2 February 2015 Submission to the Finance and Expenditure Select Committee on the Budget Policy Statement 2015 In dialoguing with the State and the related public entities, the Church is called to offer real support for decent jobs, just wages, and a fiscal policy favouring the family as well as programmes of assistance to families and children. The Synod on the Family, Instrumentum Laboris, 2014 Summary of main points: Caritas agrees with the Government s intention to help families living in poverty in Budget 2015. We advocate for the key recommendations of the Children s Commissioner s Expert Advisory Group on child poverty to be essential elements of this discussion. In light of the OECD report Focus on Inequality and Growth released in December 2014, addressing inequality should be a high priority for responding to material hardship. The OECD report shows that redistributive policies reduce inequality and promote economic growth. Proposed tax cuts for 2017 should not be prioritised over meeting the present needs of vulnerable New Zealanders. We support the growth of social housing provision by non-government groups. However this must not replace Government s current stock of state houses. Selling up to 2,000 state houses to community housing providers does not increase the total number of affordable houses available. Instead it places significant pressure on community housing providers to manage current state housing tenants, while attempting to meet the needs of those on the social housing waiting list. We ask that the Government consult affected communities and tenants, community housing providers and other stakeholders in the announced strategic review of Housing New Zealand. We ask the Select Committee to also consider the issue of climate funding in a significant year leading up to the United Nations Climate Change Conference in Paris. We support the Government s previously stated commitment to bilateral climate change funding in the Pacific, but ask that funds reach the most vulnerable communities in the Pacific. In the context of the challenges facing the international community around climate change and sustainable development, we have concerns about the proposed changes to the Resource Management Act and to the processing of oil and gas exploration permits.
Introduction 1. Caritas Aotearoa New Zealand is the Catholic agency for justice, peace and development. We are mandated by the New Zealand Catholic Bishops Conference to undertake advocacy, education, development and humanitarian programmes in Aotearoa New Zealand, the Pacific, Asia, Africa and the Middle East. 2. Our position on the Budget Policy Statement is based on: o Our research and advocacy work in Aotearoa New Zealand and across the Pacific. o Catholic social teaching, in particular relating to economic justice, including inequalities at both global and local levels. o Our experience gained through the pastoral work of parishes, schools and Catholic agencies with communities. o Our experience in and commitment to working with poor and vulnerable communities throughout the world, particularly in the Pacific, Asia, Africa and the Middle East. Vulnerable families and children 3. We support the Government s intention to help families and children in material hardship. It is good news that the 2014 New Zealand Child Poverty Monitor reported a decrease from 27 per cent to 24 per cent of children in households in income poverty. More must be done to ensure this decline continues so all families can flourish. 4. The family makes a unique and irreplaceable contribution to the good of society, and has an essential role in raising children. All families must be able to live decently and to provide for the children in their care. In our experience, many loving and caring families are missing out on essential items that other New Zealanders take for granted. These include such basics as healthy food, waterproof shoes and warm homes; and participating in school outings, sports and cultural activities. 5. The key recommendations of the Children s Commissioner s Expert Advisory Group on child poverty are essential elements of this discussion. In particular, we highlight the importance of: o Enacting legislation requiring the measurement of families and children living in poverty. o Setting short-term and long-term poverty reduction targets. o Establishing various child poverty related indicators. o Monitoring and regular reporting of results. 6. We look forward to the comprehensive plan focusing on the most complex families in the deepest hardship and the wider community of families on the breadline 1 as announced in December 2014 by Social Development Minister Anne Tolley. Addressing inequality 7. We appreciate the discussion raised by the Finance and Expenditure Committee with the Minister of Finance on income inequality in New Zealand last year during the Budget Policy Statement 2014 select committee process, as a result of our 2014 submission. 2 1 Budget 2015 to focus on child poverty Tolley, 2 December 2014. www.3news.co.nz/nznews/budget-2015-to-focus-onchild-poverty--tolley-2014120210#ixzz3nzdifnm6 2 Budget policy statement 2014 and Half-year economic and fiscal update Report of the Finance and Expenditure Committee, March 2014. pg 11
8. We would like to clarify that we express concerns regarding the rise of inequality over the last thirty years, and not the minor fluctuations experienced post-2010. Since our last submission to the Finance and Expenditure select committee, the Minister of Finance has agreed with Church leaders over the high-level analysis of the growth in inequality over this time frame, as illustrated in the following graph from the New Zealand Council of Christian Social Services, while continuing to debate the relevance of this trend to economic and social policy settings. The conversation around inequality has developed over the last year. We want to see Budget 2015 deal with this issue in more detail and with greater attention. 30 years of income inequality New Zealand Council of Christian Social Services 3 9. To address poverty and material hardship faced by families and children, it is important to address the issue of income inequality. It is important that the benefits of economic growth are felt by all New Zealanders, especially the poor and vulnerable. 10. The OECD report Focus on Inequality and Growth released December 2014 notes that inequality has held New Zealand growth back by more than 10 percentage points over the last thirty years. This is more than any other OECD country. There would be great social and economic benefits in actively reducing inequality in New Zealand. 