Particular problems for sole parents
The undervaluation of unpaid caring work, notably the work of bringing up the next generation, poses particular problems for sole parents, the vast majority of whom are women. In 2013 there were 201,804 sole-parent families, 84.2 per cent of them headed by women, with Māori and Pasifika overrepresented.17
Yet under governments led by both major parties, benefit levels were until 2016 only inflation adjusted after being heavily cut in 1991. Real wages have risen since then (albeit not as fast as productivity on average), so the living standards of those dependent on benefit rates have fallen further and further behind those enjoyed by people in paid work. NZ Superannuation, by contrast, increases in line with wage growth, so that the rate for a married couple never falls below 66 per cent of the average net wage.
Those who get the Sole Parent Support benefit are now required to look for part-time work when their youngest child is three. Finding suitable work or education and training are major impediments to doing so. Few will have enough time for full-time study or full-time work; the student allowance and modern apprenticeships are available for full-time students only; and there’s an understandable reluctance to incur debt from student loans when there is no guarantee of well-paid work.19 Yet to move off the benefit and access the full Working for Families package, a sole parent must find and manage a job for at least twenty hours a week in addition to parental duties.
With the qualifying hours for the package not averaged over a year, some suitable jobs that fit well with the care of school-age children (such as teacher aiding) may pose extra problems. They are not paid in the long summer school holidays, meaning a loss of both the work and tax credits over the summer, and no option but a benefit for this period.
For more casual work, employers often demand highly flexible hours, but the benefit system is based on the principle that people work fixed hours. As First Union’s Robert Reid says, ‘If your hours go up and down, then that mucks up your in-work tax credit, it mucks up your accommodation allowance, it mucks up your Working for Families. If you are a beneficiary as well and working part-time, if your hours go up and down, then it mucks up all of that benefit.’20
With the rapid abatement of benefits when paid work is undertaken, trying to combine paid and unpaid work may leave many sole parents no better off financially. This benefit-system poverty trap has been analysed for decades, but never solved. The Council of Trade Unions is seeking a more flexible and generous system that helps cushion the impact of precarious work. But the department that administers benefits, Work and Income, has no plans to review the rules.
Máire Dwyer, a consultant on gender, welfare, labour-market and social policies, has identified four ways in which policy lets sole parents down. First, the goal of reducing long-term welfare dependency is poorly specified, with desirable outcomes – particularly improvements in sole parents’ wages and total incomes – unmonitored. Second, policy ‘remains dominated by orthodox economic analysis which has never taken unpaid care and household work into account’. Third, it ‘focusses on investments within the welfare system, not broader system changes, such as childcare policies and lower income taxes’. Fourth,
policy advisers have yet to come to terms with the diversity of family forms and the different demographics of populations. Many policy initiatives consider only the aggregate impacts of change, rather than the needs of, or impacts on, particular groups, including women and men … More gender analysis would bring to the fore the differential impacts of policy on women and men, and other population subgroups, and recognise that systems and policies are evolving from gender-inequitable starting points. 21
The Child Poverty Action Group has also raised fundamental questions about the status and treatment of women and children. In a report on the welfare system it suggests that the use of a couple as the unit for determining support is confusing and outdated, and can have serious harmful effects on children. This issue was raised as early as the 1988 Royal Commission on Social Policy but has been largely ignored by governments ever since. CPAG points out: ‘Relationship status as a factor for determining individual entitlement to social security payments is not an innate determining factor, but a socially constructed one deeply embedded in New Zealand’s history’22 – and, to complicate matters, ‘different parts of the system are based on different ideas of what a relationship is and whether the partner’s income should be taken into account. The result of that confusion can leave the focus on what a woman is not entitled to, rather than what she and her children need to survive.’23
For the purposes of benefit eligibility, the terms ‘couple’ or ‘relationship in the nature of a marriage’ apply to two adults who are married, in a civil union or in a de facto relationship, but inconsistent and often circular statements on the definition of the latter cause major problems, especially for sole parents. The main determinants are said to be emotional commitment and financial interdependence, but, as CPAG says:
Relationships for individuals are often complex and volatile over time and society has become more accepting of different living patterns. Cohabitation may or may not be a defining feature of ‘marriage’, and it may or may not determine when ‘unmarried’ people can be regarded as in a relationship. This matters from an equity point of view when social policies treat individuals differently depending on their marital (relationship) … There are so many combinations and permutations of co-habitation, financial interdependence, emotional commitment, forward plans, and sexual/family patterns, it is no wonder that no one simple clear definition can be found. So much is at stake for those whose lives are already complex, stressed and difficult. 24
The job of deciding whether or not a relationship exists is done by Work and Income officials incentivised to be suspicious, expose fraud and reduce government expenditure. Some are more sympathetic and prioritise their clients’ interests, but it is hard for them to hold out against this ethos and ever more restrictive rules. The effect on a woman who may be just starting to explore the possibility of a new relationship can be devastating.
