AWA: Academic Writing at Auckland

 In New Zealand, a sole parent is defined as a parent without a partner and living with one or more dependent children, with a dependent child defined as a person aged below eighteen years and not in employment (Ministry of Social Development, 2010). The current welfare policy provided to help sole parents is geared towards facilitating them into entering the workforce. However, this strategy has several issues that negatively impact on the people they are trying to help. A universal basic income scheme is a system that provides a guaranteed income to all citizens and thus could alleviated some of the problems associated with the current system. However, it too does have its own disadvantages and thus a guaranteed job scheme may be an alternative to improve upon the current system.

The current welfare policy in New Zealand that is used to support sole parents is one that motivates them to enter the labour market to supplement their welfare income. This means that though single parents are able to obtain government assistance through welfare payments, there are requirements attached mandating them to acquire part-time work. An example of this policy is the Working for Families (WFF) package with its key component of In-Work tax credits. One of the aims of WFF is to improve the employability of sole parents, and this is done through childcare subsidies, housing assistance and specific work-related tax credits. There are four types of tax credits provided, the family tax credit, the in-work tax credit, the minimum family tax credit and the parental tax credit. The family tax credit, is paid to all low-income families with dependent children, and is adjusted according to the number and ages of the children and household income. The in-work tax credits and minimum family tax credit, is only available to sole parents if they work for twenty hours a week and do not receive an income-tested benefit. Both are designed to supplement income and ensure a minimum take home pay (Wynd, St John, O’Brien, & Dale, 2010). As seen with the in-work tax credits and the minimum family tax credit, the working for families package places a significant emphasis on getting parents to have a stable job.

On top of the WFF package, there is a benefit scheme that is tailored specifically for sole parents, this is the sole parent support payments provided by the ministry of social development. However, there are restrictions in place, with the main requirement that the parent must be seeking part-time employment of minimum twenty hours a week. Therefore, like the WFF package, the sole parent benefit also requires the recipient to look for employment in the labour market to supplement their welfare payments. Though it should be noted that because the sole parent support benefit is an income tested benefit, those receiving it are unable to obtain the in-work or minimum family tax credits, despite the twenty hour a week work requirement (Ministry of Social Development, n.d.). Thus, together with the working for families package these are some examples of the current New Zealand policies that are implemented to help support single parents in raising their children.

However, there are notable disadvantages with the current welfare policy regarding sole parents. A problem with the current system is the inability of paid work to ensure independence from the state welfare system. The WFF package in particular help facilitate beneficiaries to get into the workforce, however it does not guarantee that the number of hours and the pay are sufficient to live on. According to Statistics NZ household economic survey, it found that a high proportion of sole parent families tend to have incomes below the income poverty rate. The poverty rate measure was based on 60 percent of the 2007 median household disposable income, after a 25 percent deduction for housing costs (Ministry of Social Development, 2010). This means that one way or another, they are still dependent on the welfare system and the minimum family tax credit to supplement their work income.

Moreover, there is an issue that arises when trying to manage a balance between the demands of work and the demands of childcare. This is especially so for sole parents as they may not have someone else to share in the responsibility. Therefore, the responsibility of managing both the workload of a job and parenting creates stress for both the parent and the child. A recent NZ news article states that parents that are unable to find childcare whilst they are at work are forced to send their child to the city libraries unsupervised as a last resort (Harris, 2017). On top of that between 2004 and 2009, a qualitative research was done with several interviews of parents that are on both a state benefit and in the labour force. The results show that managing time for work and caring for family is very stressful and can have a negative impact on mental health for both the parent and child (Wynd, St John, O’Brien, & Dale, 2010). This is further reinforced by a quantitative survey done in 2003 to 2004, which found that approximately 43 percent of New Zealand sole parents in the past twelve months met the criteria for a diagnosable mental disorder as compared to 19 percent of partnered parents (Ministry of Social Development, 2010).

Furthermore, a problem with the current system is its reliance on the volatility of the labour market. The system pushes sole parents to find employment in the job market, however, this does not guarantee them a job and should they be unable to find a job due to the labour market, they would be disqualified for the in-work and minimum family tax credits. Thus, further exacerbating the situation in which sole parents find themselves in. This together shows that New Zealand may need another system to improve upon the flaws of the current policy arrangement.

