In an ideal world we wouldn’t need wage subsidies to ensure people in full time work earn more than those on benefits.
But the world isn’t ideal and paying a top-up to low waged people is better than letting them languish on the dole.
The Child Poverty Action Group thinks this discriminates against the children of beneficiaries. They took the issue to court and lost.
. . . The Court of Appeal found that the off-benefit rule, on its face, subjected beneficiaries to different treatment that amounted to a material disadvantage but the rule ultimately did not breach the Bill of Rights.
“This is because the in-work tax credit deliberately created an earnings gap between people on a benefit and people who are working. The objective was to incentivise people into work and improve incomes for families with children,” the Court of Appeal judges said in their decision released today.
“CPAG accepted this objective was important enough to justify limiting the right to freedom from discrimination but argued that the off-benefit rule was disproportionate to the objectives to be achieved.”
The Court of Appeal said the discriminatory impact of the off-benefit rule was not out of proportion to the goal of incentivising people into work and “the evidence established that it only impairs the right to be free from discrimination to the minimum extent necessary to achieve the objective”. . .
Children of beneficiaries are, generally, worse off than those in families where at least one parent works.
Being worse off isn’t just financial, those in families dependent on benefits tend to have poorer health, achieve less at school and a more likely to be victims of or commit crimes than those on the same income when it comes from work.
Benefits have a place in helping those who are unable to support themselves. A few of those will always be dependent but most, given the right help, will be able to help themselves.
If there was no gap between the income of those in work on those on benefits the welfare trap would deepen.
TV3’s documentary Mind The Gap focussed on the issue of the gap between rich and poor.
That gap won’t be bridged by disincentivising work which is why the financial gap between those in work and on welfare must be maintained.