Saturday, June 21, 2014

A perplexing muddle of policies

The Minister of Social Development, Paula Bennett, has just announced  plans to help parents move off a benefit into study. The announcement is somewhat perplexing: there seems to be little understanding of how the current system works, but is the first sign of a possible rethink of the Minister’s “relentless focus on work”.

The announcement outlines an investment of $18-$24 million over four years to enable an estimated 3,000 sole parents to move into full-time study. The money is going toward:
  • aligning the accommodation support available through the student support system with that available through the benefit system for parents. This could result in increased payments of “up to $165 per week”;
  • changes to allow sole parent students' child support arrangements to continue while they temporarily claim a benefit;
  • abolishing the stand down period for student parents who need a benefit over summer.
This all sounds great, and the official press release gushes that “it makes sense to invest in education for sole parents”. Indeed it does. But is this just a case of back to the future?

This same government, and this same Minister, cut a perfectly functional tertiary study assistance package back in 2009 when they gutted the Training Incentive Allowance (TIA). Technically the allowance is still available, although only for courses below level four of the National Qualifications Framework. Data from the Ministry of Social Development shows the number of Domestic Purposes beneficiaries receiving the TIA slumped from 9,898 in 2009 to 3,181 in 2011 (the last year for which data is available). It is worth $106.02 per week (or as a lump sum of $4,240.80 per annum).

The TIA was replaced with the far less generous Sole Parent Study Assistance (SPSA) in February 2011. This is worth a maximum of $500 per year and is in fact a loan (albeit interest-free). A total of 986 people received this assistance in 2011/12.
These numbers suggest that assisting a further 3,000 sole parents into study won’t even fill the need that existed 5 years ago.


It is also likely the package is not as generous as it initially seems. While it might be possible to get an increase of up to $165 per week in Accommodation Supplement (AS), the maximum AS available is in ‘Area 1’ areas. For a parent with one child (a two-person family) the maximum Area 1 rate is $160, less than the $165 possible increase. For a three-person family the maximum rate is $225. Area 1 includes the wealthy suburbs of Auckland’s North Shore and the Auckland isthmus. Data from Statistics New Zealand shows the majority of sole parents live in less salubrious areas. It would be useful to know how many sole parents the Minister anticipates would receive the additional $165 per week in additional AS when it is likely that most would receive far less.


More interesting is the provision for Child Support (CS) payments to continue while the studying parent receives a benefit. The press release suggests this policy is aimed at parents currently receiving a benefit. But if a parent is on a benefit, they do not receive any CS paid by the non-custodial parent because it is used to offset the cost of the benefit. Only if the CS received exceeds the amount of the benefit ($300) does the excess get paid to the caregiver. There are very few such cases.

So when the Minister says the CS payments will continue, what does this mean? That parents on benefits will need to come off benefits if they want to take advantage of this package? If so, they may go onto a Student Allowance. In this case they can receive their CS but it is counted as income for the purposes of their student allowance. Otherwise parents will need to take out a student loan. At $175.96 per week this is not designed to support a parent with and child/ren, even with CS added on.

It can only mean parents leave the benefit system and join the 2,400 parents “currently accessing mainstream student support”. Except now any CS they receive will be passed through to them in the event they need to go back onto a benefit over term breaks. It is unclear if this will count as income and result in a possible reduction of the benefit. It would be helpful to know how many parents the government anticipates this new support will apply to, and the average amount it is expected this will benefit student parents. 



The most useful provision is for benefit stand down periods to be abolished over breaks when parents need to go back onto a benefit. Stand down periods can cause great hardship, especially for parents trying to house and feed children. The ability to go straight onto a benefit when the tertiary term ceases will be very helpful. One hopes that Ms Bennett sends a memo to her staff to this effect. The legislation requires that work is the primary focus for beneficiaries and there have been reports that parents who are studying are being harassed by Work and Income into undertaking “job-seeking activities”. 

If this is an effort to put a kinder, gentler face on welfare reform, there is some way to go yet. If the government was sincere about enabling parents to study and move off a benefit they would restore the Training Incentive Allowance and recognise tertiary study as a valid activity for sole parents (and other beneficiaries). Spread over 4 years, $24 million is very little money, and the wide margin in the estimated cost suggests the government has little idea how much this will assist sole parents. And it raises bigger questions for the administration of social support, especially around the pass through of CS to beneficiary parents.

Nonetheless, this is the first relaxation of the Minister’s “relentless focus on work”. Perhaps she’s realised what has been evident to others for some time: that unemployment rates for women remain high; that most of the work available for unskilled mothers is low-paid and precarious; and that crap jobs with long hours do not lift children out of poverty. There are currently about 76,000 sole parent beneficiaries. Assisting 3,000 into study is too little, too late.