Policy Watch: Budget 2020 Special

“This is the rainy day we have been preparing for – now we must weather the global storm” Hon Grant Robertson, Minister of Finance.

Tēnā koutou and welcome to the NZCCSS Policy Watch Special on the Coalition Government’s 2020 Wellbeing Budget: Rebuilding Together. 

The proverbial rainy day has arrived but not in a form anyone had expected! A microscopic virus COVID-19 has shattered the health, wellbeing and livelihoods of millions of people around the world. Here, a swift lockdown by our government has brought this virus under control for now, but economic fallout for ordinary families and whānau continues. Already NZCCSS social service members are seeing an increasing number of people who have lost their job, struggle to pay rent or a mortgage, and in need of welfare assistance. These numbers are only set to increase once the wage subsidy runs out and the full scale of this economic downturn is known. These are the unprecedented events that is the backdrop to Budget 2020. 

NZCCSS immediate response to Budget 2020

NZCCSS supports the direction of the $50 billion Covid Response and Recovery Fund (CRRF) fund at the centre of Budget 2020, and its focus on job creation and saving, public housing, food security, apprenticeships and training.  All of these budget priorities will have an immediate impact on the wellbeing of families, whānau and communities during these uncertain times. 

Community social services, including our NZCCSS members, were essential workers during the lock down distributing food, supporting homeless people into transitional housing, and delivering a range of other supports to vulnerable families.  Many social workers and care workers made a personal sacrifice to live in a range of residential facilities. Budget 2020 has recognised the critical role of community and NGO services but there is real trepidation across the community NGO sector that the level of this funding will not match the magnitude of the demand that will rise alongside unemployment numbers [Treasury has predicted a rate of 9% by September 2020]. 

“..With the coming waves of unemployment and hardship the need for a strong, capable community and social services sector has never been more apparent. The lack of government financial support for the sector over many years has negatively affected the ‘social infrastructure’ the sector provides. An ongoing process for increasing funding and building up sector capability is required to ensure community and social service organisations are well positioned to meet the increasing needs”.  Trevor McGlinchey, Executive Officer for the New Zealand Council of Christian Social Services (NZCCSS).

At a time when more New Zealanders will be looking to government for a job seeker benefit, NZCCSS is disappointed Budget 2020 excluded any significant increase to benefit levels or the abatement rate recommended by the Welfare Expert Advisory Group (WEAG). 

 “NZCCSS is disappointed that the structural change that is needed in the welfare system has not been implemented. The Budget has maintained the benefit status quo, with only small increases in income.  As a result of this lack of change many more New Zealanders will be impacted by poverty and hardship”, said McGlinchey.  “If the Welfare Expert Advisory Group’s recommendations had been implemented whānau would need less support as they would be self-sufficient and more able to engage positively with their communities.”

Read NZCCSS’ full media release here.

Child Poverty report

The latest child poverty figures are a reminder New Zealand had a shameful record of child poverty long before COVID-19 and the rates are set to skyrocket given the predictions of severe job losses. The second Budget Day Child Poverty report (CP Report), required by the Child Poverty Reduction Act 2017, draws on the Government Statistician’s first report of progress against poverty targets but untangling these data sets is not straight forward.  Differences around the reporting time frames prevent the data from showing the full improvements in rates following the release of the Families Package, implemented in April and July 2018 (page 19). Regardless, the data speaks for itself. It would appear there has been slight improvement against the first two measures and none against material hardship measures (151,700) children, representing children most at risk of poverty and hardship throughout their lives.

NZCCSS is deeply concerned to read in the report references to a rise in children living in material hardship

A strong note of caution is required in relation to the detailed findings of this modelling. It is significantly harder than usual to estimate future child poverty levels due to both the uncertainty of economic forecasts and also the availability of survey data that reflects the current situation. Officials’ view is that if anything the modelling results are more likely to underestimate the likely increases in poverty rates over the coming years“.

rates are expected to rise sharply, as New Zealand experience suggests that these rates are particularly sensitive to economic change”.

