All posts by Tracey Sharp

Media Statement: Equality Network – 31st March 2020

We can be justifiably proud of our Government’s approach to the Covid 19 virus crisis. It has acted quickly recognising the WHO recommendations. The country “lock-down’ will do much to stop the spread of the virus and the Government support for people and businesses is to be commended. This will hopefully put us in a better position to face the future and recover from the damage that the virus is doing and will certainly continue to do. Further, most are following Government instructions and people are working together in their communities to make the best of their situations, by forming neighborhood support groups.
However some cracks are opening and even though the Government is responding with changes to the support packages, many would describe the crisis as a three way issue.
First is the virus and the damage it is doing to people. Then there is no doubt that there will be long term damage to the economy. But thirdly, many people concerned about social justice are now describing the crisis as an inequality crisis and the Government must recognise this.
Those most impacted are those on basic incomes or benefits. Many cannot store food and must visit supermarkets every few days. At present they find that shelves are empty of many basic needs, owing to an excess of panic-buying by selfish hoarders. Many cannot afford to top up their cellphones, do not have IT devices for their children to access educational programs, have no internet access and do not have strong neighbourhood support groups.
Many of those with mental health problems feel powerless, especially if they live alone. There are still many uncertainties about what will happen as well as the anxieties of subsisting on a very low benefit or income. And the stress levels for many young people are very high.

And what about the homeless? Those sleeping rough, couch-surfing and living in overcrowded accommodation will further struggle to self-isolate and survive.
Covid-19 is impacting unequally on those most vulnerable. Those at the lower end are suffering whereas those who are well-off have the resources to cope much better. So it is an inequality crisis and the Government must do something about it. In the GFC the poor suffered most and took much longer than the wealthy to get over the impact.

The Government must among other things:
• Significantly increase benefits. The recommendations of the Welfare Expert Advisory Group would be a great start.
• Increase the incomes of the low paid by increasing the Working For Families Tax credits, making them available to all and not just those in the workforce. Actual government grants to all these people.
• Ensure that there are enough well stocked food outlets so that all can get food when they need and ensure that panic buying does not result in empty shelves
• Ensuring that the homeless are well looked after. This will significantly slow the spread of the virus, and benefit us all.
• Encourage the establishment of neighbourhood support groups.

With this further support from Government we can get through this together and significantly reduce inequality of outcomes for Covid 19.

Dr. Prudence Stone for the Equality Network. 0272898987
The Equality Network is grouping of 36 New Zealand organizations all of whom promote social justice. It operates under the principle that more equal societies are better for all. For more information visit our website: www.equalitynetwork.org.nz

Media Statement: Equality Network – 31st March 2020


We can be justifiably proud of our Government’s approach to the Covid 19 virus crisis. It has acted quickly recognising the WHO recommendations. The country “lock-down’ will do much to stop the spread of the virus and the Government support for people and businesses is to be commended. This will hopefully put us in a better position to face the future and recover from the damage that the virus is doing and will certainly continue to do. Further, most are following Government instructions and people are working together in their communities to make the best of their situations, by forming neighborhood support groups.
However some cracks are opening and even though the Government is responding with changes to the support packages, many would describe the crisis as a three way issue.
First is the virus and the damage it is doing to people. Then there is no doubt that there will be long term damage to the economy. But thirdly, many people concerned about social justice are now describing the crisis as an inequality crisis and the Government must recognise this.
Those most impacted are those on basic incomes or benefits. Many cannot store food and must visit supermarkets every few days. At present they find that shelves are empty of many basic needs, owing to an excess of panic-buying by selfish hoarders. Many cannot afford to top up their cellphones, do not have IT devices for their children to access educational programs, have no internet access and do not have strong neighbourhood support groups.
Many of those with mental health problems feel powerless, especially if they live alone. There are still many uncertainties about what will happen as well as the anxieties of subsisting on a very low benefit or income. And the stress levels for many young people are very high.

