Anne Tolley desperate to screw down beneficiaries even further

So for 18 years, people who have been on stand-down periods from benefits – i.e. forced to stretch whatever savings or credit or charity they can access just in case they’re not really in desperate need of paying the rent or buying food for their kids – have been consistently underpaid.

Radio New Zealand reported Work and Income had underpaid some beneficiaries by a day since 1998, as it had paid people from the day after their “stand-down” period ended.

When people applied for a benefit, they often had to wait two weeks for it to start.

Work and Income was meant to pay a beneficiary from the day after the two week period ended, but instead had been starting payments the following day, RNZ reported.

And the government’s response to this persistent underpaying of poor and vulnerable people, who are already expected to live on less than it actually costs to live?

The Government was now trying to retrospectively change the law dating back to 1998, when the provisions took effect.

Of course they are. As many people have said in response to this article, if WINZ found out you’d been over-claiming for a day’s benefit since 1998, you’d be in jail, castigated as the worst kind of bludging, greedy parasite.

When WINZ has been stiffing beneficiaries for an extra day’s benefit for nearly 20 years? Oops, better make that all go away really quickly, we certainly don’t want people to think they’re entitled for restitution after being simply, wilfully, defrauded by the government.

(Unless they’re Saudi millionaires who totally reckon they were promised cushy trade deals.)

In fact, they’re going to “fix” the law not by making WINZ obey the damn law, but by changing it so everyone has to wait one day more before they can get the government assistance they desperately need.

This matters. We might be tempted to say “oh it was ages ago for some people and it’s not much money per person”. But benefits in this country are already at unsurvivable levels. The New Zealand Council of Christian Services says:

Real net benefit rates compared to the real net average wage have declined steadily and significantly over the past 30 years and are at levels that leave people in poverty. The Working for Families package has helped wage earners but this has further increased the income disparity between the waged and unwaged.

Benefit levels do not allow families to feed, clothe and house themselves adequately. For example, the PIP Update Report found that the disposable income of food bank clients (most of whom are reliant on benefits) is barely sufficient to cover the estimated food costs required to feed a family of two adults and two children.This leaves little or nothing for other household costs.

And that PIP Update Report was completed in 2007. We’ve had a bit of a global financial crisis since then. You reckon things have gotten any easier?

This government, and Anne Tolley in particular, have declared “success” for their punitive welfare reforms because the numbers of people on a benefit are going down. And that’s often what makes the headlines: benefit numbers down! Economy obviously hunky-dory! But when you dig beneath the numbers it’s clear this government hasn’t achieved anything meaningful. Thousands of people are being lost in the system because they haven’t managed to complete the (obscene amount of) paperwork to renew their benefit. Others may be checking out because the system is so – deliberately – difficult to navigate.

This is just wrong. It’s inhumane. It’s cruel and unnecessary. That’s why we have to talk seriously about the role of the state in supporting every person who cannot be in paid work, for whatever reason. We have to challenge the rightwing idea that paid work is the only valuable contribution a person makes to their community and society. We have to get real about new ideas like a universal basic income. We have to stop, absolutely stop, walking into the trap of blaming beneficiaries for broader economic circumstances or pussy-footing around about whether the poor are “deserving” or not.

We have to do better than this.

Back to the future: Brian Easton on benefit abatement rates

Hat-tip to Sarah Wilson on Twitter for linking to this 1995 piece by Brian Easton on the “unintended” consequences of abating people’s benefits when they get part-time work – to the extent that it’s just not worth getting “off” the benefit at all.

John stopped persevering with the job, when he discovered he was not being paid for it. The employer paid him a fair wage, but John was on the unemployment benefit. When he reported his additional earnings, the Income Support Service reduced (abated) his benefit. After he paid income tax too, he was left with 2 cents of every dollar he earned, not enough to cover even the cost of the bus fare work. In the economist’s jargon he faced an “effective marginal tax rate” (EMTR) of 98 percent (plus the costs of the job). There was no financial incentive for his working, and so he gave it up. John has been trapped into unemployment by the abatement rules of his benefit. There are many like John.

The problem of high EMTRs has always been there, but things have changed since 1972 when they last went under a major review. In those days jobs were easier to find, and it was not necessary to build up a series of part time jobs to obtain a full time one. Under full employment people jumped from a benefit (if eligible) to a full time job, so the high EMTR in between did not matter. But that situation rarely applies today.

Yet, our Income Support Service, handing out unemployment benefits worth over a billion dollars a year, is still basing its abatement rates on the assumption that there is full employment. Meanwhile, the strategy of reducing taxes on those with high incomes has meant the revenue has to be raised from the poor by putting up their EMTRs. If one’s heart bleeds for the rich facing a disincentive from an income tax rate of 33 percent, why the hard hearted view that a 98 percent rate will inspire John to get a job?

The abatement rates aren’t as bad today as they were then – but the top rate is still 70 cents on the dollar.

How on earth can we blame people for being on benefits when there simply isn’t fulltime work available, and when they’re financially punished for taking part-time jobs? (Oh, and we’ve removed the support they need to study and “improve” themselves, and even if they’re sick we’re going to force them to undergo humiliating checks-and-balances just to make sure their chronic illnesses haven’t magically disappeared.)

Easton notes that the idea of what we now call a Universal Basic Income would address some of these issues. Hopefully we’re a lot closer to that becoming a reality than we were in 1995 – but not much, I suspect.