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Carmen Parahi

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National Correspondent

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Unemployment and racial privilege The Government’s response to Covid-19 entrenches a racial divide in the welfare state.

Kath Paraha has many stories to tell. A mix of personal experiences and tales belonging to the people living in poverty she helps to navigate the welfare system.

The 62-year-old great grandmother is a long term beneficiary and full-time volunteer with Auckland Action Against Poverty (AAAP). About 70 per cent of their clients are Māori.

Paraha gave up her manager’s job with a trucking company about 10 years ago after she started experiencing heart problems. Since then, her health has deteriorated and she has multiple conditions including hypertension, diabetes and emphysema.

She is currently on a supported living benefit. Whenever she asks for help from Work and Income, it always makes her feel like she’s begging, she says.

Paraha spends her days taking care of her mokopuna and advocating for others who also rely on benefits to live. She takes her unpaid role at AAAP very seriously. 

Kath Paraha

Kath Paraha

“I love this job because it’s good to see them smile when we’ve given them something to eat,” Paraha says.

She uses her own experiences and knowledge of the welfare system to help others. There is passion and sometimes fury in her voice when she rattles off the stories of hardship her clients experience.

Recently, she says, a 92-year-old pensioner was given a letter from her doctor to take to Work and Income in Mangere to ask for a vacuum cleaner because she has sciatica and couldn’t bend over. A caseworker rejected the application and told the elderly woman she should go to the $2 shop and get an island broom instead. She left the office in tears.

Paraha was standing outside the office and saw the woman crying.

“I went back in and demanded it and I walked out with the ‘okay’ for the vacuum cleaner. I was so mad. These elderly people are too scared to go in.”

“I don’t know where they get their logic from. It’s definitely unfair and two-tier,” she says.

The Covid-19 Income Relief Payment is available to almost anyone made redundant as a result of Covid-19 between March 1 and October 31. It is a $490 per week payment for 12 weeks. There’s no stand-down period and the only criteria in relation to a person’s partner is that they earn no more than $2000 per week (before tax).

Those who were unemployed before the pandemic had to apply for Jobseeker support. That is only $250 a week and there are many more conditions on getting it.

Prior to March, it would take up to six weeks for Jobseeker support to be processed. The application was started online. Applicants then had to attend a seminar about finding work and learn about all of the obligations they had to meet while on the benefit. Then an appointment would be set up to sort out all the paperwork and establish if there would be a one or two week stand down period. If finally approved, the payment is made a week in arrears.

In February, while that system prevailed, unemployment across the country was at a historic low. It was out of sight and mind for most New Zealanders. Nearly half of all Jobseeker support (work ready) recipients at that time were Māori.

But since the shock of Covid-19 and the introduction of the new, much more generous and accessible Income Relief Payment, the proportion of Māori getting support has fallen dramatically.

Māori make up 29 per cent of Jobseeker recipients since March, down from 48 per cent in February.

European New Zealanders, on the other hand, make up 43 per cent of recipients in these more generous times, up from 30 per cent in February. It’s the most significant rise for the European demographic in years: 14,290 people of European ethnicity went on to Jobseeker in March and April, compared with 9798 Māori.

In short: When more European people have been in need of help, the benefit almost doubled and became much easier to get. When it was mostly Māori who needed help prior to Covid-19, there was much less money available and it was an ordeal to obtain.

“I don’t begrudge the ones that got laid off,” says Paraha.

“That’s not the problem. But I can’t see why they should be offered $490 when the same people on the same level have got no jobs and their unemployment benefit is half of that.

“The people who’ve been on the unemployment benefit for ages don’t get that kind of help. So they’re feeling victimised.”

Michael Fletcher

Michael Fletcher

Economist Michael Fletcher says the income relief payment is utterly unjustified. 

A person who lost their job in February, before the lockdown began is in an identical position as someone who lost it in March. They’re both looking for a job, they both face the same income shock and everything else.

“What it means is that those people who lost their job for whatever reason the day before March began are simply going to get $250 a week.

“They are actually affected by Covid because they've got a hell of a job to try and find new employment because the jobs have all dried up.

“It’s unjust and unfair as well.”

The difference a day makes

Two people in identical situations become unemployed one day apart. The Government’s support for them varies dramatically. 25-year-olds flatting in central Auckland and paying $200pw in rent. The first lost their job on Feb 29, the second on March 1.

25-no-support
25-yrs-no-covid-19-payment
support-text support-text 25-yrs-no-covid-19-paymentt-info
25-with-support
25-yrs-with-covid-19-payment
support-text support-text 25-yrs-with-covid-19-paymentt-info

Fletcher says he understands the Government’s temptation to soften the blow for those coming off the wage subsidy scheme by creating the payment.

But it has divided people into two groups.

Covid-19 job losses have hit a group of people that has been little-affected by unemployment before, mainly Pākehā skilled workers. They will be better off than the other beneficiary group because of the Government’s income relief payment.

He is not prepared to label the policy racist, but has a description for it that aligns with institutional racism.

“Its outcome will have different impacts on different ethnic groups but it’s driven, I think, it appears to be driven by an attempt to protect the incomes of those people who are hit by Covid itself whilst doing nothing about the pre-existing problems with the welfare system.”

First Union President Robert Reid is not so bashful.

Reid was part of the Welfare Expert Advisory Group that made recommendations to the Government to restructure the welfare system a year ago. He’s worried the two-tier system will largely break along ethnic lines.