And what about the homeless? Those sleeping rough, couch-surfing and living in overcrowded accommodation will further struggle to self-isolate and survive.
Covid-19 is impacting unequally on those most vulnerable. Those at the lower end are suffering whereas those who are well-off have the resources to cope much better. So it is an inequality crisis and the Government must do something about it. In the GFC the poor suffered most and took much longer than the wealthy to get over the impact.

The Government must among other things:
• Significantly increase benefits. The recommendations of the Welfare Expert Advisory Group would be a great start.
• Increase the incomes of the low paid by increasing the Working For Families Tax credits, making them available to all and not just those in the workforce. Actual government grants to all these people.
• Ensure that there are enough well stocked food outlets so that all can get food when they need and ensure that panic buying does not result in empty shelves
• Ensuring that the homeless are well looked after. This will significantly slow the spread of the virus, and benefit us all.
• Encourage the establishment of neighbourhood support groups.

With this further support from Government we can get through this together and significantly reduce inequality of outcomes for Covid 19.

Dr. Prudence Stone for the Equality Network. 0272898987
The Equality Network is grouping of 36 New Zealand organizations all of whom promote social justice. It operates under the principle that more equal societies are better for all. For more information visit our website: www.equalitynetwork.org.nz

Tax Justice Aotearoa

Tax Justice Aotearoa is planning an active year, including:
• Producing more policy briefs. We want to examine income taxes, a land tax, Te Tiriti and tax, environmental taxes, international taxation and a financial transactions tax. Get in touch if you have any interest or expertise in these areas, and would like to help.
• Building on the success of Tax on Tuesdays with two more series. The first will focus on environmental taxes; the second on tax, benefits, in-work poverty and housing.
• Running a modest social media campaign to show people what their taxes get them – the quality public services we all value so much.
• Continuing to meet with ministers, parliamentarians and policy-makers to talk about how to reduce and prevent inequality with taxes.
• Continuing to engage with others, grow our network and membership, and share messaging. [email protected] for more details or to join the campaign.

Living Wage

Living Wage are holding an election forum on 20 August: 6:30pm – 8:00pm at St. Matthew in the City Auckland
Together with Te Ohu Whakawhanaunga they will also be facilitating a 2-day Community Organising Foundation Training on 26 & 27 March, 9:00-4:30pm, Manurewa Baptist Church, 9 Lopton Road, Manurewa. Refer www.livingwage.org.nz for more details

The Workshop – Learn to get your messages across

Want to be sure that your messages get across? The Workshop is offering appropriate training sessions in Wellington and Christchurch, with more to come this year! Given it is election year, the year ahead will be filled with public (and private) conversations about the big issues that affect New Zealanders and the world. Leading those conversations in ways that deepen people’s understanding of the problem and motivates them to support the most effective and inclusive solutions, is critical to ensuring your work brings about positive change in the world.

We are continuing to grow the evidence base of how to do this work with our unique research and integrate it into our training. Book your team into one of our strategic communication sessions to build your skills. Introductory sessions for the first timers, and Masterclasses for those who want to further their learning and practice. Or you can talk to us about in-house sessions.

Inequality in Aotearoa New Zealand – Update for 2020

The Ipsos New Zealand Issues Monitor reported in December 2019 that Poverty / inequality is the second highest ranking issue in Aotearoa with 29% considering it as a top issue. It has been in the top 5 issues since measurement began. Housing is the top issue. Read more here .

But there has been little improvement in lowering economic inequality. Max Rashbrooke comments that the report on Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2018, by Bryan Perry for the Ministry of Social Development’s key annual report makes for depressing if not surprising reading.

Economic inequality remains at the very high level the country was left with in the late 1990s following 15 years of market-based reforms. Poverty rates for the general population and children remain high. Relative poverty rates virtually all increased 2008-17. In contrast, material deprivation decreased. Nonetheless, the overall story is the continuing absence of substantial action against economic inequality and poverty, both of which damage individuals and the social fabric alike. For more details refer here .

