26 May 2020

Welfare advocates not happy with Covid-19 unemployment benefit

9:33 am on 26 May 2020

A new unemployment benefit for people who lost work because of Covid-19 is unfair and discriminatory, welfare advocates say.

New Zealand currency held fanned out in someones hand

The government's announcement of the new payment follows a surge in interest in benefit support following Covid-19 impacts. Photo: 123rf.com

The new payment, announced yesterday, will give $490 a week to people who have been made redundant because of the pandemic, while part-time workers are eligible for $250 a week. Both payments are untaxed, and will be available for 12 weeks from 8 June.

The existing jobseeker benefit for people over 25 is currently set at a maximum of $250 after tax.

Beneficiary advocate Kay Brereton said: "The benefit is simply not enough to survive on".

"It is galling," she said of the difference between the two payments.

"It acknowledges that by setting the rate at almost twice the rate that someone can get on a single rate of jobseeker."

The government's announcement of the new payment follows a surge in interest in benefit support following Covid-19 impacts.

The Ministry of Social Development received a total of 120,000 applications for jobseeker support in April. Documents showed it was preparing for an extra 300,000 benefit applications earlier this month.

Still, the difference between the two unemployment support payments can be stark.

A household of two on the Covid-19 payment would bring in $980. If they were both on the jobseeker support, it would be just $401 after tax.

And while jobseeker tapers off once a person and their partner earn more than $90 per week, the new payment won't be touched at all unless the beneficiary's partner earns at least $2000 a week, in which case they are ineligible.

Experts say the new payment broadly mirrors recommendations put forward by a welfare expert advisory group last year.

Thinktank The Workshop co-director Jess Berentson-Shaw said it was disappointing the group's full recommendations - including raising main benefits by between 12 percent and 47 percent - weren't adopted.

"I don't think we need to reinvent the wheel here. The things that help people outside of a pandemic are the same things that help people in a pandemic," she said.

Council of Christian Social Services secretariat Trevor McGlinchey said the new, more generous payment should be extended to all unemployed.

"We're going to have an awful lot of two-income families that are reduced to one income."

Between February and April there was a near 60 percent rise in European New Zealanders seeking jobseeker support, while for Māori the increase was far lower, at 25 percent.

The chair of Auckland's Te Puea Marae, Hurimoana Dennis, said the new payment was being welcomed by those Māori families and marae that were under strain providing support for people who had lost work and had nowhere to go.

Minister of Social Development Carmel Sepuloni said the Covid-19 payment was a responsible move and did not mean those on a Jobseeker allowance were undeserving.

"Not undeserving at all - and I would say we've already shifted to lift benefits. I've always said and never shied away from the fact that there's more to do with the welfare system.

"We did make benefit increases and a doubling of the winter payment one of the first steps in our response to Covid."

The government had to respond quickly and it was not the first time such a payment had been used in New Zealand or overseas, she told Morning Report.

"We had a similar payment following the Canterbury earthquakes, also we had a ReStart package following the GFC (global financial crisis).

"These are unprecedented times and we take into consideration that people will be unexpectedly losing jobs at a greater scale than we've ever seen before and they need time to adjust or to find other employment."

"Social insurance overall is something that we are keen to explore as a government and will continue to explore."

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