Table 3 – 2018/19 rates of child poverty for the three primary measures (Page 19)

Primary measure2017/18 baseline2018/19 rate
On the BHC50 measure16.5% of children (183,400 children)14.9% of children (168,500 children)
On the AHC50 measure22.8% of children (253,800 children)20.8% of children (235,400 children)
On the material hardship measure13.3% of children (147,600 children)13.4% of children (151,700 children)

The majority children living in poverty live in benefit dependent households, the Welfare Expert Advisory Group (WEAG) report  and its 42 recommendations offers some much needed hope to these children that their lives might improve. The extent of the disparity between benefit payments and an adequate income was thoroughly covered by WEAG. The report found the adequacy of income support (for a variety of different family circumstances), had a shortfall from $50 per week to $230 per week. This is a significant inequity, and reinforces the need to lift main benefit levels, alongside other recommendations discussed in the report (page 94-118). The cost of not doing so is far higher over the long run.

One positive in the CP Report identifies that Budget 2020 allocated $22.1 million to develop and implement a child poverty persistence measure.  This is a good step but will have a limited impact if policies to increase low income households are not implemented.  Action is needed now and not when we have yet more data.

Community-based sector

There’s a tsunami of need coming towards our services over this next phase and we’re going to need ongoing support. In the emergency phase, food and housing have been of the utmost importance but we are now coming into a recovery phase where, alongside food and housing, we are seeing more requests for financial mentoring, counselling and employment services.” Lisa Whoolley, EO Vision West, Vice President NZCCSS

The dedication of the community-based NGO sector to the wellbeing of children, families and whānau has never been clearer than during the COVID-19 lockdown.

NZCCSS members worked tirelessly to distribute food to families, to support homeless people into homes into temporary accommodation, and worked effectively alongside the national and local government.  All of this whilst delivering services for older people, tamariki and children, families and to those impacted by family violence and mental health issues. 

As we slowly returning to a level of normality, constrained by the knowledge a second wave of this virus remains a threat until a vaccine is found, the demand for food, budget advice, and housing continues. This demand will only increase as job losses continue in response to the COVID-19. 

Government’s investment in the community sector has significantly improved, with some new spending across four years (see below), the question is will it be sufficient to address the tsunami anticipated as wage subsidies run out and unemployment levels rise to approximately 9% by September 2020?  

Last year Social Services Provider Aotearoa (SSPA) released an independent report by MartinJenkins that found “government-contracted social services for children and families were being under-funded by $630 million a year”.  This indicates a serious shortfall between what services are provided and what are paid for.  NZCCSS shares the concerns raised by SSPA’s Executive Officer Brenda Pilot, that while the  funding to the NGO sector is welcome “it’s a long way short of the additional funding needed to ensure the sustainability of the sector. whilst the around the need for more sustained funding of the community sector to ensure its sustainability”

Vulnerable groups already emerging at Salvation Army social services throughout New Zealand include people who have lost their jobs and households unable to meet rent and mortgage costs. Of further concern are immigrants formerly vital to New Zealand productivity, but now jobless and without any entitlement to Government support. The situation is needing attention” Ian Hudson. Salvation Army. National Social Policy Director, NZCCSS President

Housing and Food security

At the Auckland City Mission, in the week after Easter, we provided more than 1,200 food parcels compared to our usual 450 each week. Two weeks ago, the government and Auckland Council transformed Spark Arena into a giant food bank to provide for those going hungry during the lockdown”.

 “Many in paid work struggle to find sufficient well-enough paid hours to meet high costs of living. In particular, disproportionate housing costs relative to income leaves many families with little money after paying rent” NZCCSS member.

Access to food and secure housing were at the forefront of the Government’s immediate response to COVID-19 alongside the NGO sector during the lock down. In a short time finding a home to stay at and food to sustain became a question for all New Zealanders across social economic groups but we know that those with higher household incomes have far more options available to them than families surviving on low incomes, and living in overcrowded conditions or without a home.     

Like child poverty, New Zealand had a housing crisis well before the COVID-19 pandemic arrived but the latter has highlighted the importance of housing for both personal and community health. NZCCSS welcomes the announcement in the budget for 8,000 new houses (6,000 public houses and 2,000 transitional houses).

We agree however with the Community Housing Aotearoa and other commentators that significantly more houses are needed to sustainably address the housing crisis and that this action is urgently needed. The latest housing data from the Ministry of Social Development identified 14,869 applications on the Housing Register. 

