On 30 March 2022, the Methodist Alliance put out a media release about the benefit increases coming in to force on 1 April.

The media release read:

The Methodist Alliance welcomes the increases to benefits on 1 April 2022 but they still fall far short of meeting the actual costs of living, trapping people receiving benefits in poverty.

Whakamana Tāngata,[1] which was released in February 2019, highlighted the shortfalls between the benefit rates and what was sufficient for an adequate standard of living. At that time, a Jobseeking couple with two children, who received the accommodation supplement and Working for Families, faced a shortfall of $356 a week; and a single person on a supported living payment, who received the accommodation supplement, faced a shortfall of $137 per week.[2]

With significant increases in the cost of living since 2019, these shortfalls have magnified trapping people in poverty and in accommodation unsuitable for their needs.

Benefit rates are so low that many people receive supplementary payments. The most common is the accommodation supplement which helps with the increasing costs of housing. The second is temporary additional support to help with essential living costs. Both these top ups are subject to claw backs and are reduced if the benefit increases. This means that the increases will result in lower supplementary payments , with the net result of what appears to be a significant increase in effect substantially reduced, leaving some people little better off. For some people, it means they will fall to a lower category for social housing eligibility meaning a longer wait for secure, appropriate housing.

The abatement threshold is the amount a person can earn before their benefit is cut, and is currently equivalent to just seven and a half hours at the minimum wage. This is in stark contrast to when the abatement rate was first introduced in 1986, when it amounted to 15 hours per week at the minimum wage.

A single person with no dependent children who accepts part-time work and earns more than the $160 a week may see only a few extra dollars a week in their pocket, once the abatement rate of 70c for every dollar earned has reduced their benefit. They may also have work-related costs such as travel to and from work. In addition, their social housing costs may increase as it is based on their income. The total effect may mean that they are financially worse off accepting the part-time work – a powerful disincentive to seeking independence.

The Methodist Alliance urges the Government to ensure benefit levels provide people with an adequate income to live with dignity, with enough money to buy food and pay for housing without having to go to Work and Income for additional support to meet basic living costs. We also call on Government to index abatement rates to the minimum adult wage and restore them to the original levels of 15 hours per week.

Poverty and inequality in Aotearoa New Zealand remain entrenched problems after over 30 years of economic reforms.

The government Covid-19 response which provided higher levels of financial support than existing benefit recipients, represents tacit acknowledgement that current benefit levels are inadequate to support the most basic standard of living for ordinary New Zealanders.

Members of the Methodist Alliance work with some of Aotearoa New Zealand’s most vulnerable people, many of whom are benefit recipients. This work has highlighted the desperate and unsustainable situation that our poorest people face in their daily lives - as they often bear the brunt of economic downturns in a way that most New Zealanders do not.

Benefits no longer provide for the most basic needs of recipients (accommodation, food, power). This leaves many people dependant on emergency grants, food banks and high cost debt just to survive. The current benefit system keeps people in a poverty trap and does not support them to gain sustainable employment to increase their incomes, safety, and wellbeing.

The low benefit abatement threshold and high abatement rate are major factors in maintaining this poverty trap. While the benefit system aims to help people into sustainable employment, and self-sufficiency, for many this involves transport costs and other employment related expenses like suitable clothing and training etc. A low abatement threshold often means employment is not worth the debt risk of incurring these costs – so is a barrier to employment.

In a fair and caring society, people who receive welfare support deserve to live with dignity and participate in their community. To do this they need sufficient income to cover the basics and just a little bit more for emergencies e.g. healthcare costs. The Methodist Alliance working group campaigning to increase benefit and abatement rates believe that a benefit system which provides income sufficiency will not only restore dignity to those who are in need, but also have an immediate stimulatory effect in their local communities across the whole country and will be particularly noticeable in those areas with the greatest needs.

If you would like more information about how you can support the Methodist Alliance, the Methodist Missions, or to join the campaign workgroup, please contact me.

Carol Barron, National Coordinator

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

[1] WEAG, Whakamana Tāngata – Restoring Dignity to Social Security in New Zealand, 2019

[2] WEAG, Whakamana Tāngata – Restoring Dignity to Social Security in New Zealand, 2019, P96