Determining whether or not a relationship in the nature of marriage exists is not a clear-cut exercise, yet it has far reaching ramifications. A subjective judgment of all of a mother’s circumstances, as well as those of her alleged partner, is required. A degree of surveillance may be involved that is far from open and transparent … The application of this test is unsatisfactory and contentious. More fundamentally, current law fails to acknowledge that women have a right to be considered as individuals, independent of their male acquaintances or relationships. 25
Only in the separate payment of New Zealand Superannuation to each member of a couple living together is there a recognition of individual entitlement, one valued by many women. However, the distinction made between a couple living together and two adults not regarded as a couple living together is maintained, in terms of amounts paid, for superannuation as well as other benefits. That makes no real sense. Economies from shared accommodation and other costs are similar in both cases. But for sole parents the question of whether they are in a relationship is more crucial.
The possibility of prosecution and imprisonment for relationship fraud (failing to declare a relationship) may even lead some women to fear entering any kind of relationship while receiving Sole Parent Support. ‘Repartnering is a major reason why sole parents exit the benefit system and may provide a route out of poverty,’ says CPAG, ‘but a sole mother may fear that beginning a relationship and testing whether her new partner will be stable and supportive may mean accusations of fraud and/or loss of an independent income.’26
Investigations of suspected fraud can be protracted, disruptive and distressing; furthermore, CPAG has found that ‘mothers convicted of “relationship fraud” are treated more severely than is possibly warranted, with little recourse or appeal’.27 The contrast between the treatment of this and other benefit fraud and tax fraud is marked. Lisa Marriott, an accountant and academic who has extensively researched the comparisons,28 has found that tax offences are treated less seriously than other financial offences: it appears, she says, that offending by individuals who have greater education and wealth ‘is viewed as somehow preferable to offending by individuals who have the opposite traits’.29
The amount of money involved in tax evasion is at least 25 to 50 times the amount involved in welfare fraud, and potentially 100 to 150 times as much – yet welfare fraud convictions are far more likely to lead to a custodial sentence: 60 per cent of those convicted of welfare fraud received a prison sentence, compared with 22 per cent in tax fraud cases. As Marriott says, ‘Community work is the most frequently used punishment for tax offending, whereas imprisonment is the most likely outcome in the benefit fraud cases investigated.’30
She also points to the likelihood that white-collar crimes have different motivations from blue-collar ones, being more likely to be motivated by ‘higher-order needs’ such as status and esteem, whereas blue-collar offenders may be more motivated by more basic needs, such as food and shelter. She rightly suggests that the these motivations should be considered as mitigating factors for blue-collar offenders and aggravating factors for white-collar offenders, rather than the reverse, which appears to be the case. (One point Marriott does not make and on which she probably does not have detailed data is that most benefit fraud cases involve female sole parents and almost certainly most tax fraud cases involve men.)
