22 May 2015

Benefits boosted but costs up too

9:58 am on 22 May 2015

Beneficiaries have welcomed the Government's additional $25 a week after tax, but say it does not go far enough to feed their children, let alone clothe them.

no caption

Photo: 123RF

As part of Budget 2015, the Government announced a $240 million a year package beginning in April next year aimed at helping children living in some of the country's poorest families.

It expects about 110,000 families, with 190,000 children, will receive the higher benefit rates.

But those on the benefit and advocacy groups said although it provided a much-needed boost, it was too little - and it would come too late.

Read more stories on Budget 2015

Auckland beneficiary Muhammad Riaz, who is on the benefit because of an injury, said the extra money would not make a lot of difference to his family of six.

"We can just buy two days' lunch for the kids, and that's it. That's only for two days," he said.

With four children aged four to 14, Mr Riaz said the family regularly faced emergencies they could not afford.

He said three of his children got sick last week, and he could not buy some of the medicine needed for one of them and himself.

"If something like this comes in, an emergency, you can't do anything. The money comes, and straight away it goes to the bills, your rent and the children's breakfast and other household stuff."

He said he wished he had extra money to provide a healthy lunch for his children and enrol them in sports.

Kay Brereton, spokesperson for the Beneficiary Advocacy Federation of New Zealand, said families needed about $50 to $100 extra for their children to participate in the community as others do.

Regardless, she said it was a welcomed increase.

"Hopefully, they'll be able to spend it on food, because that's the thing in people's budgets that misses out," Ms Brereton said.

"You can't pay short on the rent, you can't pay short on the power - all of that comes out of people's food budget."

But Darryl Evans, the chief executive of the Mangere Budgeting Services Trust, said rent would take an extra chunk out of the additional money.

Rent in state housing is 25 percent of beneficiaries' income, so those getting the extra $25 will have to pay an additional $6.25 a week in rent, while those in private rentals will receive $4 less in their accommodation allowance.

"Families are struggling with rental prices in general, and what we're seeing and hearing regularly is that [for] those people renting privately, the rent really does increase almost every time there is a review, which is six-monthly."

Other measures in the budget include having most sole parents available for part-time work once their youngest child turns three rather than five, increasing hours of part-time work from 15 to 20 a week and having those on sole parent support re-apply for their benefit every year.

Will families miss out?

Finance Minister Bill English said the package struck a balance that offered more support to low income families with children while ensuring there was a strong incentive for parents to work.

"Moving to paid work is the best way to lift more families out of poverty, while an increase in benefit rates will help address our concern about children whose family's resources have been falling behind other households."

But not all families will get the full $25 a week set to be given by the government.

If a beneficiary is receiving temporary additional support, which is given to those who cannot meet their essential living costs, it may affect how much they receive in the hand.

A Ministry of Social Development spokesperson said that out of the eligible families, more than 13,300 will see an average cut of about $7 a week to the additional support, while a few families will see a complete offset.

Major Sue Hay from the Salvation Army said that was not good enough.

"We would certainly hoping that this would be a budget that would address child poverty, so we're disappointed that it won't improve the situation of all families who are currently struggling," she said.

Get the new RNZ app

for ad-free news and current affairs