The Methodist Alliance is proud to be part of the Fairer Future Collaboration – 37 organisations around the motu who are led by ActionStation and are calling on our Government to adopt a seven-point plan of action to support low-income New Zealanders facing the high cost of living and to create lasting change for people most in need.

The seven points are:

1. Increase core benefit levels to the standard of liveable incomes

An update of Welfare Expert Advisory Group (WEAG) 2018 modelling, commissioned by Fairer Future, found significant deficits between income entitlements and basic expenditure will still exist after the April 2022 benefit increases for almost all WEAG model households.

For example, in mid-2022:

• The model couple with three children receiving Jobseeker and paying low rent would need around $300 extra a week (or 29% additional income or around $16,000 a year) to meet their total costs (including kids’ sport, contingency for e.g. car repair, etc). To solely meet their core costs (rent, food, power etc), they still need a additional $165 a week (15% more income or $8,600 a year).
• The model one-parent and three children receiving Sole Parent Support and paying low rent would require around an additional $240 a week to meet total costs (or nearly a quarter more income: 23%); or an additional $111 a week solely to meet core costs (10% additional income or $5,770 a year).
• Even if they are sharing a house to save on costs, the model single adult receiving Jobseeker would require around an additional $90 a week to cover all costs (22% additional income) and $50 a week income to cover core costs (12% additional income).

2. Raise the minimum wage to the living wage

During the COVID-19 pandemic, there was a huge reliance on essential workers delivering essential services. The pandemic upended claims about “low-skilled” and “high-skilled” work. Politicians repeatedly said that this was an opportunity to value supermarket workers, bus drivers, and nurses who have kept society functioning while also keeping all of us safe. But wages have not been lifted to reflect that rhetoric.

The Council of Trade Unions (CTU) noted the 6% annual increase in rents across the country and a 4% annual increase in food prices, was not matched by increases to wages which only moved up by 2.4%. The Fairer Future collaboration supports calls by the CTU and others for the minimum wage to be increased to the living wage level - currently $23.65.

3. Increase the Disability Allowance

The changes announced in Budget 2021 focused on core benefits and did not affect the Disability Allowance. Fairer Future called on the government to increase both Disability Allowance and Child Disability Allowance; for the application process to be simplified; and the Disability Allowance minimum to be set at the current maximum.

4. Overhaul relationship rules

Work & Income and the Ministry of Social Development, continue to apply rules that reflect outdated and Eurocentric models of families. People on income support owe huge debts to the Government because it has been ruled that they are in ‘a relationship in the nature of marriage.’ As well as creating real financial hardship for whānau, the definition of relationship is often not consistent with tikanga Māori.

People who date others for six weeks, or have someone stay for three nights a week, can have their financial support cut - and these rules are often applied in arbitrary and inconsistent ways. The system should be individualised, with flexibility around new relationships, as recommended by the WEAG.

5. Remove sanctions

New Zealand’s welfare system is still full of sanctions, which cause stress and hardship. The WEAG’s evidence suggested people from disadvantaged backgrounds and minority ethnic backgrounds are most affected by sanctions.

A June 2021 report by the Beneficiary Advisory Service showed that sanctions have often resulted in affected people going without necessities.

When the Government introduced its Covid Income Relief Payment in 2020, recipients were not subject to sanctions.

6. Wipe debt owed to MSD

Debt to MSD owed by benefit recipients has almost doubled in five years, and in 2021 it reached over one billion dollars. Unlike other government agencies, MSD does not have the ability to write off debt on hardship grounds. In contrast, both the IRD and the Ministry of Justice has the ability to write off debt due to hardship.

People commonly get into debt to cover essentials of life - like school uniforms, car repairs, and power bills. This is because their income support is inadequate and does not provide a liveable income. Some of the poorest people in our country owe thousands to MSD that they will never be able to pay back and/or leave families with insufficient money and unable to afford basic necessities.

Women and people under the age of 35 are more likely to owe debt to MSD, and the women are likely to be raising children. For some women this means that 25% of their income goes to debt repayment.

If the Government wiped the debt owed to MSD, it would alleviate mental distress and hardship caused.

7. Improve supplementary assistance and urgent grants

Supplementary assistance plays an important role in providing targeted support for those in need. The WEAG recommended changes to the Accommodation Supplement to provide greater support to those in housing need. At present, the Accommodation Supplement is currently unavailable to those with over $8000 in cash assets, and this should be raised.

Urgent grants would be far less necessary if core benefit levels were set at the level of a liveable income. All supplementary assistance should keep up with the cost of living, and the abatement rate should be increased, as recommended by the WEAG, to avoid whānau being trapped in poverty.

The Methodist Alliance’s working group campaigning to increase benefit and abatement rates continues to work with ActionStation and Fairer Future to be a voice for those who do not have one and to fight for a better future where all people flourish.

Carol Barron, National Coordinator

03 375 0512 | 027 561 9164 | Carol@MethodistAlliance.org.nz