Reflections from the ‘False Economy’ tour

Below is a presentation that was part of our ‘False Economy: The high cost of a low wage economy’ meeting in Auckland this week.

I was really moved by what Darryl had to say and wanted to make sure that other people had a chance to see what he shared with us. Please have a read of his speech, copied below.


Speech from Darryl Evens CEO of Mangere Budgeting & Family Support Services 03/04/13

These past few year’s many New Zealanders have experienced uncertainty in terms of whether they get to keep their jobs or due to the rising financial stresses that life brings. Many have had to seek social welfare or benefit support for the first time in their lives. Families and individuals are coming into services such as Mangere Budgeting & Family Support Services as they seek our support. Many believe the future to be bleak, some face homelessness, some face loss of employment but overwhelmingly most feel they no longer have a familiar and secure future; which is distressing for so many. Having to put your hand up and ask for help can be extremely embarrassing for many but I do not believe there is ‘whakama; in doing so. The Maori word Whakama means to be ashamed or embarrassed. I truly believe that putting your hand up today will mean the difference between feeding your children tomorrow or not

It is those working families who often earn minimum wage who are first at our door seeking help. The reality is that $13.50 an hour before tax simply is not enough to sustain a family and yet the government saw fit recently to reduce the youth rate down to $11.00 an hour for those between 16 and 19 years. I wish to remind John Key and Paula Bennett that many of these 16-19 yr olds are actually married people who are struggling to support families. $13.50 an hour wasn’t enough to live on; so what did they do, they reduced it even further.  Without the ‘working for families tax credit’, more of our families would be experiencing extreme financial hardship.

With the vast majority of our clients renting as opposed to owning their own homes; many are now telling us that they cannot sustain private rentals beyond 3-4 months. Many are only 1 or 2 weeks away from being evicted due to rising rental prices which is the very reason we are now seeing more than one family sharing a home. As families overcrowd our houses, our children are becoming sicker by the day. We all know that overcrowding often leads to respiratory illness and in some extreme cases they are also affected by diseases such as Meningococcal Meningitis, Tuberculosis, Rheumatic Fever and serious skin infections and lesions. As I see it, two of the major causes of child poverty are income inequality and poor housing. Most of the vulnerable families that we work with have been unable to access an affordable home, one which is dry and easy to heat and one where they have some security of tenure.

Of those families who have lost their homes due to the rising cost of living many have ending up in garages, cars, caravans and also in boarding lodges across South Auckland. Boarding lodges for the most part were designed to offer emergency accommodation to those who were trying to reintegrate into society following substance abuse, alcoholism or those recently released from prison but now the vast majority are housing individuals or families who simply can no longer afford private rental accommodation and so the lodges especially in Mangere are becoming the landlords to those most in need.

Of the vulnerable families we see in these lodges, most are living in overcrowded rooms, often paying as high as $240-260 a week for the privilege. A recent visit to one South Auckland lodge by myself and my Strengthening Families Coordinator saw 17 families living in cramped conditions, many of the children were suffering from scabies, coughs, colds, some had recently recovered from pneumonia and one particular child had recently had heart surgery and yet these rooms are small, their cold and most have mould on the walls and ceilings. I would suggest that the vast majority of these lodges should not be allowed to house families with children however many of these families tell us they had no other option on the day they lost their home.  Local government really does need to monitor and regulate these lodges. An important factor to be aware of here is that of those 17 families, 8 were in full time paid employment.

So as not to normalise these living conditions, I remind myself and others; that not so long ago ‘garages were buildings to house cars’. ‘Motor vehicles were modes of transport’. ‘Caravans were something we holidayed in’ and boarding lodges most definitely were not places we housed our needy families and their vulnerable children in.

Only 5 years ago, we all heard the tragic story Folole Muliaga who died in Mangere, South Auckland due to power poverty. A Samoan family who were unable to pay a $168.40 power bill and yet they were disconnected by their electricity provider along with thousands of others in the same year. It is a disgrace that working families, beneficiary families and also our pensioners are too scared to turn on the heaters as they fear these exorbitant power bills and yet the power prices continue to rise.

