by Metiria Turei
The Welfare Working Group wants to force beneficiaries to work, but proposes to pay them less if they do so.
At page 107 of the Welfare Working Group’s report (PDF) the Group proposes changes to benefit abatement – i.e. the way benefits are reduced in response to income earned by the beneficiary.
Currently there are two separate abatement regimes. So-called short term benefits such as Sickness and Unemployment benefits are reduced by 70 cents for every dollar of weekly income in excess of $80. Longer term benefits such as Domestic Purposes Benefit and Invalid’s benefit are reduced by 30 cents for every dollar of weekly income between $100 and $200, and then by 70 cents for every dollar of weekly income in excess of $200.
The Welfare Working Group is advocating a single abatement rate for the Jobseeker Support it proposes to replace all these benefits – a reduction in benefit of 55 cents for every dollar of weekly income earned in excess of $20.
I have graphed how that would affect someone meeting the current qualifications for Domestic Purposes Benefit (post 1 April 2011 benefit and tax rates and assuming an ‘S’ tax code):
The blue line is before-tax weekly income earned in addition to benefit, the red line is what the beneficiary is currently left with in-the-hand each week, and the green line is what the beneficiary would be left with in-the-hand if the Welfare Working Group’s proposals were implemented.
Every sole parent beneficiary earning more than $20 a week would be worse off under the Welfare Working Group’s proposal. And, of course, most sole parent beneficiaries will be required to seek work. The proposal is effectively a benefit cut by stealth.
Other types of beneficiary don’t fare much better. Here’s how the Welfare Working Group’s regime would affect a single person aged over 25 without dependent children who currently qualifies for Sickness Benefit (again using post 1 April 2011 benefit and tax rates and assuming an ‘S’ tax code):
Under Jobseeker Support, this beneficiary would be worse off at all weekly income levels between $20 and $300. Of course, many and possibly most people who meet the current qualifications for Sickness Benefit do not have sufficient capacity for work to earn $300 a week, so they will be worse off whatever they do.
The Welfare Working Group’s report is an extremist beneficiary-bashers’ wish list and should be promptly consigned to Paula Bennett’s rubbish bin.