15 May 2020

High income earners, returning Kiwis among benefit applicants

10:59 am on 15 May 2020

Those who signed on for the benefit during lockdown were more likely to be first time beneficiaries, higher earners, recently returned from overseas, and Pākehā, a new report shows.

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Carmel Sepuloni. Photo: RNZ /Dom Thomas

It shows more than 48,000 people were granted a benefit during the lockdown period - an increase of almost 170 percent compared to the same period a year ago.

Much of that increase has been driven by 38,960 people going on to the main unemployment benefit, known as jobseeker support.

  • 46 percent had little or no previous benefit history, compared to 26 percent in the same period last year.
  • 45 percent were aged in their 20s, compared to 37 percent last year.
  • 39 percent were Pākehā, compared to 30 percent last year.
  • There has been a ten-fold increase in the number of people who have recently returned from overseas going on to jobseeker support - 4718 compared to 424 last year.
  • Job loss continues to be the main reason for new benefits being granted, at 45 percent, while returning to New Zealand accounts for 12 percent of grants.

    Compared to Pākehā, new benefit grants for Māori and Pacific grew slowly, which has resulted in a proportional decline for both groups compared to 2019.

    For Māori, it has dropped from 42 percent to 27 percent, but the report notes Māori are still over-represented in the figures.

    Some regions have also been harder hit than others - the Nelson, Southern, and Auckland Metro regions have experienced the highest proportional increases.

    "Nelson and Southern regions have historically had strong labour markets with relatively low benefit numbers. These are also regions that have significant tourism sectors," the report said.

    "In contrast, Taranaki, the Waikato, and Central regions showed the smallest increases."

    Of those going on to the benefit during lockdown, 40 percent have lost weekly earnings of $585 a week or more - and the increase in higher earners going on to the benefit outstripped those earning less, or with no previous income.

    Social Development Minister Carmel Sepuloni said the people going on to the benefit during the lockdown were a "different cohort to what we would usually see".

    "This is very different from the global financial crisis where they saw more Māori and Pacific people losing jobs in the early stages of that and this time we see more Pākehā," she said.

    "There will be more job losses and that's our reality, and we know that that's happening internationally."

    Sepuloni acknowledged that going on to a benefit after earning a higher income wasn't easy.

    However, she said the government had increased benefits by $25 a week as part of its initial Covid-19 response package, and made other changes in last year's Budget to index benefit increases and abatement thresholds to wage growth.

    She has ruled out any changes in the short-term to the way couples are treated in the benefit system, to allow someone to access a benefit, even if their partner was still working.

    Meanwhile, the latest weekly figures from the MInistry of Social Development show the increase in the number of people going on to benefits each week is continuing to slow.

    There was an increase of 2735 in the number of people receiving a benefit last week.

    The number of special needs grants for things like food is also continuing to decrease from its peak during lockdown.

    At present 11.6 percent of the working-age population is receiving a benefit, compared to 10.4 percent at the beginning of this year.

    As well, 6.2 percent of the working-age population is on jobseeker support, up from 4.9 percent.

    Sepuloni said there was a fast-tracking process for some applicants who required less support and wanted to engage with the job market quickly.

    On the other hand, many who've lost their jobs and cannot access the wage subsidy nor the benefit, have complained they are excluded from the unemployment statistic while others have asked for some tax relief.

    The Ministry of Social Development (MSD) is under fire and has been told to investigate after Work and Income appeared to have spent decades wrongly advising some benefit applicants that they cannot get support until their redundancy runs out.

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