Food insecurity has also been a major problem for thousands of families across NZ. In fact Food Parcel Assistance has been our number one request on a daily basis during the past 24 months. Other Food Banks as well as Work & Income offices are inundated with requests for food assistance and yet for many of these working families they are often $2 or $3 a week, over the threshold to get the additional support that WINZ can offer.

The Department of Human Nutrition at the University of Otago estimate that to feed a family of 4, this is an adult male, an adult woman and two children, aged 14 and 5 years should be spending approx $240 per week on a basic diet and yet speaking with families coming into my organisation we are told that similar size families on average are only able to spend $83.33 per week on groceries, this is a deficit of $156.67 each week; this evidences the fact that some our children are going hungry each and every day. The stark reality is that 1 in 4 children living in NZ live in an impoverished home; that is between 240 and 270,000 children and yet 40% of these have at least one adult in the home, who works full time.  These are statistics that we should be ashamed of and yet we continue to give millions of dollars each year in overseas aid and also to NZ sporting groups and yet we have children in our own backyards; going hungry.

This is the very reason that working families are often forced to work between 60-70 hours a week simply to exist. When our children are working paper-rounds or taking on part time work in our supermarkets just to add a few extra dollars to the household grocery budget, then surely something has to be done.

One area that really must be mentioned is the cost of debt in NZ, particularly for working families on the minimum wage. Getting credit can often be far too easy for many of these who simply cannot afford the repayments. We see families borrowing money to pay basic living costs – these costs then blow out of all proportion; as we regularly see interest rates of between 498 and 535% on short term loans, and then on top of this; outrageous fees and penalties are charged for those who fail to meet their obligations. This is deepening the cycle of poverty and costing the government 10fold in dealing with the effects of impoverished communities; made so by the loan sharks who prey like piranhas on our most vulnerable. Families who work hard and budget well are undermined by unregulated controls on the cost of debt and this sends them over the edge. Debt and all its associated costs are a major factor for many of our families deemed vulnerable and living in poverty.

The causes of poverty as I see them are social and economic in nature, and are often outside the control of the individual or family. These may include:

  • High unemployment rates
  • Low wages
  • a lack of affordable housing
  • poor housing policies by Government
  • low accommodation supplements and
  • wider policy developments.

These problems require long-term policy solutions such as changes in the housing benefit system, in housing policy, the building of more affordable homes, and ensuring that a wider cross-section of society benefits from the fruits of economic growth by way of a livable wage. The minimum wage no longer cuts the mustard and people need to earn a wage that is sustainable for them and their families.

Increased private rental charges, higher power and energy prices, higher costs for food and dairy, higher road user charges and increased petrol costs etc etc…..without putting up wages (and I don’t mean by a miserly 25cents an hour) means that we are effectively making our people poorer and ultimately it is costing the nation millions in welfare dollars, which really is a false economy.

25 Comments Posted

  1. >High unemployment rates

    NZ had structural unemployment levels up until the GFC i.e. essentially zero unemployment given 3% will always be unemployable due to personal issues.

    >Low wages

    We work hard in areas that return little revenue. I have a few ideas on how to change this.

    >a lack of affordable housing

    Makes one wonder why we engage in smart growth planning and encourage everyone to live in Auckland. Housing is cheap in the regions. Why don’t we want more people living in the regions?

    >poor housing policies by Government

    See above

    >low accommodation supplements

    See above

  2. Some commenters here are quick to lecture. While in some cases people should perhaps consider using contraception or whatever other measures to avoid further pregnancies after perhaps having two children, it is just arrogant moralising to blame people on low incomes for not trying to improve their living situations.

    Yes, it is usually unskilled or rather low skilled jobs where the minimum pay is paid, but how are people going to get education and training while working to survive, restricting their time to be flat out doing that and raising a family.

