A 2017 MSD
paper estimates 40 per cent of children in material hardship have working
caregivers. These families are facing undue hardship. They are households that
cannot escape hardship despite at least one adult working full time.
The current minimum wage is $16.75 x 35 hours per week equals $586 per week. Deduct tax at 17% which is $99.62 leaving a net pay of $486.38. Work & Income rates 28hrs a week as full time work. The lowest average rent for South Auckland mentioned above is $449.00, leaving you $37.38 to live on.
The most
important thing is that we know that a sizeable portion of the poor kids
come from working families.
The effects
of low wages - found in a 2018 MBIE report that analysed tax records
- might be obvious to some. Low-wage workers have more short-term jobs, hold
multiple jobs at once, and find themselves on the benefit more often. We have
increasing numbers of people employed on contract work, as-and-when needed, and
work that can just change at any time.
Research
consistently shows poverty / hardship leads to more ill-health, much lower life
satisfaction, much more associated with crime, and lower educational attainment.
These are all of the things we absolutely don't want in society.
In New
Zealand, we pay low wages and work long hours. By comparison Australians earn
on average 32 per cent more, Canadians 22 per cent and the British 9 per cent.
The working
poor - You could work all week and have only $20 to show for it.
You could be
mother-of-two Joanna, working a retail job in Henderson, with take-home
pay of $550 eaten up by rent of $530 every week.
This isn't a
story about rental prices in Auckland. This is a story about low
wages, high living costs, and the working poor. And it's a story that's
increasingly being told around the country.
For
almost two years, a solo mum in Motueka has struggled to find a
home for her family. The working mum and her young son have been homeless.
They have couch-surfed, stayed with friends, slept in a car and stayed on the
floor of a family member's home. Flooding during the February storms meant they
were displaced again, the tent they had been living in was damaged, the
domain they were camped out at now closed.
Unless you
have a safe place to live with privacy and security, it isn’t a home. And
without a proper home life is very difficult to manage.
Many kids
won't have the stationary they need for school, they won't have warm clothes,
lunch to eat, clean undies, their own bed tonight to sleep in or shoes on
their feet.
A husband works 40 hours a week as a
mechanic, earning $20 an hour. After tax, he gets $460. But their rent is $330.
Then there's power, and petrol. Other
things come up and they've taken out loans, because as the saying goes, they've
had to rob Peter to pay Paul. By the time they get to buying groceries, they
are looking at $80 to feed five people - two adults and three children.
Brand new doesn't exist
for them, instead they have op shop things. Gone also are the days of
having meat and veggies on the table every night. They now often
have noodles, eggs and baked beans. The wife and husband often skip meals
to feed the kids. Sometimes, the wife doesn't have tea at all and doesn't say
anything to her husband so he won't feel bad.
Unemployment is at its
lowest in a decade but wage growth has stagnated. So you can get a job, but it
might not cover all the bills.
Sitting between employment
rates and wage statistics are the working poor - employed, but doing
it hard.
Joanna, is 49, and
has been behind the counter at a major New Zealand retailer for almost 20
years. It takes Joanna around 40 hours at $20.40 an hour - $4 above the minimum
wage - to earn the week's rent. Her $550 weekly pay cheque - after tax,
KiwiSaver, union fees, and $20 tucked away for Christmas - is practically gone
before it's in her hand.
A $70 accommodation
supplement from Work and Income helps - but it still won't cover the
bills. She has to reapply for it every three months, which is insulting, She
works bloody and has to take time off work to go to the WINZ office to do that.
And it won't feed her two boys, who are at university. They each pay board of
$140 a week, which helps put food on the table and keeps the lights on.
They
couldn't afford to pay more, because they're struggling students. If they
wanted to move out and do their own thing, she just couldn't afford to stay there
anymore.
So what's Joanna left
with? Not enough to pay for parking, of $25 a week, at the mall where she
works. She kept getting tickets because she wasn’t paying for parking … so she
has been riding a bike to work.
She sits tight, keeps to a
strict budget, and doesn't ask the landlord to fix anything for fear the rent
will increase. But what if the car breaks down? Joanna has asked Work and
Income for help before, and the response is a firm "no". They
just say, 'You're on good money, your wage is good'
Another, a single mother,
earns $800 a week. Then you deduct $500 for rent and $300 for childcare.
She is a nurse; she has got a degree and training. It's not just people who you
might automatically think of.
Rentals are so expense. If
people can’t get a State house they have to go for a private rental … you can't
find anything under about $350, and that will be a crappy little studio.
Average rental in Auckland (January 2017) $528, North Shore between $505 -
$693; Rodney between $442 - $553; South Auckland between $449 - $607; West
Auckland $451 - $579; Mangere 3 bedrm $495 and 4 bedrm $550 - $700.
There is no official ‘poverty line’ in New Zealand as
there is in other countries and no formal agreement about exactly how to
measure poverty.
There is general consensus however, that the strongest
indicator of poverty is your level of income. There is also some consensus that
an income level set at 60% of median household disposable income after
housing costs is a reasonable level of income to protect people from
the worst effects of poverty.