A welfare policy that is in trial in certain parts of the world both past and present is the universal basic income (UBI) scheme. This is a policy in which a cash transfer is given to an individual without any conditions attached. This provides a guaranteed level of income for the individual and allows them to maintain a minimum standard of living. The main benefits of this policy are that it relieves pressure on sole parents to find paid employment to afford life necessities. The first issue of the current system is that it did not help beneficiaries become fully independent from the welfare system. This problem may be resolved through the use of the universal basic income as it allows single parents to be less reliant on work as a source of income. This frees up time for them to improve upon their human capital, that is their skills and knowledge whilst taking care of their children. By improving their human capital, it improves upon the employability and social mobility of these parents and allows them to move into higher paying jobs, thus allowing them to slowly become independent from the means-tested welfare system. A study conducted in the United States involved negative income tax rather than a UBI, however, the effect would have been similar. In the study, it found that people that received an income maintenance payment would more likely stay in education as the income reduced the opportunity cost of being in the labour force, thus allowing them to increase their skills and qualifications (Munnell, 1986). This is important as it has been found in a 2006 census that two in five mothers with dependent children and have no qualification were solo mothers, while only one in five mothers with school or post school qualifications were solo mothers (Ministry of Social Development, 2010). Therefore, it is important a UBI scheme supports the parent financially so that they do not have to rely on paid work, freeing up their time to up skill and slowly become independent of the welfare system.

            The second issue with the current New Zealand policy is the impact on the mental health of the sole parent from needing to balance both the demands of paid work and childcare. This problem can be put into perspective as the conflict between the demands of a capitalist economy and the demands of necessary social reproduction. On one hand, the parent needs to participate in paid labour in order to earn a sufficient income for them and their child to survive. However, on the other hand the parent needs to perform social reproductive labour such as maintaining their household and taking care of their child (Fraser, 2016). This conflict presents parents with a dilemma especially sole parents who are often needing to perform both by themselves. The UBI scheme addresses this issue as it provides a minimum income for sole parents thus attributing value to social reproductive labour by itself. The additional income from the scheme allows for a smaller workload so that sole parents can spend more time taking care of their children. This would reduce the stress on the parent due to a lower workload and reduce the negative effect of stress on their mental health. This can be seen in the Canadian pilot study of the universal basic income scheme. In the Canadian experiment, result found that overall hospitalisation including mental health diagnoses fell by 8.5 percent after the introduction of the scheme (Forget, 2011). This thus shows that a UBI scheme can help sole parents by relieving some of the pressure of managing time necessary for both paid work and for childcare.

            The third issue that can be addressed by the UBI scheme is the issue of unemployment among sole parents. In the current system, beneficiaries are pressured into entering the workforce as the transfer is often contingent on getting paid work. However, there is no guarantee that they can gain employment and not being in paid work disqualifies beneficiaries from a number of tax credit welfare policies. The UBI system addresses this issue by providing a minimum level of income that allow single parents to survive whilst not having a job. This ties into Esping- Andersen concept of decommodification, which is the degree in which an individual can survive without reliance on the market (Arts & Gelissen, 2010). The UBI would therefore provide sole parents and their children with sufficient income while they are unemployed. In the American state of Alaska, there is a permanent dividend fund, that distributes income from oil sales coming from state-owned lands. This dividend paid to all Alaskan citizens forms a type of universal basic income scheme, though the dividend itself is insufficient to live on. A case study performed showed that the dividends were a factor in helping reduce poverty rates in Native Americans. The census years of 1980 and 1990 Native American poverty rates fell from 25 to 19 percent (Goldsmith, 2010). The dividend payments were found to be important not due to its size but due to its predictability. Thus, the dividends had supported the Native Americans who lived in an area where wage paying employment was scarce (Goldsmith, 2010). Therefore, the UBI welfare system can address problems with the current welfare system in New Zealand.

 However, it can be argued that there are significant disadvantages to the UBI welfare system, namely the cost of implementation and maintenance (Gruioniu, 2013). The issue here is the fact that the scheme is universal and not means-tested, therefore, most citizens would be eligible for a share of the income. This would result in a significant cost of maintaining the scheme and paying each citizen an equal share of the income. The question then arises on how to pay for this substantial expenditure without taking away from the same citizens that it is being given to. In the past examples, only minor pilot studies have been conducted ensuring minimal costs. The only example that lasted for a significant period is the Alaskan permanent dividend fund at twenty-nine years. As noted before, the Alaskan dividend fund was only possible due to the substantial oil reserves held in the state, whose profits are sufficient enough to cover both the state spending budget and maintain the dividend fund (Goldsmith, 2010). Therefore, cost is an issue to sustaining a universal basic income scheme without depending on a natural resource.

