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Income support and other assistance for sole parents in New ZealandA comparative summary with other OECD countries
MAPP555, 13 September 2012
Why do governments care about sole-parent families?
MAPP555, 13 September 2012MAPP555, 13 September 2012
Income support for non-working sole parents
DPB (Domestic Purposes Benefit) for non-working sole parents who:
• are the parent of a child under 18 who is dependent on them;
• are not in a relationship with the other parent;• do not have a partner or have lost the support of
their partner;• are 19 or over.(Source: Work and Income http://www.workandincome.govt.nz/individuals/a-z-
benefits/domestic-purposes-benefit-sole-parent.html)
MAPP555, 13 September 2012
Income support for non-working sole parents (cont.)How much can you get if you are a non-working
sole parent?• A maximum weekly rate at $293.58 net or
$333.01 gross. • In addition:• A maximum hospital rate at $42.38 net or $47.35
gross is also granted.(Rates applied as of 01st April, 2012. At: Work and Income
http://www.workandincome.govt.nz/manuals-and-procedures/deskfile/main_benefits_rates/domestic_purposes_benefit_sole_parent_tables.htm)
MAPP555, 13 September 2012
Income support for non-working sole parents (cont.)But: following changes will be applied from 15th,October, 2012:•Youngest child between five and 13: look for part-time work (any suitable job between 10 and 20 hours a week); •Youngest child aged 14 or older: look for full-time work (any suitable job between 20 and 40 hours a week).
(Source: Work and Income http://www.workandincome.govt.nz/individuals/benefit-changes/dpb-sole-
parents.html)
MAPP555, 13 September 2012
In comparison with other OECD countries
Australia: similar support for sole parents with residency for 2 years with the amount of AUD 546.8/ fortnight + medical allowance of AUD5.8 but work testing applied;Chile, Mexico and USA: no similar direct supports;Denmark: supports provided in the Family Allowance for a child aged 0-17 at DKK 4,363/year;Spain: no ongoing support but does have a one-off birth grant at a maximum about of EUR 1,000
(Source: OECD http://www.oecd.org/social/familiesandchildren/47852162.pdf)
MAPP555, 13 September 2012
Employment Incentives for Sole Parents in New Zealand
• New Zealand’s background in supporting sole parents
• Income support and tax cuts• Free and efficient childcare• Jobs with family friendly hours• 1/3 of sole parents in New Zealand currently have no
interaction with the benefit system due to incentives and 40% appear to have had 20 hours or more of paid work per week as of June 2009
MAPP555, 13 September 2012
The OECD and Incentives
• Incentives provided by other countries in the OECD include:
• Within the USA they have the Personal Responsibility & Work Opportunity Reconciliation Act which is a time-limited benefit
• France adopted the 35-hours work policy which provided flexible hours for workers within firms
• It also has a highly developed universal pre-school system for two to six year olds
The OECD and Incentives Continued
• The United Kingdom under the Blair government had a large focus on reducing child poverty and unemployment where sole parents receive up to £20 a week for up to 6 months if they agree to look for work and then £40 if they do receive a job
MAPP555, 13 September 2012
Who should pay child support?• All parents not living in the same household as their children
Who should determine child support payments in NZ?* Child Support Agencies and in NZ it is the IRD
Aim of the child support is to support children whom* Their parents had split up• Two people who had a child but aren’t living together
Child Supports and Childcare Supports
* The person caring for the child generally applies for child support. We call this person the custodian.
* A standard formula is used to calculate how much child support must be paid by the paying parent.
* The annual amount is divided into monthly amounts, than the CSA let the paying parent know how much they need to pay, and the custodian know how much they will receive.
* The money than passes on to the custodian to assist with the care of the child, or the government, if the custodian is receiving a sole parent benefit like the DPB.
How does child support work?
Comparing child support in NZ with other OECD
countries
• Who determines child support payments?
• Rigid v discretion in determining child support levels
• Age of child for payment requirements
Net childcare costs for a sole-parent family with full-time earnings of 67% of the average
wage, 2004
MAPP555, 13 September 2012
What interventions work?