    The minimum wage is unacceptably low, and $ 15 an hour would be more realistic. Other issues also need looking at. NZ exports huge amounts of agricultural products, some processed, which are sold cheaper in the UK and Europe, than here. So how can that be? How come rents in North America, in much of Europe are lower than in NZ, and how come NZers have such exorbitant living costs and comparatively low incomes?

    Something is rotten, and part of the problem is oligopolies here creaming it, while NZ customers work long hours and pay more than other people in other developed countries to live. Many homes in NZ are also poor quality.

    Poverty has many reasons, and yes, pay and income are one side to look at, but the picture must be largern. Simple rants here by the know betters, just wanting to lecture and moralise, yet offering no sensible solutions, they solve nothing.

    For example bring back the training incentive allowance for DPB and IB recipients for above level 3 studies. Then they have realistic support to improve their skills. Smart solutions and better organisation of many things will help, not demeaning moral lectures.

  3. With deaths rising faster than births, annual natural increase (births minus deaths) is likely to decrease. From 31,000 in 2012, there is roughly a 3 in 4 chance that natural increase will be less than 27,000 in 2036. There is a similar chance natural increase will be less than 25,000 in 2061. There is also a small chance of natural decrease (deaths outnumber births) by 2036, but roughly a 1 in 3 chance of natural decrease by 2061.

  4. solktas solution to poverty is getting poor people to breed more so we pay out more benefits.

    How does perpetual population growth fit with your thoughts on with using up the world’s finite resources, and pumping out more carbon?

  5. The 65+ dependency ratio (the number of people aged 65+ per 100 people aged 15–64 years) increased gradually from 14 per 100 in the mid-1960s to 20 per 100 in 2011. It is projected to increase significantly, with the ratio expected to be in the range 36–39 per 100 in 2036, and 39–51 per 100 in 2061. This means that for every person aged 65+, there will be about 2.6 people aged 15–64 in 2036 and 2.3 in 2061, compared with 5.0 people in 2011 and 7.1 in the mid-1960s.

  6. Just how many people should New Zealand have? 4.5m today. 8m in twenty years time? 20 million in another 80 years?

  7. solkta says “The Fertility Rate in New Zealand has been sitting at replacement level since 1978…..So if people really did start having less children due to the financial cost, then we really would need to start addressing structural poverty.”

    Our population has increased from 3 million to 4.5 million over the same period.

    So that just sounds like an empty excuse to keep rewarding people for doing all the wrong things.

  8. bj says “You want to nanny-state the underclass in this country into childlessness? ”

    No – not what I said. FIRST, stop high school girls DELIBERATELY getting pregnant. We’re 2nd worst in the world for that.

    SECOND, get them a qualification or work experience that is useful to employers so they can get a reasonable job. There are fewer and fewer low skilled jobs these days.

    THIRD, get them to plan to be financially and emotionally secure BEFORE they have their family.

    FOURTH, have ONLY the number of children they can properly support and look after.

    Where are the policies that encourage this behaviour.

    Currently our policies reward people who do all the wrong things.

    And we’ve got some who want even bigger rewards to do the wrong thing.

  9. I’m waiting for some solutions from Arana and photonz, which demonstrate some compassionate understanding of the problems, rather than moralizing.

    Solving “poverty”? A difficult problem that no society has managed.

    Define “poverty”. No one in NZ is poor compared to life in NZ in 1905. Are we talking relative poverty?

    Some people have more children than they can afford. If their neighbors keep paying for more and more children, then surely you’ll make the problem even worse? What strain do you put on the environment if you encourage people to have as many kids as they want, irrespective of personal cost?

    I don’t think we should encourage people to have children they cannot afford. This would go a long way to solving “poverty” issues.

    The work issue is somewhat harder. The reality is that many no-skill/low skill jobs have been outsourced. You could reestablish them, and raise trade barriers, but are you really just doing the equivalent of turning off the machines and have 1,000 men use teaspoons to build a tunnel, just so you can have more employment?

