Policy Watch Budget 2016 Special

Policy Watch Budget 2016 Special:

what we are looking for and what was announced

NZCCSS is looking at the Budget announcements as always through the lens of the most vulnerable. We look for signs of real social investment that makes a difference for people on the margins (see also Scoop Budget 2016 coverage).

The simple summary of our response is disappointment that there are no measures to address poverty. NZCCSS Executive Officer Trevor McGlinchey’s said: “We were hoping for a courageous Budget which addressed the underpinning causes of child poverty and the need for social services – this Budget does not make a difference in the levels of inequality and desperate need for those with the least”.

  1. Children and Families – social investment package benefits unclear
  2. Housing – $200 million for extra social housing in Auckland
  3. Older People – the health squeeze continues
  4. Inequality and poverty – very little to help people get ahead

1. Children and families – social investment package benefits unclear

NZCCSS looked for announcements that will lift the incomes of lower income families. The 2015 Budget included a surprise lift in benefit rates for households with children that was implemented in April this year but the $25 per week is nowhere near enough to meet the basic needs of households relying on benefits. Minister Anne Tolley has commented that the increases were not expected to be a one-off , but Prime Minister John Key had already indicated that this Budget has a “different focus” while also saying there will be “things for those most in need in our society”. The annual cost to New Zealand of child poverty is $10 billion says UNICEF – there is a compelling case for genuine social investment to reduce child poverty.

The Government did announce a Social Investment Package for “vulnerable New Zealanders” totaling $641.6 million over 4 years, which means $160.4 million per year. Some of the money is “reprioritised” but we were not told where that money is being taken from. See below for more on reprioritisation. The Treasury’s Budget 2016 web page gives some information.

A large chunk ($199.9 million over 4 years) is being spent on the changes to the Government’s care and protection system for children. Minister Anne Tolley said that a total of $347.8 million over 4 years is to be spent implementing the recently announced overhaul of Child, Youth and Family services to deliver a new “child-centred approach” by March 2017. The overhaul of CYF work is in responses to the report of the Expert Panel that was released late 2015. The Expert Panel recommended $500 million be allocated over four years to establish some kind of new entity within Government that is focused on vulnerable children. Read NZCCSS Executive Officer Trevor McGlinchey’s summary of the report and Cabinet Papers here. It remains unclear how much of the Expert Panel report’s recommended investment is actually included in these annoucements.

Included in the $347.8 million is another $144.9 million (over 4 years) set aside to meet cost pressures and increased demand for services for more children in care.

It is not clear how much of this “investment” will actually directly benefit children in low income households. The money will be spent restructuring Government departments and their operating model to support raising the age of care and protection, an independent youth advocacy service, caregiver training and recruitment, as well as workforce training. No details are available as yet that tell us whether this funding will include services provided through non-government organisations and social services.

More young people will be included in the money management Youth Service programme as 18 and 19-year olds ($61.2 million) and more funding ($50.3 million) is being applied to help people with complex health needs gain access to employment. Funding of $43 million over 4 years to target the roughly 150,000 children identified as “most at-risk of not achieving in education” will go to schools they are attending, rather than to the families of those children. No further increases in education funding were announced and the extra funding amounts to less than $100 per child per year. The Out of Gate prison reintegration service gets $5 million a year – but this appears to simply be a “continuation” of the funding for existing services.

Other Elements of the Social Investment package may indeed deliver direct benefit to families in hardship:

  • The $40 million for Whānau Ora ($10 million per years over 4 years) will fund up to 2500 further whānau to help with health and disability issues, improve financial literacy and reduce household debt.
  • The extension of the Warm Up New Zealand programme with $4.5 million per year for 4 years will help low income families better insulate their homes. But, as the Green Party has pointed out, this is “the smallest allocation in years” and only enough to insulate a mere 20,000 homes.
  • Similarly, the Healthy Homes programme will be continued with $4.5 million per year for 4 years which is a tiny amount given the extent of the poor quality of tens of thousands of rental houses in this country.

The Ministry of Social Development is also in the midst of a massive shake up of all its social services funding through its Community Investment Strategy and this includes the reprioritisation of MSD social services funding contracts. The announcement that $7.3 million per year in funding is being taken away from the Parents As First Teachers programme to fund additional places in the Family Start home visiting programme for vulnerable, is an example of what is happening across social services funded by the Ministry of Social Development. A number of other organisations have already been told that their funding will cease, including Hui E! and the National Council of Women.

2. Housing – $200 million for new Auckland Social Housing Places

The Auckland housing crisis has exploded into the mainstream media and wider public consciousness over the past few weeks, as the plight of homeless families sleeping cars has been all over the headlines. The growing intensity of the homelessness issue in Auckland has forced the Government into policy scramble mode and there were a number of pre-Budget announcements.