The current minimum wage is $16.75 x 35 hours per week equals $586 per week. Deduct tax at 17% which is $99.62 leaving a net pay of $486.38. Work & Income rates 28hrs a week as full time work. The lowest average rent for South Auckland mentioned above is $449.00, leaving you $37.38 to live on.
Ask yourself – how would I get by if I had to provide for myself and family out of this income? This is the daily reality for hundreds of thousands of people in New Zealand.
Some groups are more likely
than others to be in poverty: Beneficiaries, children, Māori and Pacific
peoples, and sole parents are more likely to experience poverty than other
groups. There is a growing group of older people.
The super was calculated on
the assumption that you would be mortgage free and own your own home by the
time you qualified for superannuation. The single rate nets you about $371 a
week. How is that looking after you have paid your rent of $449?
What does poverty mean for
people: Being in poverty means experiencing hunger and food insecurity, poor
health outcomes, reduced life expectancy, debt, and unaffordable or bad
housing.
There is not enough
help available when you really need it
Benefits are not enough to live on with
dignity – this is the real issue.
The resources of organisations providing
emergency assistance are stretched.
The benefit system is complex and people are
often not made aware of their entitlements.
Housing assistance is
inadequate.
With the best budgeting skills there still isn’t
enough to pay the bills
Because people in poverty
must survive on very low incomes, they are adept at budgeting and making ends
meet.
Contrary to the popular
myth, people in poverty don’t spend all their money on alcohol, smokes and
gambling.
Inadequate income is the
real issue affecting the ability of people in poverty to manage their finances.
Debt can be a problem for
some low-income people, but debt is often linked to tragic circumstances.
Debt and problems managing
money isn’t just an issue for people in poverty.
Living on a benefit is not a
‘lifestyle choice’. Nor is living on a benefit a good ‘lifestyle’.
Few women receiving a
benefit are unmarried teenage mums.
Most sole parents stay on benefits for a short period. and usually only while their child is young.
There is some benefit fraud, but most debt to Work and Income is the
result of negotiated ‘recoverable assistance’ loans or ‘Innocent Overpayment
Debt’.
Getting a job doesn’t solve the poverty problem
Getting a job doesn’t solve the poverty problem
Employment alone does not solve poverty.
Most beneficiaries want to
work. International research does not support the assumption that beneficiaries
lack a work ethic and are content with the beneficiary ‘life-style’.
Obtaining work in itself
does not guarantee that poverty will be alleviated. Many jobs are ‘precarious’
or insecure and don’t pay as well (or offer the same security) as a full-time,
permanent job.
There are good reasons why
not all beneficiaries should get a job right now: health problems, disabilities
and childcare responsibilities all present major barriers to work.
Making life hell on a benefit does
not reduce poverty
Most people are on benefits
only for a short time.
There is no evidence that
cutting benefits reduces dependency.
An argument for
back-to-work policies is that it is good for children to see their parents
working but research has shown negative outcomes for older children when
parents are pushed back to work.
It is poverty, not dependency
that is the problem.
Economic growth alone does not solve poverty
Economic growth alone will
not necessarily address poverty and inequality.
The gap between the rich
and the poor is large and shows little sign of declining.
There are more people in
poverty now than there were in the 1980s.
Income disparities between
Māori, Pacific peoples and Pakeha remain high.
The
rise in inequality in this country between the mid-80s to the late 90s
was the biggest in the developed world. Three decades on, the legacies of
tax cuts for the rich, benefit cuts for the poor and jobs lost to technology
and globalisation are having an impact.
The
most recent figures, from the Ministry of Social Development's 2016 Household Income Report, show the highest-earning 10 per cent of Kiwis used to
make five to six times more than the lowest 10 per cent. Now, their income is 9
times higher.
The
twin factors of low incomes and housing unaffordability mean more Kiwis are
struggling.
A
high level of inequality can mean the population is less socially connected.
People begin to live very different lives. They lose that sense of other
people's lives, they lose that sense of empathy for each other so trust
declines. Society is less cohesive.
It
also creates an uneven playing field; the children of less privileged parents
are not as likely to succeed
Child poverty is a reality in New Zealand and its costing
us dearly.
As
much as $10billion of public money is required every year to deal with the
negative consequences of child poverty. Independent research has shown that
three quarters of that cost is avoidable.
Children
living in income poverty develop more pressing health needs. Children who are
maltreated are more likely to have poor mental health into the future and also
more likely to be involved in the justice system. This extra burden on the
justice system alone costs $2billion every year.
No child should experience severe
and persistent poverty, least of all in a land of relative abundance.
There is no simple solution to
address the causes and consequences of child poverty -- solutions need to
address a range of factors. Poverty is the result of a breakdown in a number of
facets in a fragile ecosystem of community wellbeing.
The
Children’s Commissioner notes a
significant and durable reduction in child poverty is possible, but will take
time and money. It requires political vision, courage and determination. Above
all, it means making children our priority and making effective use of the best
available evidence.
The first step is to adopt a strategic framework for addressing child poverty
issues and ensuring accountability for outcomes; then
· enact of legislation requiring the measurement of child poverty
· enact of legislation requiring the measurement of child poverty
· set
short-term and long-term poverty-reduction targets
·
establish
various child poverty-reduction indicators
·
monitor
and report on results.
