Give families $200 a week, no strings attached: Morgan Foundation researcher

Kristen Rupapera says a universal benefit would mean she could do more with her daughter Jaymie.
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Kristen Rupapera says a universal benefit would mean she could do more with her daughter Jaymie.

Mum-of-one Kristen Rupapera says an extra $200 a week would be a welcome boost to her family's budget.

She works part-time, and her partner works full-time on a dairy farm. Money is tight, but they get by.

"An extra $200 a week would mean we could do more with [daughter] Jaymie," she said. "It could pay for swimming and dance classes, as well giving us extra money to be able to take her out more. If families have a low income then even a simple trip to the beach may have to be planned for."

If the researcher behind a new book got her way, Rupapera would be in luck.

READ MORE: Low-income families panic as they pay now for Christmas spending

Morgan Foundation science researcher Jess Berentson-Shaw has co-authored a book, Pennies from Heaven, with economist Gareth Morgan, which argues that a no-questions-asked $200-a-week benefit for all parents with a child under three would help give young New Zealanders a better chance at life.

Berentson-Shaw and Morgan said children could not flourish without enough money. With rising housing costs, insecure and low-paid jobs, many families were being pushed to breaking point – by costs that were outside their control.

Berentson-Shaw said more than half of New Zealand families suffered at least a year of income poverty after having a child. Poorer children were more likely to be victims of crime, drop out of school, suffer abuse and have their own babies younger.

Pennies from Heaven argues that cash without strings is the best way to help those families, and cites international studies that show lifting families out of poverty could halve the outcome gap between children in poverty and others.

Kiwis believe older people had contributed to society and deserved a benefit, but don't think that way about children, ...
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Kiwis believe older people had contributed to society and deserved a benefit, but don't think that way about children, says researcher Jess Berentson-Shaw.

But Berentson-Shaw said New Zealand was still individualistic about children and expect them to be the sole responsibility of parents. 

She suggests a "thriving child UBI" of $200 a week for parents with a child under three, which would cost about $1.8 billion on top of current paid parental leave and parental tax credits.

On top of that, she would like to see a basic income for lower-income families. The payment would combine the existing family tax credit, and the Working for Families' in-work tax credit for all families under the Working for Families income threshold. But there would be no minimum work requirement for the payment.

Berentson-Shaw said New Zealand was quick to moralise about the poor and think that they would spend any extra money they got "on drinks and fags".  But she said research showed poor families given more money increased their spending on their children and cut their spending on alcohol and tobacco.

"All these families are just like our families, they just happen to be struggling under extreme financial pressure. We've got to move to understanding it's not about poor families but about all families and what happens to them when they are in poverty. That gets us closer to what is going on.

"Every family under enormous financial stress behaves in pretty much the same way. The money releases that stress for the family to find their potential."

She said it was possible to find the money to fund the benefit.

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"The modelling we did suggests any number of ways it could be affordable. One is whether we need to start thinking about who is getting super and where is the greatest need and whether there could be a better balance between how we support the elderly and the young."

A possible change would be to introduce a tax clawback on income earned by people who also received the pension. This would save about $1b a year. New Zealand Super is the largest proportion of New Zealand's social spending.

"Many older, wealthy New Zealanders who continue to work have benefited from favourable social policies to develop their asset base over their lifetimes. We do not as yet have a system in place to account for wealth for the purposes of taxation, but addressing the excess financial advantage superannuation gives well-off older people is a way to reduce the wastefulness of the current system and arrest its exponential growth as the Baby Boomers move to the front of the queue."

Berentson-Shaw said there was a sense that older people had contributed to society and so were deserving of a benefit. "I just think we've not got around to seeing children in the same way yet."

A Comprehensive Capital Income Tax (CCIT) could be used to provide the rest of the money required, by taxing property investments.

Berentson-Shaw said the children's benefit would also lead to savings: $1.1b in poor education and its impact on productivity, $2b in health, $1.1b in crime and $700m in social welfare savings.

She said the policy was politically "disruptive". "About half of New Zealanders can see the structural issues that feed into low incomes and poor outcomes and that means about half don't."

Rupapera said the policy would create a more even playing field.

"However, just because that's what I would do doesn't mean all families would do the same. Give this amount of extra money to some families and it could create more problems. More alcohol, cigarettes, drugs? No child would succeed then.

"If this universal benefit is to help parents out I think it should be given in a non-cash form. Fuel vouchers to get to work, grocery vouchers for food, store vouchers to buy clothing and linen. This would then be beneficial."

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 - Stuff

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