind.

“Sole parents rate of benefit will increase by $10.48 per week because of the change. Under the previous system, they would only receive an increase of $5.64 per week.

“This is also the first of four years that income abatement thresholds will be increased in line with movement in the minimum wage, removing a disincentive to work.

“Simply put, if we are expecting people to become independent and find sustainable employment, discouraging them from taking additional work on offer simply doesn’t make sense. We’ve fixed that.

“So as of 1 April, these changes mean a sole parent will be able to earn $115 of other income per week before their benefit begins to reduce, instead of $100.

“These changes are an important step forward in helping New Zealanders out of the poverty trap. At Budget time I said that it is time for change. This Government is delivering.”

According to the press statement,

  • 800,000 people receiving New Zealand Superannuation and Veteran’s Pension will see their rate increase by just over 3 percent so that they remain at 66 per cent of the net average wage.
  • 310,000 people on a main benefit will see their rate rise by 3.09%, in line with movement in the net average wage

Main benefits include:

  • Emergency Benefit
  • Grandparented rates of Domestic Purpose Benefit for solo parents and Widow’s Benefit (paid overseas under a Reciprocal Agreement)
  • Jobseeker Support (including student hardship rates)
  • Sole Parent Support
  • Supported Living Payment
  • Youth Payment/Young Parent Payment

Rates and thresholds of other assistance will increase by 1.66 per cent, in line with movement in the Consumers Price Index (less the cigarettes and tobacco subgroup).

  • 60,000 students receiving Student Allowance will see increases indexed to the Consumers Price Index.
  • 70,000 people receiving supplementary assistance only will see increases indexed to the Consumers Price Index.

From April 1, the increase in main benefits will be 3.09 per cent.

Using current calculations, a sole parent could get an extra $10.48 a week, a single disabled person $8.44 extra a week, a Jobseeker beneficiary aged 25 or over $6.78 extra a week or, for a 20-24 year old Jobseeker beneficiary, an extra $5.63 a week.

The Taxpayers’ Union’s spokesman Louis Houlbrooke was disinclined to join in the cheering.

The Government says it’s fair to index benefits to wages because we already do this with superannuation. So about tax brackets? These aren’t indexed to inflation, let alone wages. The result is that each year, taxpayers keep less, while beneficiaries get more.

“Politicians often say we cover the costs of super and benefits by increasing productivity. But under this Government’s policies, increases in productivity will automatically trigger hikes to benefits and super, meaning we can never dig ourselves out of this spending hole.”

On The Daily Blog, in contrast, Martyn Bradbury’s headline huffed: Labour give beneficiaries a pittance increase per week – if only they could save children in poverty with the speed they saved Concert FM

He said he can’t believe the audacity of Labour increasing the pittance beneficiaries are paid by lifting benefits adjusted for inflation and then wanting a standing ovation for granting that pittance…

He referenced information HERE and emphasised text which said:

Main benefit recipients will receive a 3 percent rise on April 1 as the Government’s decision to link rates to the average wage comes into effect.

His rejoinder:

…bloody John Key raised benefits higher than Labour have!

Because the de-unionised working classes have had crumbs instead of real wage growth, they look at the welfare payment with envy and this envy is manipulated by the Right into voting resentment.

Labour are too frightened of triggering that resentment with a benefit increase and they don’t have enough control over the Ministry to try and force a change of culture so we are left to cheer for pathetic increases rather than actually alleviating poverty.

If only Labour could save children in poverty with the speed they saved Concert FM.

A second term Labour led Government MUST have a purge of the neoliberal welfare complex in their first 100 day program or it will be another wasted opportunity to reform the corrupted public services that sadistically treat the most vulnerable amongst us with such contempt.

According to the Statement of Financial Performance for the six months ended December 31 2019, Social security and welfare accounted for $17,735 million – or 30.1 per cent – of Crown expenses totalling $58,979 million.

Twenty years earlier, social security and welfare spending during the first six months of 1998/99 was $6,441m and accounted for 36.3 per cent of total Crown expenses of $17,720m.

Contrary to our impressions, in other words, this chunk of the government’s Budget has shrunk as a portion of the total.

 

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