This report was prepared and circulated prior to a meeting of community people with the Mayor and two other Councillors in Palmerston North on 1 December, 1998 as one follow-on from the Hikoi - to form a Poverty Action Group in the city. More horror stories were told - people living in the used clothing donation bins and others with no money at all, some cut off quite arbitrarily by WINZ. The psychiatric unit at the Hospital to close completely.

from Ian Ritchie, Member of the Poverty Action Group, 1 December 1998

Private Bag 11 042
Palmerston North
1 December 1998

 

Ms J White
The Mayor
Palmerston North City Council
Private Bag 11 034
PALMERSTON NORTH
 

Poverty in Palmerston North

Reason for this Report

This report is intended as a basis for the meeting over lunch with you (on Tuesday 1 December) and members of the Palmerston North Hikoi Planning Group and representatives from other community groups concerned about the growing poverty in our city.

Poverty has become a much more visible issue over the last two years, starting with the National Foodbank strike which was part of the national Act on Poverty Week, held just prior to the last General Election and the Hikoi of Hope which involved communities throughout New Zealand.

The public meeting to greet the Hikoi walkers in Palmerston North on 26 September was considered to have attracted at least 3000 people. This would make it the largest public demonstration in the city on any issue probably for decades. People from all sectors of Palmerston North society were present - the churches and other religious groups, trade unions, students, elderly, all ethnic groups, business leaders and community workers. This demonstrated the wide concern and support over the issue.

While the Council was informed of the meaning of the latest research on income inequality for the city and the way this "may undermine many of the aims outlined in the City Vision and the Council's Strategic and Community Development Plans." (Morgan, 1998), it is considered that it would be appropriate for the Committee structure and work of the staff to be reviewed to take account of these matters.

 

Introduction

Until recently, poverty has not been seen as an issue, indeed, prior to the 1991 benefit cuts and the introduction of "market rents" for State houses, poverty was not nearly such an issue. However, there has been a concerted campaign to deny and ignore the growing problem and a number of myths or 'alternative views' have been promulgated.

Myths about Poverty

Recently, the Joint Methodist Presbyterian Public Questions Committee and the NZ Council of Christian Social Services published material addressing eight of the main myths about poverty which are current in New Zealand at the moment.

The rebuttal of each is detailed, factual and comprehensive. One point to note in particular, is that economic growth will not cure poverty unless it is specifically directed to achieve that.

While the Hikoi received relatively little publicity in the national media, there was a surge in poverty related stories in the major daily newspapers and on Television. One, "Christmas on $194 a week" is the cover story in this month's (December) 'North and South' Magazine. Similar graphic stories are coming to public notice from other parts of the country, eg "Family of four forced to live on $79 p.w." (Gordon, 1998)

These are not isolated stories. They are examples of the many from which the selection "Voices of the People" was made for presentation by walkers from the Hikoi of Hope to representatives of the different political groups in Parliament on October 1st. A summary of the issues and some of the ways forward contained in 'The Voices' was prepared by John Veitch.

Some of the stories collected locally by the Women's Poverty Research Group were published in "Mothers of the Poor - Life on a Shoestring" by the Open Learning Centre. Two of them were included in 'The Voices'.

Other information (Absolon pers comm) is about the increasing number of telephones being cut off, and people using their cars less often, coming to the centre of town once a fortnight to do the main shopping. This leads to increasing isolation and greatly reduced ability to take advantage of opportunities that might arise in-between times. There has also been an increase in the number of homeless.

Information from the Voluntary Welfare Agencies

The majority of the voluntary welfare agencies in the city are struggling to cope with steadily increasing demand for their services. ACROSS is coping with demand for its services approaching twice its design capacity. The situation is made very difficult by the reducing level of funding from the major funders, especially government agencies, for their work.

The following are some of the findings from the just completed research undertaken by Cindy Johns (1998) on the voluntary welfare agencies in Palmerston North:

Poverty

Many of the clients of Palmerston North's Voluntary Sector agencies are facing a daily struggle to exist and this underlying poverty causes a ripple-like effect onto all social services. Agencies that provide short-term relief in the way of food parcels and the like and those who provide on-going support, counselling and advocacy, are all feeling the affects with more referrals and clients presenting with a complexity of issues, often all related back to a lack of money and with no simple solutions. As described by the respondents, these desperate situations directly affect people's well-being, creating mental, emotional and physical issues such as a lowered sense of self-worth, depression, frustration, anger, poor health, inadequate diet, violence, a sense of hopelessness and despair and suicide.

