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New Zealand’s disability allowances are failing7 min read

10/6/19 5 min read


New Zealand’s disability allowances are failing7 min read

Reading Time: 5 minutes

Policy Coordinator Sam Murray delves into the link between disability and poverty and investigates why New Zealand is so far behind the United Kingdom and what can be done to address this.

Disabled children and their families in the United Kingdom are at far less risk of income poverty than in New Zealand. One of the key reasons is much higher disability allowances in the United Kingdom.

In 2013, the median payment rate for disability allowances for children in the United Kingdom was almost three times higher than in New Zealand. In 2018, it was 3.2 times higher. If we are fancy and adjust for differences in GDP per person, the United Kingdom disability-allowances are still 2.8 times higher.

The higher United Kingdom allowances make a real difference and largely close the income poverty gap between families with and without disabled children. So why are the United Kingdom allowances higher?

An illustration of two people talking with scales in the middle.
Without good data, New Zealand is lagging behind the UK.

Data and advocacy

The United Kingdom is not only the birthplace of the social model of disability, but it also has a long history of producing disability data, including on poverty and extra costs. A combination of robust data and effective advocacy seems to be a powerful force in leading to adequate support.

I do want to take a quick detour here. While the United Kingdom continues to provide higher allowances to disabled children, in recent years there have been a number of very harmful reforms and cuts to support for disabled adults. I have looked at some of these before and the only thing to learn from them is what not to do. This blog focuses on the disability allowances provided to disabled children/young people in United Kingdom.

Disability data collection in the United Kingdom goes back all the way to the 1960s. Data showing widespread poverty spurred the first disability-related allowances in the 1970s. In the 1980s, United Kingdom data was still showing significant problems with extra costs and poverty. People with lower support needs were also missing out. This resulted in the disability allowances being modernised in 1992.

The allowances were combined into the Disability Living Allowance. New lower rate were created for people with lower support needs. The higher rates were also made more generous. The United Kingdom also strengthened its data collection with the Family Resources Survey and the Households Below Average Income report. Together they provide robust annual poverty data, including on disabled people and their households.

Our allowances are inadequate and outdated

In New Zealand, we followed the lead of the United Kingdom in creating disability allowances in the 1970s. We never created the same evidence informed process, however, to review and update them. As a result, our disability allowances remain inadequate and outdated.

“It is fair to say that the allowances are generally seen as a cost to be managed. They are not seen as a serious vehicle to tackle poverty amongst disabled people.”

After some earlier attempts, serious data collection on disability in New Zealand only really got underway in 1996 with the first post-Census Disability Survey. Even then the Government was so lukewarm that CCS Disability Action and IHC had to part-fund the first survey (I got this titbit from a great book called Disability Revolution in New Zealand by Peter Beatson). The disability surveys are far less regular than the annual Family Resources Survey. They also produce poorer data on poverty.

The Government has just focused on containing costs

Without robust poverty data, the New Zealand Government has focused solely on containing costs. For example, the Government made administrative changes in 2007 to reduce the number of children receiving the Child Disability Allowance. This caused an almost 20% drop in the number of children granted the Child Disability Allowance. We have no idea what effect this had on the poverty and material hardship rates of disabled children and their whānau. The data is just not there.

The only changes to the Disability Allowance have also been around containing costs. For example, a 1997 law change to make the Disability Allowance only cover ongoing disability-related costs. Before this change, the Disability Allowance could technically be for one-off costs too. I think it is fair to say that the allowances are generally seen as a cost to be managed. They are not seen as a serious vehicle to tackle poverty amongst disabled people.

There has also been no interest in modernising the allowances. The two Allowances are remarkably similar to their 1970s versions. The only real change to the law on the Child Disability Allowance has been a name change in 1998.

A illustration of a man holding up his hands in confustion. There are a number of arrows above his head pointing in different directions.
Differing eligibility criteria create a confusing system that’s difficult for people to navigate.

Our allowances are inconsistent and confusing

Unlike the United Kingdom Disability Living Allowances, the two New Zealand allowances are completely inconsistent with each other. The Disability Allowance is means tested, the Child Disability Allowance is not. The Disability Allowance is paid at a variable rate up to a maximum rate (based on what extra ongoing disability costs are identified), the Child Disability Allowance is a flat rate. There is also different eligibility criteria.

The reason for the inconsistency is because they were enacted by two different governments. A Labour government enacted the Disability Allowance in 1975 and a National government enacted the Child Disability Allowance in 1978. Labour at the time favoured targeted assistance (hence the means testing) and National favoured universal programmes.

The similar names of the allowances can confuse even grizzled veterans of the disability system. I have had numerous people tell me that the Disability Allowance is the adult version of the Child Disability Allowance. Plenty of families with disabled children seem to be unaware that they can potentially get the Disability Allowance. The guidance information on the Disability Allowance tends to be more focused on adults too.

Our allowances do not work for people under 65

As a result, less than 9% of children getting the Child Disability Allowance also get the Disability Allowance (as of June 2018). This is despite 33% of the carers of children on the Child Disability Allowance being on a main benefit or superannuation, which means they qualify for the Disability Allowance. Some low income employed carers would also qualify, especially sole parents. The median amount disabled children got from the Disability Allowance was only $17.20 a week (the maximum is $64.29 a week).

The Disability Allowance probably works better for people over 65. Our relatively high superannuation rate ensures poverty rates are low for people over 65. It therefore makes sense to focus on extra disability-related costs for people over 65. Disabled people under 65, including disabled children and their families, however, face high poverty rates as well as extra costs. Our allowances are just not set up to address poverty in a substantial way.

Fixing our allowances

An immediate fix for disabled children is a doubling or tripling of the Child Disability Allowance. This would significantly reduce poverty amongst disabled children and their whānau. This would also benefit the siblings and carers/parents of disabled children as well as Māori (because they are making up an increasing percentage of people receiving the Child Disability Allowance).

“An immediate fix for disabled children is a doubling or tripling of the Child Disability Allowance. This would significantly reduce poverty amongst disabled children and their whānau.”

We also need reforms to the Disability Allowance for people under 65. It should be set at a higher flat rate (possibly with levels like the United Kingdom). The rate should be adjusted until disabled people are at, the very least, no more risk of income poverty and material hardship than non-disabled people.

By Sam Murray, National Policy Coordinator, CCS Disability Action

This blog was originally published on the Child Poverty Action Group’s website.