Submission: Retirement Review

31/10/2019
Submission: Retirement Review

Introduction


Thank you for the opportunity to make a submission on Retirement in New Zealand. The Equality Network is a national association with members from the public, private and voluntary sectors. Our vision is ‘Aotearoa New Zealand is a country where everyone has what they need to live happy, healthy lives’, and our purpose is for all members to advocate collaboratively for this vision to be realised. To achieve this, we provide a forum for information and debate about income equality in Aotearoa New Zealand, and seek opportunities to support each other in work that contributes to reducing inequality in our country.
Our organisation recognises te Tiriti o Waitangi as Aotearoa New Zealand’s founding document, defining respectful relationships between tangata whenua and tangata Tiriti. The Equality Network is actively committed to supporting Te Tiriti values in policy and legislation.
Our general statement on retirement is that it must be a sustainably equitable prospect for all New Zealanders, not just some, to live a healthy and fulfilling life past 65. The system at the national level must also be sustainable, therefore, in policy. We argue that total tax paid in New Zealand should be significantly higher, similar to the level in northern European nations such as Denmark, for the equitable sustainability of New Zealand’s superannuation to be assured.
We call for a new tax system which taxes all income, including benefits, other Superannuation schemes and Kiwisaver in a steeply progressive manner, beginning from zero for those on incomes that reflect material hardship, but progressing steeply up to 60% at over $200,000 per year. This would not affect most New Zealanders, particularly if a progressive scheme retained a tax rate of 33% for those on or over $100,000 per year. We argue that only a scheme that is steeply progressive in this way will New Zealand claw back from the wealthy and those still in work, to support the growing population ageing and in future reliant on their superannuation fund.
We will speak to some, not all, of the terms of reference in the following pages.

How effective are current retirement policies for financially vulnerable and low-income groups
The amount spent on subsidising KiwiSaver attracts little attention as it is relatively small, however the cost to the Crown accounts of NZS is often viewed as ‘unsustainable’, or ‘unaffordable’ especially as the number over 65 swells relative to those of working age. The growing numbers of older persons and the ageing of the older population itself also portends a rapid growth in health and welfare expenditure both in absolute terms and relative to other state spending. After years of belief that elder poverty was a thing of the past in New Zealand, there is new evidence that for many low-income people, the state pension is no longer enough to live on.
We note that New Zealand spends a modest amount compared to many demographically older European countries. The New Zealand Treasury projections show that gross cost of NZ superannuation is expected to reach only 7.9% of GDP by 2060, well below the percentage already spent by a large number of countries today. Yet the expenditure is often overstated with the gross figure, without making clear to the public that this is before tax and NZS is fully taxable as income for all recipients.
According to St John and Dale, as a basic income NZS appears to have been outstandingly successful to date in preventing poverty among most of those over 65. Compared to the rest of the population, their fixed line income-based after housing cost poverty rates have been very low. Similarly, hardship rates based on nonincome measures are also low, 3% compared with 13% for children and 8% overall. Nevertheless, they observe that in the last five years relative living standards have slipped. While NZS (married rate) has been kept at 66% of net wages, with the rise of more two-earner families, NZS has fallen relative to median household incomes. This corroborates the suspicion that many more retirees are affected by rising rents as home ownership falls.
What are the developments and emerging trends in retirement income policy since the 2016 review
There is increasing concern worldwide that societies are ageing unequally. This refers to the inequality developing over the whole of the life course, but materialising in old age. The OECD states this is often the result of specific episodes during people’s lives that cumulate their detrimental effects on health and income at old age. This is not a new phenomenon, but “while the current generation of older people is experiencing higher incomes and lower poverty risks than previous ones, the younger generations are likely to face again higher inequality in old age.”
This is due to living longer in a more unstable labour market with widening inequalities of income distribution.
We note other countries design and manage public pensions very differently to New Zealand. Other countries place less reliance on the basic ‘tier one’ pension and more on ‘tier two’ or compulsory, contributory state pensions. These social insurance schemes are usually financed by contributions from both employers and employees. We note many countries encourage private saving for retirement, whether mandatory or voluntary, to a much greater extent than does New Zealand.
St John and Dale forecast that towards the end of the next decade an increasing number of superannuitants will require additional supports such as Accommodation Supplement and Disability Allowance, Temporary Additional Support and hardship grants, primarily for food. Our members have experiential evidence of a growing poverty problem in the older age groups despite extra supports they receive from MSD. Budgeting services and foodback are reporting increasing demand for food parcels from this age group. Others may be accessing loans and going into debt.
What has been the impact on govt retirement income policies, including Kiwisaver and NZ superannuation of:

