Budget 2022: Systemic change needed to improve social equity

Three years into the pandemic, this ‘post-pandemic’ Budget has a complex task to handle - continuing support for those directly impacted, addressing long standing issues that have not shifted and setting a platform for future success. The crisis has highlighted new vulnerabilities and exacerbated existing ones. While the pandemic has absolutely consumed attention and Budget priority, the big issues of climate change, social equity and resilience continue to loom large. Unfortunately, this Budget fails to provide a cohesive enough response to these issues, although there are some signs of promise.

Our State of the State research on social inequity and resilience has long noted that there are those with multiple vulnerabilities who are systematically disadvantaged. Persistent inequity of outcomes across health, housing, education and welfare mean these individuals and whānau have suffered disproportionately from the crisis. Many of the remedial measures taken to bolster businesses and buffer the economic shocks have failed to target these groups – meaning they have been pushed further to the fringes of the social support structure.

Slightly better off but still at risk, there is a group who live in precarity - one or two shocks away from crisis. Many in this group have been tipped into deeper vulnerability through pandemic related job-losses, exacerbated through cost-of-living increases and supply-side shocks such as those resulting from the war in Ukraine. While loss of employment is certainly a major shock, and one this budget recognises as an area for intervention, employment is not providing many Kiwis enough of a buffer – as evidenced by reports from food banks of increasing numbers of working families seeking help. Households are experiencing erosion of financial buffers such as savings, social supports due to increased isolation and reduced social contact, and mental health buffers due to ongoing threats and anxiety.

The current “cost of living crisis” is addressed in Budget 2022 with some short-term initiatives:

• A $1 billion spend on a $350 per person “cost of living payment” paid over three months from 1 August 2022, for individuals earning less than $70,000 and not eligible for the Winter Energy Payment. This is expected to benefit 2.1 million New Zealanders.
• A two-month extension to the fuel excise duty and road user charge cut.
• A two-month extension to the half-price public transport initiative, noting this will become permanent for Community Services Cardholders.

The sustained impact of the pandemic increases the need for high quality social responses in housing, cost of living, and provision of basic needs. The Budget includes a $100 million investment in mental health, $114.5 million in family violence including a $38.1 million investment in community-led integrated responses, and increased funding for essential dental care (dental grants for low-income families will increase from $300 to $1,000 and will no longer only apply to emergency care).

There are some improvements for child wellbeing that are delivered through Child Support. These changes will see amendments to how child support is paid to sole-parent beneficiaries, which is expected to benefit 41,550 sole-parent families to the tune of a median gain of $24 per week. These changes will be the first time in history that children of sole parents on a benefit will receive their full Child Support payments. Making this change is, unfortunately, not straight forward and legislation will be required later this year. Changes are intended to take effect from 1 July 2023.

Budget 2022 also provides permanent funding for hardship assistance such as food grants, dental grants and recoverable assistance payments, which while clearly needed does not address the underlying causes of these hardship grants being required.

Housing is a major driver of cost-of-living pressures in Aotearoa New Zealand, and access to safe, warm and dry homes is a key determinant of family wellbeing. Access to houses as investments is important in creating intergenerational wealth, which most vulnerable people are locked out of. The Budget continues to invest in supply side initiatives, but there are continued challenges in achieving velocity on the supply side. There needs to be a system-wide response, covering workforce, investment and funding cycles, contracting models and financial investment settings. The ongoing incoherence in how residential property is taxed (or not) means that housing as an investment continues to have a skewed returns profile which will continue to lock in spiralling wealth inequities. Where reform has been the answer across so many sectors, a reform of housing that goes beyond government agency operations is not yet on the cards.

Employment and training received piecemeal amounts of funding in this Budget, perhaps reflecting the record low unemployment currently. Employment provides us with meaning and dignity, and the opportunity to provide for whānau, but as food banks report seeing more working families than ever, a focus on employment is not a golden ticket for wellbeing and resilience. The employment related provisions in this Budget do not specifically target those who are long-term unemployed, nor is there much in the Budget for those who are unable to work due to long-term disability. In recognition that one in four New Zealanders identify as having a disability, Budget 2022 confirms the establishment of the Ministry for Disabled People with effect from 1 July 2022.

The other side of employment is the ‘talent crunch’. As borders open to the rest of the world, and inbound immigration settings remain tight, we need to think about productivity and availability of talent that will be enablers for the types of reform the Government is undertaking.

Health and mental health continue to be underlying vulnerabilities, and health has been the big winner in this budget. But as we support people in a primary care and prevention context, it is the social systems that must be strengthened. The social determinants of health are well documented, and the inequities in health outcomes must move beyond words on a page and progress to clear investments. The Māori Health Authority is an important structural change and this Budget allocates $168 million over four years. On the other hand, we are still waiting for social and welfare transformation – and this Budget doesn’t yet deliver any step changes. The Ministry of Social Development is currently consulting on Working for Families, so maybe Budget 2023 will be the year to address the outstanding recommendations of the Welfare Expert Advisory Group.

Lifting up from individual sectors, across our reforms we have set ourselves some big social ambitions in equity and sustainability – two sides of the same coin, as the climate crisis will hit vulnerable communities hardest. It can be hard to see these ambitions well addressed in any one Budget, but there is also little sense of how this Budget is building up to it. Without the vision and strategy for how our systems come together to deliver on our ambition, the risk is that investments continue to be made at an initiative level because this looks most impactful. But systemic change across the interlocked social, welfare, health, housing, education and employment systems cannot be achieved by a long list of well-meaning changes that fail to address what is really holding us back. Our recent State of the State report identifies the need for a joined-up and community-informed vision, a systematic approach and long term accountability for the implementation of reform.

And the truth is government doesn’t own all of the levers for change. Government has the right idea that solutions arise in communities - we need a significant devolution of design, decision making and funding to community-based initiatives. But this also means that government needs to invest in what only government can do. In general, this is about creating infrastructure, equitable access to funding, and shared decision making. It is time for government to stop investing in itself and start investing in the social fabric. Change programmes are too often inward facing, and cross system structures are not strong enough as a result. Our global research on ‘Reweaving The Social Security Net’ shows that the priority must be in strengthening communities and creating resilience through systematic investment in social systems, as well as specific initiatives.

This might include:

• Creating joined up approaches to assessing needs across multiple domains and providing consistent public reporting on need, such as child poverty statistics.
• Sustained investment in tailored services for individuals and whānau that prioritises equity and reports on how equity outcomes are being delivered.
• Prioritising community-led and Māori-led responses through funding of social services so community led organisations have the resources, infrastructure and confidence to plan ahead.
• Investing in agile workforces including skills- and capability building, and recognising the talent shortages across the sector, and prioritising greater Māori and Pacific employment creation.