• Increased financial support for working has been shown both nationally and internationally to help encourage sole parents into full-time or part-time work (OECD, 2008; DoL and MSD, 2002).
• In-work benefits similar to the in-work tax credit have been shown by the OECD to effectively improve work incentives.
MAPP555, 13 September 2012
Sole parents’ employment increased due to the working for
families changes• estimated additional 8,100 sole parents
engaged in some paid work as a result of the WFF changes
• increased numbers of sole parents were working 20 hours a week or more.
• Sole parents’ periods of benefit receipt were shorter and sole parents previously on benefit were staying off benefit longer.
Future of support for Sole Parents in New Zealand
• Ongoing support• Additional registration requirements?
References
Work and Income http://www.workandincome.govt.nz/individuals/a-z-benefits/domestic-purposes-benefit-sole-parent.html; Work and Income http://www.workandincome.govt.nz/manuals-and-procedures/deskfile/main_benefits_rates/domestic_purposes_benefit_sole_parent_tables.htm;Work and Income http://www.workandincome.govt.nz/individuals/benefit-changes/dpb-sole-parents.html;OECD http://www.oecd.org/social/familiesandchildren/47852162.pdf
http://www.workandincome.govt.nz/manualsand http://www.workandincome.govt.nz/manualsand procedures/deskfile/main_benefits_rates/domestic_purposes_benefit_sole_parent_tables.htmprocedures/deskfile/main_benefits_rates/domestic_purposes_benefit_sole_parent_tables.htm
http://www.msd.govt.nz/about-msd-and-our-work/newsroom/factsheets/future-focus/domestic-http://www.msd.govt.nz/about-msd-and-our-work/newsroom/factsheets/future-focus/domestic-purposes-benefit.htmlpurposes-benefit.html
Families Commission (2010), Families Commission (2010), Economic Wellbeing of Sole-Parent Families Economic Wellbeing of Sole-Parent Families
OECD (2011), OECD (2011), Doing Better for FamiliesDoing Better for Families
OECD (2011), OECD Family Database, OECD, Paris.OECD (2011), OECD Family Database, OECD, Paris.
Examples of financial assistance available to NZ Single parents
• Domestic Purposes benefit (DPB) – financial assistance to provide for bare necessities
• Accommodation Supplement – helps cover costs of housing• Disability allowance – if your child has a disability or medical
condition• Childcare subsidy – if your child/ren attend a childcare centre• Oscar Subsidy – if child/ren attends after-school programme or
holiday programme• Working for families – payment provided to all families with
children under 18 if income <$120,500 per year• In-Work Tax credit of $60 per week – If working 20+ hours per
week• Child support – if custodial parent - collected by IRD from non-
custodial parent
MAPP555, 13 September 2012
Income support for sole parents
• [Specific direct income support – eg DPB in NZ]
• How does this compare with other OECD countries? (eg Australia similar but work and means tested, Spain has no ongoing support but does have a one-off birth grant, Chile, Mexico and USA have no similar specific direct support) Source: OECD policy summary
• Which of these differences do we think is the greatest/ most significant in terms of outcomes sort esp in NZ setting?
MAPP555, 13 September 2012
Employment incentive for sole parents
• Not all parents are the same. • Female Sole Parents who received DPB
were– likely to have few work skills, work experience
and restricted access to reliable and affordable childcare (MSD, 2003)
• Interventions for work-ready sole parents focus on financial incentives and reducing external barriers eg improving access to quality childcare and finding jobs with family-friendly hours (OECD 2008 in IRD/MSD 2010)
MAPP555, 13 September 2012
NZ interventions for promoting sole parent employment
• the Independent Family Tax Credit in July 1996 (later renamed the Child Tax Credit) payable to families not receiving an income-tested benefit or New Zealand Superannuation
• abatement rates in July 1996 that encourage sole parents receiving Domestic Purposes Benefit (DPB) and Widow’s Benefit to work part-time
• work-testing for sole parents with children over the age of 6 years in February 1999 (coinciding with an 8% decline in DPB numbers) and its subsequent replacement with Enhanced Case Management in March 2003 (coinciding with a 4% decline in DPB numbers).
