Individualising entitlements in New Zealand's benefit and social assistance systems

Date published
25 Jun 2018
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Document type
Report

When New Zealand’s welfare state was designed in 1938 it was based explicitly on the male-breadwinner/female-carer family model. At that time, almost all children were born to married parents (and a high proportion of those who were not were adopted out to married couples), labour force participation by mothers was low, and wage-setting under the Industrial Conciliation and Arbitration Act framework was focused on ensuring male wages were adequate to support a wife and children. Welfare benefits for the working aged population were designed to protect people against risks to this situation, most notably, either an inability for men to work due to disability, injury, sickness or insufficient demand for labour, or widowhood or desertion affecting mothers with children.

Things have changed enormously since then, and in the modern context a benefit/social assistance system that uses joint family income as the core criterion for income-tested assistance is anachronistic. It fails to protect couple families that rely on two incomes against the risk of job loss by one partner. It creates a very strong disincentive for sole parents to form new relationships (or for a person to enter a relationship with a sole parent) and exposes them to the risk of debt and potential fraud proceedings if they are judged to have been in an undeclared relationship. In many cases, the biggest losers in these situations are children, faced with poverty-level living standards if their care-giver is a sole parent or among the growing number of ‘working poor’ families.

Successive Family and Whānau Status Reports (Families Commission/Superu 2013-17) have found that sole parent families with at least one child aged under 18 are most likely to be experiencing financial and other stresses. This situation highlights the perverse nature of a benefit/social assistance system that creates disincentives for sole parents to form new relationships.

Dr Michael Fletcher investigated the feasibility and implications of removing relationship status from both the benefit and family tax credits systems, without disadvantaging any group compared to their current entitlements. In other words, restructuring assistance so that the basic unit of assessment is the individual, to benefit families and whānau by protecting against the modern risks associated with labour market fluidity/insecurity and dynamic and diverse partnership arrangements.

Last update: 26 Jun 2018