Housing

The cost of adequate housing, since the introduction of the government charging market rentals is closely associated with the ability of social service clients to meet their own needs.

"Poverty is the issue and the number one factor driving poverty in the country is housing costs".

Prior to market rentals, the cost of State rental accommodation was set at 25% of income and this held the price of all rentals down. Today, it is not unusual for families to be paying 40-70% of their income on housing needs. Consequently, the income left is inadequate to meet all the other associated needs of living.

"With a low income to start with, what's left is not realistic, not realistic at all".

The disproportionate cost of housing to income causes people to find solutions, some of which themselves create new issues. Several families sharing accommodation leads to overcrowding causing unhygienic situations and vulnerability to sickness and disease. Constant relocation due to the inability to meet high rentals and the quest to secure cheaper accommodation causes dislocation where the whole family is never settled, there is a sense of non-attachment to the area because of the constant fear of moving again, friendships within the neighbourhood do not develop, children experience many schools and this unsettledness may create behaviour problems and alcohol and drug addictions.

Employment

While the lack of employment opportunities can be the direct cause of clients presenting to a social service agency it can also be only one factor in a combination of many issues, such as the failure of the education system and stringent eligibility criteria for benefits through Work and Income New Zealand (WINZ), (previously New Zealand Income Support Service (NZISS).

As well as resulting in a low level of income, unemployment has long term effects on the well-being of the individual concerned, their family and society. At a personal level, the following were all identified as results of unemployment: frustration, sense of failure, a lack of self-esteem, loss of dignity, stress, anger, violence, and alcohol and drug dependence. Within the family it can have an effect on the family dynamics causing; tense relationships, loss of communication, challenges to traditional gender roles, and family destruction. At the wider societal level, people who are unemployed are often excluded and alienated from participating in society creating a situation that fosters prejudice and discrimination.

The loss of income that occurs when gaining part-time employment while on the benefit because of stringent government policies in both the Inland Revenue Department (IRD), through secondary taxation and Work and Income New Zealand (WINZ), through the claw back provision and the reduction in accommodation supplement was seen as a major obstacle for people trying to improve their situations

Health

Poverty and low incomes are a major issue with regard to health and the use of and access to health services including prescriptions. Various bodies have highlighted this including the National Health Committee. Researchers estimate that 25% of families are unable to access adequate health care services for this reason and the PN Women's Health Collective finds that a high proportion of their clients fall into these categories.

 

Palmerston North Demographics

According to the 1996 Census, there were 73,095 people in Palmerston North; 35,394 male and 37,698 female, 9,255 Maori, and 1680 Pacific Island 17,850 families, 3,444 single parent families 25,236 households.

Level of Income

In Palmerston North, 48% of those over 15 have an income of less than $15,000. In the new Palmerston North Electorate, 45% of the households have incomes below $30,000 before tax with the areas of greatest deprivation being the suburbs of Highbury and Roslyn. (Judith Reinkin 1998)

The $15,000 before tax income level includes beneficiaries and those earning low wages ( eg the adult minimum). Households with incomes below $30,00 a year qualify for the Community Service Card which entitles them to lower doctors' fees and prescription charges. These income levels constitute an unofficial poverty line.

Numbers on Benefits

At the end of August there were approximately 18,800 people receiving a benefit from NZISS.

The level of Poverty in the city.

Morgan calculates, from national statistics that "it can be argued that there are roughly 4,600 households in Palmerston North below the poverty line. He quotes research that found that 73% of single parent families live below the poverty line and that the rate for Maori and Pacific Islanders is two and a half times and three times higher respectively the level among pakeha families.

The numbers receiving supplementary assistance from WINZ (which incorporates the old NZISS) are not currently available, however it has been estimated that the city's foodbanks assisted the equivalent of 10% of the families in Palmerston North last year.