MAPP555, 13 September 2012
How effective have supports been in the New Zealand experience
• Working for Families – implemented October 2004 to April 2007. Main objectives:– make work pay by supporting families with dependent
children so that they are rewarded for their work effort– ensure income adequacy with a focus on low and
middle income families with dependent children to address issues of poverty, especially child poverty
– achieve a social assistance system that supports people into work, by making sure that people get the assistance they are entitled to, when they should, and with delivery that supports them into, and to remain in, employment
MAPP555, 13 September 2012
Sole parents’ employment increased due to the working for
families changes• In the quarter ended June 2007, there were an
estimated additional 8,100 sole parents engaged in some paid work as a result of the WFF changes,
• increased numbers of sole parents were working 20 hours a week or more.
• Sole parents’ periods of benefit receipt were shorter and sole parents previously on benefit were staying off benefit longer. In 2007, two out of five sole parents who were not employed considered themselves available to work.
MAPP555, 13 September 2012
Conclusions and potential focus
• Summary of presentation
• Outline of any potential lessons that can be learnt from other OECD countries
• Where is NZ heading?
MAPP555, 13 September 2012
Income Support & Assistance for sole parents in NZ for Domestic Purpose Benefit
Who can get it?
* Parent of a child under 18 who is dependent on you
* Not in a relationship with the other parent* Do not have a partner or you have lost the support
of your partner* 18 or over (or 16-17 if they were legally married or
in a civil union * Must be a New Zealand citizen or permanent resident* Have lived in New Zealand for at least 2 years at
any one time since becoming a New Zealand citizen or resident (unless you are a refugee)
MAPP555, 13 September 2012
•
Important statistics about DPBImportant statistics about DPB** As of February 2010, there were 97,000 New Zealanders on As of February 2010, there were 97,000 New Zealanders on DPB for sole parents in DPB for sole parents in February 2010.February 2010.** 43,000 sole parents on DPB have a child aged six and over. 43,000 sole parents on DPB have a child aged six and over. ** Over half had one child and 30 per cent had two children.Over half had one child and 30 per cent had two children.** Māori make up 38 % of DPB sole parents who will be Māori make up 38 % of DPB sole parents who will be ** Pacific Island people make up 8 %.Pacific Island people make up 8 %.** 12,500 DPB who will be work-tested have recent work 12,500 DPB who will be work-tested have recent work experience or have completed experience or have completed training.training.** New Zealand is one of the few countries in the OECD to New Zealand is one of the few countries in the OECD to have no work expectations for have no work expectations for sole parents with children sole parents with children aged under 18 years.aged under 18 years.** 15 per cent of sole parents on DPB have been in some paid 15 per cent of sole parents on DPB have been in some paid work during the last year.work during the last year.** number of sole mothers who work full-time has increased number of sole mothers who work full-time has increased significantly in the last 15 years.significantly in the last 15 years.** Sole mother full-time employment rates increased rapidly Sole mother full-time employment rates increased rapidly when work tests were previously when work tests were previously introduced for people introduced for people receiving DPB (1997-2003).receiving DPB (1997-2003).
MAPP555, 13 September 2012
References
http://www.workandincome.govt.nz/manualsand http://www.workandincome.govt.nz/manualsand procedures/deskfile/main_benefits_rates/domestic_purposes_benefit_sole_parent_taprocedures/deskfile/main_benefits_rates/domestic_purposes_benefit_sole_parent_tables.htmbles.htm
http://www.msd.govt.nz/about-msd-and-our-work/newsroom/factsheets/future-focus/http://www.msd.govt.nz/about-msd-and-our-work/newsroom/factsheets/future-focus/domestic-purposes-benefit.htmldomestic-purposes-benefit.html
Families Commission (2010), Families Commission (2010), Economic Wellbeing of Sole-Parent Families Economic Wellbeing of Sole-Parent Families
OECD (2011), OECD (2011), Doing Better for FamiliesDoing Better for Families
OECD (2011), OECD Family Database, OECD, Paris.OECD (2011), OECD Family Database, OECD, Paris.
MAPP555, 13 September 2012