Job losses due to COVID-19 and loss of income mean these figures are set to climb higher as more people can’t afford to pay private rentals or mortgages. It is critical the government has a programme to ensure New Zealand has sufficient quality public housing to enable low-income households to live a secure, health home.     

Housing Register since 2017. [Source: Ministry of Social Development]

Food insecurity goes hand-in-hand with low wages and unfair welfare policies that create a cycle of low incomes leading people to experience poor nutrition and hunger.  COVID-19 shone a light on what was already a deeply concerning issue to NZCCSS members.

We are therefore heartened by the Government’s announcement of $32 million to establish a National Food Distribution Network for rescued food, and to fund food banks, and other community food services. 

The Kore Hiakai Zero Hunger Collective brings together community, producers, philanthropists and government to build collaborative, long-term solutions and mana-enhancing solutions to food inequality in Aotearoa.  This is one of the initiatives set to benefit from this funding and to make a significant contribution to ensuring all New Zealanders have access to healthy kai.

Investing in Māori

Budget 2020 invests $900 million in response to COVID-19 to Maori whanau and tamariki that spans job creation, Māori and iwi housing initiatives and Māori NGOs. This is a welcome investment that will go some way to address historical inequities but NZCCSS remains deeply concerned the impact of COVID-19 job losses will disproportionately fall on Māori communities. 

Health and Older People

Budget 20202 allocates DHBs an extra $3.92 billion ($980 million per year), and provides a one-off boost of $282.5 million (operating and capital) over three years for a planned care (including elective surgery) catch-up campaign following COVID-19 disruption. 

For age care residential facilities it proved difficult to locate any news other than $26 million to support residential aged care providers. Overall this is welcomed, but there are concerns across healthcare providers that this is insufficient to address new costs related to COVID-19 to care for residents in residential aged care.  Rest homes throughout the country have provided outstanding support to vulnerable older people against a backdrop of historical funding issues.  

Overview of key Budget 2020 announcements

COVID response and economic recovery fund (CRRF) plan

  • $4bn business support package, including targeted $3.2bn wage subsidy extension
  • $3bn infrastructure investment and 8,000 public house- build programme to boost productivity and create jobs
  • $1.6bn for trades and apprenticeships training package
  • $1bn environmental jobs package
  • $3.3bn new funding to strengthen core services including health and education.

Vote Oranga Tamariki

  • Supporting Social Service Delivery for Community Services Providers: $57.7 million over 4 years -increasing funding for NGO service providers to sustain the current level of partnered service delivery, addressing both general cost increases and significant personnel cost pressures that are impacting the ability of NGOs to recruit, reward, support and retain their workforces.
  • Caregivers

– increasing the Unsupported Child’s Benefit (UCB), Orphan’s Benefit (OB) and Foster Care Allowance (FCA) by $25 a week per child ($143.1 million over 4 years).

– allowing caregivers who may provide care for less than 12 months to access the Orphan’s Benefit and Unsupported Child’s Benefit ($46.6 million) extending Birthday and Christmas Allowances, which are currently only available to caregivers caring for children in state care, to those receiving the UCB and OB ($16.8 million).

-continuing payments of the FCA to caregivers of children in state care for up to 20 days while the child they care for is in respite care ($3.2 million).

Vote Social Development

  • Community Services: Ensuring Continued Access to Building Financial Capability Services – $9.692 million over 4 years support to key groups experiencing, or at risk of experiencing, hardship by strengthening Building Financial Capability (BFC) services. The BFC model is effective at improving the financial capability and resilience of vulnerable people, including Māori and Pacific People, as well as sole parents with children.
  • Community Services: Strengthening Capability of Social Sector Providers –$480.000 Community Services to community sector peak groups and national bodies over 4 years to strengthening the capability of Social Sector Providers 2020/21. 
  • Community Services: Improving Access to Support Services for Communities in Regional New Zealand $19.8 million to focus on strengthening, enhancing and expanding services provided by government and NGO services on the Heartland Model. Aims to better support those in rural regions by increasing community cohesion and reducing social isolation.
  • Family Violence: $183 million to Community Services based Family Violence Services. The funding will cover crisis response services for victims of family violence and provides support services for those experiencing elder abuse, and treatment and help for family violence perpetrators. Funding is also provided for refuge safe houses.
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