11. We urge the Government and all political parties to take a proactive approach to building a market economy of inclusion where all can participate. Effective redistribution policies that can reverse and limit inequality by investing in social capital will benefit everyone in the long term. 12. The Government s proposed priority to reduce income tax in 2017 for low and middle-income earners should not come at the cost of important social spending to meet the needs of vulnerable New Zealanders. The reduced allowance of $1 billion each year, in Budget 2015 and Budget 2016 in order to consider a tax cut in 2017, limits the Government s ability to make much-needed social investment in areas such as housing and family poverty. 3 New Zealand Christian Council of Social Services: New Zealand s Income Inequality Problem, 10 April 2014. closertogether.org.nz/nzs-income-inequality-problem/
13. Any change to and reform of New Zealand s tax and benefit system needs to move us toward a fairer New Zealand in which no one misses out on basic essentials and the opportunity to thrive. Housing 14. The State has historically been a significant player in public housing provision. We are concerned by John Key s recent State of the Nation speech announcing the Government s intention to sell up to 2,000 state houses to community housing providers and iwi in the following year. 4 We do not share the Government s analysis that the housing crisis is primarily driven by resource consent issues. This downplays the importance of the Government s own decisions about housing spending, particularly decisions such as state housing maintenance and upkeep that do not require resource consent. 15. As we previously stated in the 2013 Social Housing Reform Bill submission process, Caritas supports an increased involvement in housing by non-government social housing providers, only if this is an expansion of and not a substitution for Government s involvement in state housing. 16. Shelter is one of our most fundamental needs and having access to safe and affordable housing is a basic human right. We recognise that the causes of the current housing crisis are complex. The State, the market and the community housing sector all have a part to play to ensure New Zealanders are adequately housed. 17. The market and community sector cannot meet New Zealand s housing needs if the Government further withdraws from formal involvement in housing provision. Selling state houses to community housing providers will not increase the total number of social housing spaces available. Instead, it places significant pressure on community housing providers to manage current state housing tenants, while trying to respond to the needs of those still on the social housing waiting list. 18. In order to meet the current and long-term need for affordable housing in New Zealand, a substantial investment in social housing is needed alongside the maintenance of current state housing stock. 19. We recognise there is an ongoing process of renewal of state houses not suitable for purpose, which results in some being renovated, redesigned or sold. This capital must be reinvested in the provision of public housing for current and future generations. 20. We are encouraged to hear the Government has decided to commission a strategic review of Housing New Zealand in the first half of this year. 5 We ask that the Government consults affected communities and tenants, community housing providers and other stakeholders in this process. 4 John Key: State of the Nation Speech 2015, 28 January 2015. 5 Ibid.
21. The potential scope of change to Housing New Zealand as indicated by the Government requires more public input and discussion than currently provided. Climate funding 22. 2015 is a significant year for the international community, as we work towards the United Nations Climate Change Conference in Paris. Important decisions are being made which will affect future generations. We ask the Select Committee to consider the issue of climate funding. 23. Caritas supports the Government s prioritising of the Pacific for direct climate change-related funding. While New Zealand should also contribute to multilateral responses being coordinated by the international community, our neighbours in the Pacific cannot wait for the international fund to be fully operational. We ask that climate funding policies ensure this money reaches the most vulnerable communities in the Pacific. 24. In 2014 Caritas released our report Small yet Strong, highlighting stories from communities around the Pacific who are living with the realities of climate change and other environmental challenges Issues such as erosion, sea level rise and ground water salination are threatening the livelihoods of the most vulnerable communities in the Pacific. 25. We are concerned that the Budget Policy statement does not mention these significant questions, or refer to important decisions that have been made about climate funding. However, the Budget Policy statement does refer to changes to the Resource Management Act, and the system of processing oil and gas exploration permits. In 2015, as the international community grapples with the complex issues of climate change and the Sustainable Development Goals, sustainable management of resources and environmental protection are significant economic goals. Conclusion 26. It is encouraging that there has been a small reduction in child poverty, meaning that some families and children are benefiting from the slow recovering economy. However, many families continue to struggle in poverty. The priorities set out by the Government need to consider the well-being of New Zealand s most vulnerable and struggling members. 27. The challenges faced by families are closely interlinked to other social challenges facing New Zealanders, such as inequality and housing. It is important that the Government prioritise addressing income inequality so all can benefit from economic growth. 28. Similarly, we ask that Budget 2015 takes into consideration the needs of our Pacific neighbours regarding climate change and climate funding. 29. We encourage the Government to take a long term view of solutions to housing, poverty, climate change and the challenges facing our country and our wider Pacific community, to ensure we are building a New Zealand that is fairer and more just for future generations.