  1. The changing nature of work, including the increasing number of people who are self-employed and/ore working in temporary and flexible jobs
    Older citizens are clearly making significant contributions to the paid workforce. Statistics NZ noted in the 2017 National Labour Force Projections that the proportion population aged 65 and over in the labour force is expected to rise from the current rate of 23.7% to 26% by 2036. It increased from 23,000 in March 1991 to 57,900 in March 2006 and to 146,000 in 2038. This indicates that around 8% of our total labour force will be aged 65 and over by 2023, and 10% by 2038.
    The nature of work is rapidly changing and we argue this will make employment at older ages more difficult with more calls on welfare support. The growing use of robotics and AI in manufacturing and digital technologies, the ‘gig-economy’, and New Zealand transition to a low carbon economy mean major job losses and considerable structural change, which will impact on the pre-retirement age group significantly.
    Research shows that people displaced from work have poorer longterm outcomes than those who have not lost their jobs. We argue the welfare system’s retraining and support provisions are seriously lacking in New Zealand and older workers are likely to struggle to obtain sufficient income from work. They may have more periods between paid employement which will affect their ability to maintain assets, let alone save for retirement. They may be less likely to be recruited for retraining programmes, than their younger counterparts. With this we see a high likelihood that hardship amongst older working age people will rise in the future. Compared with OECD best practice, New Zealand has an inadequate system of dealing with job loss, redundancies and labour market shocks. Redundancy pay is not required by law, the stand-down provisions between work and benefit entitlement see many workers and families plunged into poverty.
  2. Declining rates of home ownership
    All adults except those over 80 are experiencing declining rates of home ownership, according to 2013 Census data. The decline in home ownership in the pre-retirement age groups 50-64 appears significant and shows the problem is not just younger people delaying home purchases. This lower owner occupancy can be expected to feed into lower rates of home ownership for those over 65 in the years to come. When available, Census 2018 data will likely show a further decline in home ownership in those approaching retirement.
    Research shows that poorer health is associated with rental tenure, and thus with the decline in home owndership. We fear older renters will also often be living alone, on low incomes and in poorer health than owner-occupiers.
  3. Changes in labour market participation in those 65 years and older
    We note the Labour force participation rate (LFPR) is expected to increase at all ages over 55 by 2030, but already in the pre-retirement age (55-64) New Zealand’s LFPR is 14.4 percentage points higher than Australia’s. We argue this reflects lower disincentives to be in paid work in New Zealand once pension-qualifying age is reached.
    A Commission for Financial Capability survey in 2016 with 2,989 respondents revealed the main reason 54% of the 65+ group in paid work remain in the workforce is financial necessity, while a minority (36%) work mainly for satisfaction and value.
    The impact of retirement on physical health is an important focus of ageing. The New Zealand Health, Work and Retirement Study, examining physical functioning 8 years pre- and post-retirement, indicated that retirement can be beneficial for those with poor health and limited resources. It also indicated that NZS may partly address inequalities experienced by older persons in poor health and socio-economic circumstances prior to retirement, meaning their circumstances improved post-retirement. These findings suggest there are advantages in maintaining the current policy regime around provision of NZS.
    We note a downside, however, to the increase in numbers of older workers participating in the workforce. While the oldest workers (75+) had the lowest number of accident compensation claims in 2017 consistent with the demographic structure of the working population, they had the highest claim rate of all age groups at 190 claims per 1,000 FTEs. This group also had the highest incidence rate for more serious claims, at 66 claims per 1,000 FTEs, compared with 14 claims per 1,000 FTEs for the total population.