The number of families approaching the Palmerston North Foodbank increased significantly this year and other foodbanks around the country have recorded a similar increase.

But much of the effects of poverty are hidden, indirect and cumulative. Crowding to reduce costs and substandard accommodation lead to sickness, lack of money prevents visits to the doctor, sick children don't learn, don't get qualifications and are less able to get jobs.

While the numbers of those on incomes below $15,000 may be considered high because they include students, there has been a marked rise in poverty among students with increasing numbers withdrawing because of their inability to pay the rising fees and meet living expenses. This situation will get worse.

The Mayor's Relief Fund

While this fund is not open to use by individuals, Council staff have seen a marked increase in requests for assistance (Gray, 1998)

In the minutes of the meeting which considered Gray's report the following points are included which were made in discussion (Community Development and Health, 1998):

 

Palmerston North Advocacy Service

It was because of similar issues affecting the Methodist Social Service Centre which operates the Palmerston North Foodbank which led to the establishment of the Palmerston North Advocacy Centre and the training of a large body of advocates in the city over the last 18 months. "If we find it difficult and we're trained professionals, how do others find it?". "We get people in here who should have gone to Income Support two weeks ago, they're living on food parcels, in tears at the thought of going".

 

Discussion

The substantial level of low income families and individuals and the numbers experiencing poverty and its many consequential effects in the city is of major concern.

The low level of discretionary spending power has significant implication for all city businesses reliant on this. This has a large multiplier effect. The low level of discretionary spending power is not limited to those on low incomes, however. The current recession and low interest rates are having their impacts at all levels in society, with consequential flow on effects. It is now several years since city accountants were saying that they estimated that 50% of city businesses were operating below the break even point. The level of activity has not increased since then and has probably decreased significantly in recent times.

The significant level of poverty in the city has its impact on the level of poverty-related side effects listed above. These also have large multiplier effects which affect everyone in the city and all who visit the city.

The Council (like central government) has consistently indicated that the solution is "economic development". Even if such policies were appropriate, they would be long term solutions and in the interim, the situation will deteriorate further.

The evidence is that economic development or even the creation of more jobs is most unlikely to deliver more than a part of the solution to low income levels and poverty, especially in the 'globalised economy' we now live in. For with every $1 million of cheap imports, it has been calculated that 40 New Zealand jobs are lost.

As Anne Else (1998) puts it

"But the blunt fact is that capital* does not need much labour any more. In 1989 the companies involved in the Business Roundtable represented 77% of New Zealand stock market value, excluding private companies such as Fay Richwhite. But they employed only about 11% of all NZ employees. In 1995 the world's largest 200 corporations recorded sales worth 28% of the world's total economic activity. But they provided jobs for only 0.75% of the world's workforce."

She refers to Juliet Schor (1991, p.40) who she considers makes the point well:

"Capitalist systems* do not operate in order to provide employment. Their guiding principle is the pursuit of profitability. If profitability results in high employment, that is a happy coincidence for those who want jobs. If it does not, bottom-line oriented companies will not take it upon themselves to hire those their plans have left behind."

"There is no evidence that capitalist production* will ever again conjure up enough jobs, with a good enough spread of wages, to provide anything like what we have come to see as a decent standard of living for all - let alone put back the social pattern of the 'family wage-earner'."

In addition to the firms that move off-shore, many businesses are down-sizing and full-time jobs are turned into part-time and casual jobs for reduced pay and conditions. These changes are likely to continue into the foreseeable future.

Ways the Council could address the Issues

The major dimensions of the problem of declining incomes and the rising level of poverty in the city suggest a reassessment would be appropriate of the way Council considers these and related issues.

The Social Report

This report has been discontinued and replaced by "Our City Now".

The loss of the Social Report is a considerable loss in that it was the only place issues of social concern were discussed. "Our City Now" fills a different role and does not adequately replace it.

In recognition of the widespread impacts of the significant levels of low discretionary spending and poverty in the city, and that they "may undermine many of the aims outlined in the City Vision and the Council's Strategic and Community Development Plans." it is considered appropriate that the Social Report be reinstated, given the resourcing and status of the Economic Report, and cover all people related issues as the necessary counterbalance to the Council's economic development thrust.

