The current system is designed around a now outdated notion of family with a primary breadwinner supporting a family on a single income. This has long since ceased to be the norm in New Zealand. Today, families are diverse in structure, and social security needs a modern and flexible definition of family that recognises this diversity. The current rules for defining who is in a ‘relationship in the nature of marriage’ are not working and are causing considerable harm.
At the core of the problem is that most parts of the welfare system are based on whether a person is single or part of a couple and, if part of couple, the amount the couple is entitled to receive is assessed on both partners’ incomes. This is unlike the tax system, which is based on individual income. Couple-based systems bring with them two problems: the need to determine relationship status, and financial advantages and disadvantages depending on relationship status (in the current system, this is nearly always a 'couple penalty').
Recipients of MSD support and MSD staff raised the issues of the couple penalty and defining a relationship as being in the nature of marriage as problematic, causing significant stress and hardship, and being a barrier to people re-partnering, especially those with dependent children, or a health condition or disability.
We investigated the concept of individualised entitlement as a potential solution to these problems and support moves towards individualisation. However, we acknowledge that individualisation of all parts of the system is difficult to achieve while still ensuring sole parent families receive enough assistance. We do, however, recommend that the Government investigates options to bring the couple rate of benefit closer to double the single rate (it is currently 1.7 times) as well as other means of individualising the system.
We are also aware of the pressure the current relationship status rules place on people forming new relationships. Most often this affects women who are sole parents. At times, it has resulted in harsh treatment by MSD and the courts if they are deemed to have been in a relationship while still receiving Sole Parent Support, which, in turn adversely affects their children.
Relationships evolve and develop over time. A system based on dignity and trust must allow for this without putting people at risk of losing the income they need to support themselves and their children. The Welfare Expert Advisory Group recommends that a new or formative relationship be allowed a development period of 6 months from initial moving in together rather than the current 6 weeks. We regard this as a fair balance between the equity issue of treating some more generously than others for a period and the need to allow people time to test whether the relationship, and often the blending of families, is sustainable and the best option for the wellbeing of the people involved.
This development period would remove some of the stress of having to commit to a live-in relationship, and subsequent reduction of family income, until parties were confident this was in the best interests of all people involved. It would also reduce the risks for people of getting a retrospective debt for a change of relationship status, because they would have a 6-month grace period during which they could discuss the new relationship with MSD without fear of debt.
As part of the move towards individualisation, the Welfare Expert Advisory Group also recommends consideration of a short-term entitlement to a benefit for partnered people in the case of loss of a job or income. This loss of job or income could result from redundancy, illness or disability, or the illness or disability of a dependent child. This entitlement would disregard the income of a person’s partner for 6 months, and enable couples to have a period in which to adjust to their change in circumstances. This could also be targeted to lower-income couples by capping the earnings disregard at a family income of around $48,000 a year. This recommendation is also briefly discussed in chapter 9 (improving access to employment and labour market support).
"I feel strongly that benefit entitlements should be individual and not allocated based on relationship status. As a single person with a permanent disability, I can never enter a relationship unless my potential partner agrees to completely support me. So I am unlikely to be able to have a relationship, and surely I have a human right to be in a loving relationship. Making me reliant on a partner also makes me more likely to suffer abuse in a relationship, and less likely to leave an abusive situation."
WELFARE RECIPIENT, DISABLED