At a major conference on the effects of poverty on children held recently in Auckland, health professionals and housing agencies described an alarming scale of child deprivation in New Zealand. If child poverty can be so endemic during an economic recovery, it is more than time to question the direction of social policy. Such an aggressive approach to targeting should, in theory, make more resources available for the poorest in society. Instead, it has been unambiguously accompanied by a reduction in generosity to the poor and an alarming increase in complexity. We should not be surprised.
Lower generosity is, in fact, the logical outcome of targeting.
If a large amount is given to those on low incomes, a long income range is required to claw it back. The total amount of assistance received by poor families must therefore be limited and the clawback rate high if large numbers of families who are not 'poor' are not to be caught in the complex targeting web. Joint income testing, complicated form filling, reconciliations, information about changed circumstances, bureaucratic inconsistencies ensure many do not actually gain all of their entitlements. Unfortunately the latest tax package introduces a new and unwelcome twist to targeting. Only if a family is not on a benefit, student allowance, New Zealand superannuation, or accident compensation for more than 3 months, will they qualify for a top up to their Family Support from an Independent Family Tax Credit.