We have a Māori/Pasifika benefit and a Pākehā benefit, Reid says.

“It’s because of structural racism. We still live in a settler colonial society. It was always going to be an outcome.

“It more than highlights we have discrimination in the benefit system.”

Reid says the inequities that currently exist are being magnified by the income relief payment.

It’s a wake up call to policy makers in Government to be mindful of institutional racism, he says. “Unless you’re vigilant you can easily make policy decisions that support the dominant culture in society.”

Māori economist Matt Roskruge agrees.

“It’s getting close to systematic racism. It’s knocking on the door of being blindly manufactured to disadvantage Māori disproportionately,” Roskruge says.

Matt Roskruge

Matt Roskruge

“Nobody has sat down and gone: ‘Well, who is this going to benefit and who is this going to hurt?’”

He says the Government probably didn’t give any thought to the possibility the payment was discriminatory.

Roskruge argues Covid-19 created a sharp shock to the economy but global markets were already starting to soften in September last year, which was having an impact on Kiwi jobs before the pandemic hit. He doesn’t think it’s fair Māori and other vulnerable workers who have lost their jobs since September are being disadvantaged.

“By introducing it to only new people who are about to enter onto the benefit you’ve systematically excluded a disproportionate number of Māori, who have already entered into Jobseeker, from accessing the higher fund.”

Policy-makers perhaps believe people who lived on Jobseeker support prior to March had already adjusted to a lowly beneficiary income, Roskruge suggests. The newly unemployed, on the other hand, would be used to a higher income so need the extra cash to adjust.

Social Development Minister Carmel Sepuloni rejects the charge of institutional racism.

“Our main reason for putting this into place was because we were facing an unprecedented event that people would’ve unexpectedly lost jobs at a much larger scale than what we may have seen before and would need to find new employment or to be able to adjust their financial circumstances.

“It seemed a fairer way to do it.”

Social Development Minister Carmel Sepuloni

Social Development Minister Carmel Sepuloni

European New Zealanders aren’t getting a disproportionate share of the higher relief payment, they’re simply showing up in higher numbers than before, Sepuloni says. She expects the demographics to change in the next few months and will be monitoring the numbers.

“Those were early job losses or new-to-benefit figures. Keeping in mind too we had a much larger proportion of people who were returning in the early Covid weeks from overseas who were then coming back and then needed access to benefits.”

Previous governments have tackled similar sorts of crises - the Christchurch earthquake and the Global Financial Crisis - with the same kind of approach. In each case, a line of some sort had to be drawn.

“March was really when we started to see the impact of Covid-19,” Sepuloni says.

“The first of March seemed a fair place to start that. We standby that decision.

“It is a response to a crisis situation. It was a responsible thing to do.”

One of the Government’s first responses to Covid-19 was to top up every benefit by $25 a week and double the winter energy payment to $1400 per couple and $900 for a single person.

Eight out of 10 people who apply for benefits are responded to in five working days and it’s taking 24 hours to process an emergency grant, says Sepuloni.

“Unfortunately we haven’t seen the end of job losses,” she says.

During the lockdown, AAAP’s Kath Paraha advocated for a 72-year-old woman who was using what little money she had to pay for car parking while she visited her husband in hospital. He has suffered two heart attacks this year. Both times, the couple applied for food grants and were rejected.

About 80 per cent of the organisation’s work is spent trying to get their clients food grants. Some would rather starve than have to keep dealing with Work and Income, Paraha says.

The grant is available to low income earners, as well as beneficiaries. But a single person is only entitled to $200 worth of food grants in a six-month period. If they ask for more, a case worker has to apply their discretion to determine if the reason for wanting more food qualifies as an exceptional circumstance.

Sepuloni says over the Covid period, the entitlement has lifted to $400. Anyone wanting more than that still needs to discuss their request with a case manager.

“We have put measures into place to respond to the emergency nature of the situation we’ve been in,” Sepuloni says.

“It’s meant people have had much quicker access to food grants where they have needed them.”

In April, 278,292 food grants were given out, three and a half times the 76,698 given in the same month last year.

But Paraha says those losing their jobs for the first time will experience a broken welfare system.

One of her clients, a mechanic, lost his job during the lockdown. He has checked the Work and Income job site every day looking for work. He can’t get any benefits because his wife is still working and earns over the weekly threshold amount. They’ve got five kids to feed and are struggling to pay their high Auckland rental costs. The man has applied for a job to wash dishes. Paraha says any job is better than being on a benefit. 

“If we don’t help them they’re going to end up on the street homeless with five kids,” she says.

Paraha is worried as the recession deepens, child poverty will increase and many families will suffer.

Economist Michael Fletcher has similar concerns.

“We entered this thing well in the sense of having low government debt but poorly in the sense of having inadequate welfare benefit rates,” he says.

Everything possible should be done to try and keep the unemployment rate down because the distributional impacts of high unemployment are uneven.

“It hits some groups far more than others,” Fletcher says.

“There is a phrase circulating that the Covid recession is a great leveller. That’s just not true, I’m sorry. It is not a great leveller at all.”

Reporters

Carmen Parahi, Andy Fyers, Felippe Rodrigues and Steve Kilgallon

Visuals

Lawrence Smith, Rosa Woods and Dominico Zapata

Illustration and Layout

Sungmi Kim

Editor

John Hartevelt

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