This background paper explains why families in Aotearoa New Zealand need a much more robust system of tax credit supports, as well as higher wages.
New Zealand was once a model for other countries to follow in regard to its egalitarianism. Today, there is high income and wealth inequality and an unacceptable level of family poverty and homelessness. The age group that has the highest levels of material deprivation is the group aged 0-17 years.
CPAG applauds efforts by Living Wage Movement Aotearoa (LWMA) to raise wages in New Zealand as one means of addressing this problem. While the minimum hourly wage rate sets the minimum that employers are legally required to pay their workers, the living wage (LW) is a ‘voluntary’ higher hourly rate. The 2016 living wage rate (LWR) in New Zealand is $19.80 per hour (due to increase on 1 July 2017 to $20.20) while the minimum wage rate is $15.25, i.e. $4.55 less (Living Wage Movement Aotearoa New Zealand [LWMA], 2016).
The successes are to be celebrated as more employers sign up to be living wage employers. Recently, the Wellington City Council implemented policies to pay a LWR, not just to employees, but to all staff of council-controlled organisations (Devlin, 2016)2 . The new Mayor of Auckland, Phil Goff, has also committed to paying the LWR, first for those directly employed, and then, for contracted workers. 3 In 2016, 58 firms/organisations are identified as ‘Accredited Living Wage Employers’ (LWMA, 2016).
This paper argues however that while better wages are essential, on their own they are an insufficient response, especially to child poverty. Higher basic wages must be accompanied by strengthening the generosity and effectiveness of tax-welfare policies (Boston, 2013).