Unemployment payment scheme shows Govt knows benefits insufficient

Monday, 25 May 2020

The Welfare Expert Advisory Group had called for benefit rates to increase.

OPINION: The Government’s announcement that it will introduce a new payment of up to $490 a week for people who lose work because of Covid-19 will be welcome to the thousands of people expected to find themselves out of a job in the coming months.

But you can’t help thinking that it will be a rude shock to those who were already unemployed, who could barely dream of the sort of income the Government will provide those newly jobless.

The new scheme is generous – about twice the rate of the JobSeeker Support benefit - and, crucially, your partner can earn up to $2000 a week before tax, without it affecting your ability to claim.

Compare that to the Jobseeker Support, where you and your partner can only earn a combined $90 a week before it starts to reduce the rate of benefit you can qualify for.

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A household receiving this new Covid-19 support could end up bringing in $1976 a week for 12 weeks, after tax, in total. That’s a much more comfortable life than the $375 for a single parent (plus up to $305 in accommodation supplement) on Jobseeker Support.

It seems that the Government has decided there are two classes of unemployed – those “worthy” unemployed who are only out of a job because of a global pandemic, and so should be allowed to carry on with their lives much as before, and those “unworthy” who lost their jobs or were unable to work for other reasons and so should be expected to live a subsistence lifestyle.

Many “middle-class” people have discovered the reality of the welfare system in recent weeks when they have encountered it for the first time. It’s this benefit system that groups such as the Welfare Expert Advisory Group has been pushing to make much more generous.

Now, this move seems to be tacit recognition of the fact that beneficiaries are expected to live on an amount smaller than most could handle - but instead of developing a welfare system that allows everyone enough to get by, the Government is bringing in a new layer for those who will never have to find out how the poorest live.

Researcher Jess Berentson-Shaw, who has argued for universal payments for families, said the policy revealed a stark injustice and lack of common sense in existing support and unemployment policies.

“That current unemployment and indeed other support policies have deep moral judgements about people's character at the heart of them. In the case of Covid-19 responses we are seeing an unconditional and supportive policy approach to those who have lost their jobs due to Covid-19. Which is absolutely as it should be.

“The policy is based on the knowledge we have that people have goals, they want work and to participate in our society, and that Covid-19 is taking away from people the opportunity to do these things. However, existing support polices are not founded in such thinking. And the irony of it is if they were, then the research shows outcomes for all people and our economy would be much, much better. Better work, more skill acquisition, less stress, better outcomes for children…. This is why the welfare advisory group recommended changing the values used to build welfare policy in New Zealand.”

In another blow, the Government has removed the in-work tax credit (IWTC) hours test for working families – so you can still qualify for this if your hours of work drop or you’re put on unpaid leave from your job. Or if you're getting this $490 a week payment. This is worth at least $72.50 a week.

But if you’re on the 'normal' benefit, you don’t get this payment. This is something that the Child Poverty Action Group has been lobbying for change on for a long time. Spokeswoman Susan St John says it’s creates two types of low-income families, those deserving the Government support and those who are not. “Worse, it’s the children of those families deemed undeserving.”