We commissioned research that explores the adequacy of the income support system by considering the circumstances of six example families (WEAG, 2019c). This research compares the incomes of these families in a variety of circumstances to their estimated costs (their budgets) and identifies any deficits (if their income is not sufficient to meet these costs) or surpluses (if their income is sufficient).
For estimated costs, the research uses budgets that reflect two levels of spending: spending on core or basic costs (for example, rent, power, food and transport) that are needed to ‘just get by’ without borrowing, and spending at a slightly higher level that allows for some relatively minimal participation spending (for example, playing a sport and cheap presents for family). Data was drawn from a variety of sources and the budgets were reviewed by experienced budget advisors to test the assumptions chosen.
The estimated deficits between people’s current incomes and the spending needed for a minimal level of meaningful participation in their communities are large.
The estimated deficits associated with the spending needed to meet basic costs are smaller but still substantial, ranging from around $50 to $230 a week for the example families.
These deficits result in people and families making unenviable spending decisions, such as purchasing cheap food, relying on food banks or going without food, avoiding doctor visits, foregoing children’s involvement in activities, living in overcrowded housing of poor quality or borrowing from high-cost ‘payday lenders’. There are undoubtedly negative consequences for broader wellbeing from social exclusion, an inability to invest sufficient resources for child development and the stress that such difficult circumstances place people under. These impacts on mental health, cognitive development, school achievement and social and behavioural development can limit opportunities and perpetuate, indeed magnify, future support needs.
Ultimately, such deficits mean little opportunity to save or to build assets for future wellbeing (for example, for housing or retirement), further impacting on the dignity and ability of people to participate meaningfully in their communities.
This research shows that many individuals and families receiving benefits, as well as people in low-wage work, are unlikely to have enough income to be able to meet basic costs or meaningfully participate in their communities. It also unambiguously points to the need for significant increases in rates of payment of income support, including main benefits.
This research also compares the example families’ incomes to median household incomes in New Zealand. Compared with the median income in New Zealand (equivalised across households and after deducting housing costs), all example families receiving a benefit have incomes below 40% of the median.
For example, a single person receiving a benefit and renting privately has an income, after housing costs, at around 22% of the median if they are receiving Jobseeker Support and at around 28% of the median if they are receiving the Supported Living Payment. The couple with two children receiving a benefit and renting privately is at around 29% of the median income. By any measure of poverty, these examples reveal a dire situation.