Barrister Catriona MacLennan, a co-author of the CPAG report discussed above, asks this question along similar lines:
Why are we burdening some of the poorest mothers in the country with lifetime debts while writing off the tax debts of some of our richest citizens? Inland Revenue has wiped $5 billion in tax debt since 2008. This includes money owed by property developers who continue to live ostentatious lifestyles, despite failing to pay money owed to the Government, as well as 720,000 companies with unpaid taxes. On top of that, more than one million New Zealanders have had their tax debts written off in the past six years. In the past year alone, the Government has cancelled $930 million in tax debt owed by individuals. That can be contrasted with the punitive way in which mothers who owe benefit debt are pursued for the rest of their lives – even if it is plain that they will never be able to repay the sum. 31
The reason for the extensive discussion of this issue is firstly that it affects a large number of often highly disadvantaged women, many of whom have escaped from physically and/or emotionally violent relationships. Secondly it involves gender, class and ethnic discrimination (Māori are heavily overrepresented among sole mothers), together with double standards, major invisibility and undervaluation of the task of bringing up the next generation. All these issues extend beyond the sole-parent situation although they are most crucial among this group. Thirdly, it demonstrates a lack of good gender analysis of policy positions.
Beneficiary advocates and NGOs regularly tell heart-rending stories of their work trying to help desperate people. Yet the emphasis on lowering benefit numbers at all costs, regardless of whether the people in question end up better off, continues to dictate Work and Income’s approach. As Sue Bradford of Auckland Action Against Poverty says:
Surely a sane society would put the focus on helping the unemployed into work and education rather than work-testing those who are already finding day to day survival a struggle … Labour started this drive in the 2000s when it amended the purpose of the Social Security Act to place paid work at its heart, and then instituted the Working for Families ‘In Work’ payment which deliberately discriminates against the children of beneficiaries. National has built its welfare reforms on the back of Labour’s changes. In the end, ‘work first’ is simply a crude tool used to punish beneficiaries while creating an ever larger pool of people competing for low wage, part time and casual work at the insecure low end segment of the labour market. Unpaid work in the home and in the community doesn’t count. 32
Yet despite media stereotyping of beneficiaries helping to make their demonisation acceptable, a 2012 UMR Research survey found that New Zealanders believe beneficiaries are the most discriminated-against group in the country.33 So there is some measure of understanding of their circumstances – and some hope of winning public support for policy changes.
Hopes Dashed? The Economics of Gender Inequality will launch on March 16th 5.30pm at Vic Books Pipitea, Wellington. More information on the event here.
17 Statistics New Zealand, ‘2013 QuickStats About Families and Households’, 2014, pp.13–14, available here.
18 Brian Perry, ‘Household Incomes in New Zealand: Trends in Indicators of Inequality and Hardship 1982 to 2013’, Ministry of Social Development, Wellington, 2014.
19 Máire Dwyer, ‘Sole Parents in Poverty: It’s Time to Update the Policy Paradigm’, Policy Quarterly, 11, 1 (2015), pp.19–24.
20 Patrick O’Meara, ‘Use of Zero Hour Contracts Growing’, Radio New Zealand, 13 November 2014.
22 Susan St John, Catriona MacLennan, Hannah Anderson and Rebecca Fountain, ‘The Complexities of “Relationship” in the Welfare System and the Consequences for Children’, Child Poverty Action Group, November 2014, p.42.
24 Ibid., p.5 and p.37.
25 Ibid., p.2.
26 Ibid., pp.15–16.
27 Ibid., p.2.
28 Lisa Marriott, ‘Tax Crime and Punishment in New Zealand’, paper presented at the 24th Annual Conference of the Australasian Tax Teachers’ Association, Sydney, 18 January 2012, pp.1–26.
31 Catriona MacLennan, ‘Benefit Debt Punishment Out of All Proportion to “Crime”’, New Zealand Herald, 20 January 2015.
32 Sue Bradford, ‘It’s Punitive Welfare that’s Pointless, not Protest’, Pundit, 17 February 2015.
33 Anthony Robins, ‘Beneficiary Bashing – Mission Accomplished’, The Standard, 6 February 2013.
Copyright © 2017 Prue Hyman. Extract from Hyman, Prue, Hopes Dashed? The Economics of Gender Inequality, 2017, Bridget Williams Books, Wellington, pp.34–43.
Headline image credit: ‘Mind the Gap’, by Sarah Stierch. CC-BY-2.0 via Flickr.