  10. Photonz – I am all for planned pregnancies. Knowledge and understanding about the consequences and risks and how to prevent “accidents”… yup.. those things are important but…

    You want to nanny-state the underclass in this country into childlessness?

    You want to try to explain the application of a policy which will by reason of the GINI and distribution statistics of this country, affect one ethnic group far more than the others?

    I’d think you know better than to try… and you know better than to lumber us with this as well.

    Where the women get education and have opportunities and actual control the birthrate drops. Where those opportunities and controls don’t exist the desperate poor multiply. You KNOW that… and you champion ever greater inequality with the resulting loss of opportunities all the time anyway. The “free-market” ideology of the Chicago school has become a religion where the human sacrifices are executed by the invisible hand.

    That of course, doesn’t mean I simply want to hand people money for having kids… but we’ve had that discussion before too. You have your perception of impoverished multitudes tugging ever harder at our collective wallet because of some moral failing on their part.

    I know about the tug, but I don’t think they’re anywhere they WANT to be.

  11. bj says “We see where this is going Photonz, and the places where it has actually reached its destination are remembered well but not with any kindness, in our history books. ”

    We’re already doing it – in reverse. The people who never planned to have kids, never prepared to have them, and don’t look after them properly, and can’t afford to support them, have the most.

    You’re absolutely nuts – completely insane – if you think we should continue to have 40% of children born to people who never meant to have them in the first place.

    We’ve got about the second highest teenage pregnancy rate in the world. Of all the factors associated with child abuse, the one MORE common than any other is young motherhood.

    And surprise surprise – we also have some of the world’s worst child abuse statistics.

    And when there’s ever any suggestion things would could improve things if parents better prepared financially and emotionally BEFORE they had kids, we get the hysterical and extremist nonsense that it will end in eugenics.

  12. If you will never have a good job no kids. Right.

    If you hit that job too late in life? No kids. Right.

    If you had a job and it disappeared from under you? That happens a fair bit in this country, doesn’t it…

    … maybe nobody should have any kids until they’ve won lotto or socked away enough dough that they don’t have to worry even if they DO lose their jobs. Hmmm…. I see a lot of very old Dads in our future.

    We see where this is going Photonz, and the places where it has actually reached its destination are remembered well but not with any kindness, in our history books.

    It IS a solution, just not a very good one.

  13. philip says “I’m waiting for some solutions from Arana and photonz, which demonstrate some compassionate understanding of the problems, rather than moralizing.”

    The solutions are obvious, and have already been stated over and over before. It’s not rocket science.

    1/ WORK to get yourself qualified and in a sound financial AND secure emotional positions BEFORE you have a family. i.e. plan it.

    2/ Then only have as many kids as you can afford to support i.e. if you have a crap job, don’t have six kids.

    If everyone did that, child poverty would just about be wiped out.

    Instead 40% of new babies are unplanned, and many of those unwanted.


  14. I’m waiting for some solutions from Arana and photonz, which demonstrate some compassionate understanding of the problems, rather than moralizing.

  15. I have two children and would love more but we cant afford it. In fact we would consider ourselves being cruel, selfish and bad parents to bring into the world children we knew we could not provide for adequately.
    Because they are my wife and my responsibility. No one elses.

  16. Right about the problems, wrong about the solution. Why not make the minimum wage $100 p/h if money is the “solution”?

  17. That’s a long speech to completely miss the crux of the matter.

    And it offered largely unsustainable “solutions” to poverty – give everyone more for doing the same thing.

    Today, one skilled person using a modern railway tamper can do the job that 100 labourers in a railway gang used to do.

    For every 13 people in work, there is one out of work, but 50% of businesses report problems finding skilled staff for vacancies.

    There are simply far fewer jobs for unskilled workers. And there will be even less in the future.

    The days of being unskilled and expecting to be able to find work are gone.

    If you don’t acknowledge that basic fact, then any “solutions” you come up with are little more than tinkering around the edges.

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