In addition to cost, there is the argument that the UBI scheme decreases motivation to work for people who receive the payment (Gruioniu, 2013). As with the case of most welfare systems, detractors argue that providing individuals with a social transfer discourages them to take up employment. This is because when one knows that they will receive a guaranteed basic income from the government without needing to work for it, the idea is that people would not be motivated to work. The absence of the threat of poverty results in the absence of the motivation to gain paid employment. Therefore, single parents would be in no hurry to find paid work, however, this argument dismisses the importance of social reproduction. Social reproduction is work that is necessary for the functioning of society and hence would benefit society. Therefore, it can be argued that reproductive work should be addressed in the same way as the production sector with a recognition of the necessity of performing social reproductive work (Fraser, 2016).

An alternative to the universal basic income welfare system is a job guarantee program (Connelly, 2017). The program would also establish a basic minimum standard for a decent job at decent pay in the public sector. The government would provide the jobs in sectors where labour demands are not met rather than rely on the private sector. Moreover, the pay provided is sufficient for the sole parent and the child to live on, and in turn would push the private sector to match the pay in order to attract workers (Connelly, 2017). This programme would be a decent alternative to a UBI as the government receives some form of work in return to alleviate the cost of the welfare system. As for sole parents, it would be better than the current New Zealand system as the job guarantee program would alleviate problems such as insufficient pay due to a minimum wage guarantee. The minimum wage alongside subsidies would also be sufficient for childcare thus mitigating the stress from working a double shift of paid work and housework. Finally, the fact that the job is guaranteed by the government reduces beneficiary’s reliance on the private job market. Therefore, a job guarantee program can be a good alternative to a UBI welfare scheme and an improvement to the current NZ system.

The existing welfare system in New Zealand contains several issues and is not as effective in helping sole parents in raising their children. These issues can negatively affect the mental health of these parents through the stress of work and childcare. A universal income scheme does mitigate the problems that stem from the current system but the cost of implementing and sustaining such a system is very expensive. Thus, a guaranteed job scheme is proposed as an alternative to not only mitigate the cost of the welfare system but also to help provide sole parents with sufficient income in which to survive and raise their children.

References 

Arts, W. A., & Gelissen, J. (2010). Models of the welfare State. In F. Castles, S. Leibfried, J. Lewis, H. Orbinger, & C. Pierson, The Oxford handbook of the welfare state. Oxford: Oxford University Press.

Connelly, C. (2017, January 19). Why a universal basic income is a poor substitute for a guaranteed job. Retrieved from ABC: http://www.abc.net.au/news/2017-01-19/universal-basic-income-vs-job-guarantee/8187688

Forget, E. L. (2011). The Town with No Poverty: The Health Effects of a Canadian Guaranteed Annual Income Field Experiment. Canadian Public Policy, 37(3), 283-305.

Fraser, N. (2016). Contradictions of Capital and Care. New Left Review(100), 99-117.

Goldsmith, S. (2010). The Alaska Permanent Fund Dividend: A Case Study in Implementation of a Basic Income Guarantee. Anchorage: Institute of Social and Economic Research. Retrieved from http://www.iser.uaa.alaska.edu/Publications/bien_xiii_ak_pfd_lessons.pdf

Gruioniu, O. (2013). The universal basic income and a new welfare state. Revista de Stiinte Politice(37-38), 132-140.

Harris, S. (2017, April 24). Parents ditch children at libraries in lieu of daycare. Retrieved from New Zealand Herald: http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11844076

Ministry of Social Development. (2010). Sole parenting in New Zealand: An update on key trends and what helps reduce disadvantage. Wellington: Centre for Social Research and Evaluation. Retrieved from https://www.msd.govt.nz/documents/about-msd-and-our-work/publications-resources/research/sole-parenting/sole-parenting-in-nz-an-update-on-key-trends-and-what-helps-reduce-disadvantage.pdf

Ministry of Social Development. (n.d.). Sole Parent Support. Retrieved from Work and Income: https://www.workandincome.govt.nz/products/a-z-benefits/sole-parent-support.html

Munnell, A. H. (1986, September). Lessons from the Income Maintenance Experiments. Retrieved from Federal Reserve Bank of Boston: https://www.bostonfed.org/news-and-events/events/economic-research-conference-series/lessons-from-the-income-maintenance-experiments.aspx

Wynd, D., St John, S., O’Brien, M., & Dale, C. M. (2010). What Work Counts? Work incentives and Sole Parent Families. Auckland: Child Poverty Action Group Inc.