On Budget Day a package of $258 million was announced, most of which was $200 million to fund 750 additional social housing places in Auckland. Community Housing Aotearoa and NZCCSS both welcome these additional housing places although they will be nowhere near enough to meet the huge need for housing for low income families. A particular disappointment is the lack of any capital investment in the community housing sector which continues to hold back progress. And the news that the transfer of Invercargill social housing to a community housing provider will not go ahead is a big setback to the whole social housing reform approach this Government has been relying on. Too little is being done too slowly to reduce the desperate housing hardship facing so many right now.

Minister Bennett announced that grants of up to $5,000 for people to relocate to other areas outside Auckland would be available, which is a modification of an announcement made back in January, increasing the amount of money (from $3,000) and offering it to homeless people who are not on the social housing register.

She has also brought forward the implementation date for non-recoverable grants to homeless families paying for motel accommodation while looking for other housing. In her announcement on 9th May Minister Bennett said they would be implemented from September this year but by Budget week the date had been brought forward and they will now be implemented from July.

Existing emergency housing provision will be put onto a more consistent and sustainable funding path through the $41 million in funding over the next 4 years announced earlier in May to secure 800 emergency housing places on an ongoing basis. With emergency housing limited to three months this translates to over 3,000 placements for people each year (assuming of course that they then can be placed in long term housing before those 3 months end). This is a very welcome commitment to ensure existing emergency housing provision continues to exist, and will also provide a basis for further chances to increase the amount of emergency housing in Auckland as well as in other parts of the country like Tauranga, Hamilton, Christchurch, Wellington.

Māori housing has received a capital funding boost of $12.6 million over four years to fund new housing as well as repairs and upgrades to existing Māori housing. This is very welcome capital investment in housing for families in need and such capital is urgently needed in the wider community housing sector, says Community Housing Aotearoa.

3. Older People – the health squeeze continues

The wellbeing of older people is hugely impacted by the level of overall health spending and how this is prioritised. The health budget is being put through an extended squeeze by the current government with annual budget increases falling short of the amount needed to maintain services at their current levels (see CTU Pre-Budget Health Analysis). Health Minister Jonathan Coleman announced a “record” health “investment”  of $16,100 million an increase of $568 million. This fell well short of the $691 million additional funding that would have been needed simply to maintain current services and fund the new initiatives. So once again DHBs will be trying to squeeze more than $100 million in “efficiency” savings out of over-stretched budgets.

The impact of this is to be seen in primary health services for the poorest being cut back by DHBs. Although $79.3 million in new funding for primary care is allocated, it is not clear if this will be prioritised towards low income communities and their health services. Home support services are underfunded by $60 million or more and residential aged care (rest home) subsidies that fail to cover the basic costs of service delivery. As a result the services that support older people to continue to live in their own homes are under pressure and the workforce that supports them continues to struggle with low wages.

A reference group report to the Director General of Health has estimated that it would costs between $60 – 108 million a year to regularise the hours, improve training and recognition for qualifications for home support workers. There was no indication in the Budget announcements of further funding to meet this shortfall.

There were no new announcements relating to aged residential care (rest home) funding that might help make any progress in addressing the challenges of equal pay, workforce training and service development. As sector union E Tu points out  there was no indication in this Budget that there will be investment in funding a meaningful settlement of the equal pay dispute in aged care.

$41 million is allocated for the SuperGold card scheme to provide “certainty” for the 670.000 cardholders, most of this appears to be boosting the Auckland transport subsidy for the card. But NZ First Leader Winston Peters claimed that this is not enough to cover the costs of current services and amounts to a cut-back.

4. Inequality and poverty – very little to help people get ahead

We look for more measures to lift the incomes of the lowest income earners while also ensuring that highest incomes pay their fair share of tax, and that tax dodging is reigned in. There has been an enormous shift of wealth to a small group of people already at the high end the income and wealth scale. As inequality commentator Max Rashbrooke notes, this Budget does almost nothing to change this structural problem.

The extension of operational funding for the no-interest loans scheme Community Finance partnership with the Salvation Army with  $4.2 million over 4 years is a small welcome step to reduce the debt burden on low income households, as is a similar amount of $4 million to Maori Development for microfinance of whānau. Both will help whānau and families to get ahead.

We looked for other signs of genuine attempts to remove the barriers to people getting ahead. In the end there were no significant tax announcements that impact on poverty and inequality. Tax expert Deborah Russell from Massey University sees no direct signals of tax cuts but she notes increasing tax revenues in the future still hold the potential for the Government to consider tax cuts.