    What is the impact of current retirement income policies on current and future generations, considering the fiscal sustainability of current settings
    In New Zealand, older working age people (45-64 years) who are living on their own have the second highest rate of income poverty after sole parents: doubled from 10% in 1988 to 23% in the early 2000s, and currently at 29%. While the depth of poverty may be largest among beneficiaries and their children, there is significant poverty and hardship among the older low-income working age population.
    Of those aged 50-64 years, while 714,400 are employed in paid work , around 120,600 receive a welfare benefit with more than half of these on the benefit for over 5 years, and with two thirds of this group on a benefit for reasons of health disability. A further number had an ACC payment including 14,440 on earnings related compensation for an average of 117 days21 , and 14,130 people aged 50 to 64, not receiving a main social security benefit (ie low income workers) were receiving one or more weekly supplementary benefits.
    In later working age, periods of unemployment, redundancy, ill health or caregiving duties may impact severely on the ability to prepare financially for retirement. Welfare benefits are widely perceived as inadequate as outlined in the Welfare Expert Advisory Group report. Even if NZS is taxed at the top tax rate, perhaps because the superannuitant works full-time, the net NZS is still 45% more than the net Jobseeker Support benefit rate paid to an unemployed adult. St John and Dale note the gap between welfare benefits and NZS has grown despite the occasional one-off boosts to welfare. NZS has been linked to average wages, which have risen markedly, while benefits are linked to CPI prices only. While the indexation for benefits will change to wage indexation from April 2020 and prevent the gap from widening further, it will not close that gap.
    Conclusion
    We do not think that the level of NZS is high enough to prevent hardship for all pensioners even today, and certainly this will worsen in the future unless current policies prioritise equity. There are lessons to be learned from the failure to index welfare benefits to wages, and the resultant serious levels of poverty in New Zealand. Women, already at risk, are the most affected in the welfare system and it is likely they will also be most affected by price indexation of NZS. According to Westpac NZ’s survey of over 1000 Kiwisaver members, women are contributing less than men, have lower average balances and are less likely to have other investments that can pay for their retirement.
    St John and Dale argue that raising taxes will help pay for for NZS in the future, however PAYE income tax and GST increases will have severe impact on lower and middle income people. This is why we call for a reset of income tax levels, with steep indexation to ensure income redistribution for all over 65.
    We strongly urge government not to rule out raising taxes in a steep index aligned with incomes as the most viable, if not the most popular, option to make NZS sustainable long into the future.

Sincerely,

Dr Prudence Stone
Convenor
Equality Network

Final in the ‘Tax on Tuesdays’ series:

The last in the Tax on Tuesdays series is on Tuesday 12 November: Where’s the Party At? NZ Herald journalist Hamish Rutherford chairs political party representatives David Seymour, James Shaw, Deborah Russell and Paul Goldsmith as they share their views about tax, present and future, as well its relationship to equality, climate and economic productivity.

12:00 – 1:30pm, Rutherford House Lecture Theatre 2, Pipitea Campus, Victoria University of Wellington.

CPAG Summit – November

CPAG is holding a Summit in November and all are welcome. See. https://www.cpag.org.nz/cpag-summit-2019-november-18-whakamana-tangata/ for details.

There are two ways that you can help the campaign for PAY EQUITY

1. Sign the CTU’s petition calling on the government to fix problems with the Amendment Bill before it goes to its third reading.

2. Sign the Human Rights Commission’s petition calling for a Pay Transparency Office and additional requirements for 100+ employers (to review, report and take action on gender pay gaps).