The Methodist Alliance welcomes benefit increases on April 1, 2022, but they are still far from covering the true cost of living, trapping benefit recipients in poverty.

Whakamana Tangata,[1]
which was published in February 2019, highlighted the gaps between benefit rates and what was sufficient for an adequate standard of living. At that time, a job-seeking couple with two children, who received the housing supplement and Working for Families, faced a loss of earnings of $356 per week; and a single person on living assistance who received the housing supplement faced a shortfall of $137 per week.[2]

With significant increases in the cost of living since 2019, these shortages have amplified the trapping of people in poverty and in housing that is unsuitable for their needs.

Benefit rates are so low that many people receive additional benefits. The most common is the housing supplement which helps to meet rising housing costs. The second is temporary additional support to help cover essential living expenses. Both of these supplements are subject to clawback and are reduced if the benefit increases. This means increases will mean lower top-up payments, with the net result of what appears to be a significant increase indeed substantially reduced, leaving some people a bit better off. For some people, this means they will fall into a lower social housing eligibility category, which means a longer wait for safe and appropriate housing.

The abatement threshold is the amount a person can earn before their benefits are reduced, and currently equates to just seven and a half hours at minimum wage. This contrasts sharply with when the abatement rate was first introduced in 1986, when it amounted to 15 hours per week at minimum wage.

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

The Methodist Alliance urges the government to ensure that benefit levels provide people with enough income to live in dignity, with enough money to buy food and pay for accommodation without having to travel to work and Income for additional support to cover basic living expenses. We are also calling on the government to index the abatement rates to the adult minimum wage and restore them to the original levels of 15 hours per week.

About The Methodist Alliance

The Methodist Alliance is the formal alliance of Methodist Missions and Methodist Trusts and Parishes providing social services or community development in Aotearoa New Zealand.

[1]

WEAG, Whakamana Tāngata – Restoring the Dignity of Social Security in New Zealand, 2019

[2]

WEAG, Whakamana Tāngata – Restoring the Dignity of Social Security in New Zealand, 2019, P96

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