Progress Indicators

While the Council has a vision and goals for the city, progress towards these is neither monitored not measured. Around the world, many cities are developing a series of indicators to firstly determine the state of their community, its people and environment, and secondly to determine progress towards their desired future - the City Vision.

Such a set of indicators could be developed by a working party involving a range of representatives from the community and would assist with commitment to the City Vision and the attainment of it.

Community Development Goals and Outcomes

The goals currently listed in the Community Development Plan are good but could be greatly strengthen to assist in dealing with the issues discussed above.

The set of outcomes for Community Development Policy adopted by the Christchurch City Council appear to address many of the issues raised above. The headings are given below:

Outcomes for Community Development Policy:

  1. A Nurturing Community
  2. Basic Needs Met
  3. Development of Local Community Identities and Pride
  4. Equitable Access to Opportunities, Community Resource and Clean Living Environments
  5. Improving the Position /Living Conditions of the Least Advantaged
  6. Residents receiving their Entitlements
  7. High Self Esteem
  8. Participation in Personal and Political Decision Making.
  9. Participation and a Sense of Belonging in Communities
  10. Respect for Cultural Diversity.

These could well be a starting point for some of the indicators of community well-being and 'Aliveness.'

Low Income Sub -Committee

When its predecessor, the Worker/Low Income Sub Committee was formed, it was chaired by the Mayor, was comprised of six activists appointed by three specific interest groups, two representatives from the wider community who were selected by a group from the Sub-committee. and had three Councillors on it. A student representative was added in 1994. (Jo Ihimaera, 1991, S O'Neill, 1994). Non Council members prepared discussion papers and a range of achievements were accumulated that gained it a nation-wide reputation. The O'Neill report detailed the achievements and considered that the Sub-committee had "performed extremely well against its terms of reference and objectives".

It has since been down-graded significantly and earlier this year, concerns about its ineffectiveness were raised by the members themselves.. One outcome of this was the report by Alan Bywater (1998). While this makes some very good recommendations, it falls short in two significant areas that were major reasons for its initial success - that the appointees be appointed by groups within the community rather than being selected by Council staff and that the Mayor be the Chair.

The request that the Sub-Committee members have a relationship with all Council Committees and be closely involved in the preparation of reports by Council staff is essential if the Sub-Committee is to fulfil its role to "advise the Council as to the impact that its decisions may have on low income communities". Without these changes, the Sub-committee is merely commenting on the few matters referred to it after they have been passed.

Even with these changes, the emphasis is still reactive rather than pro-active, which was the hall-mark of the WLISC. This aspect should be encouraged and strengthened.

 

Recommendations

  1. That the Social Report be reinstated and resourced to be equivalent to the Economic Report with a much broader, in-depth approach.
  2. That a set of indicators be established with the involvement of the wider community to determine the state of well-being of the city, its residents and environment, and to monitor progress towards the Council's vision for the City.
  3. That a series of outcome for Council's Community Development Policies be developed which are similar to those adopted by the Christchurch City Council and which address the issues discussed in this report.
  4. That the Low Income Sub-committee be upgraded with composition and modus operandi equivalent to its predecessor, the Worker/Low Income Sub-committee, with appointees from sector advocate groups and the 'wider community', chaired by the Mayor, with a minority of additional Councillor members who are supportive of its role; the Sub-committee members to be actively involved in Council policy formulation with all Committees and with members encouraged to be pro-active, especially in preparing and submitting reports themselves.
  5. That this paper, the Poverty Myths and related attachments be referred to all Committees and the City Manager for consideration.
  6. That the Poverty Action group meet with the Mayor at two monthly intervals to continue the discussions.

Notes:

* For 'capital', 'capitalist systems' and 'capitalist production' read profit driven business or businesses. [back]

 

References:

Alan Bywater (1998). Future of the Low Income Committee. Report prepared for the Community Development and Health Committee, 26 August.

Anne Else, 1998. The End of the Fairytale: Beyond The Capitalist Romance. Talk for Beyond Capitalism Seminar, Wellington, 2 October 1998

Cindy Johns, 1998. The Voluntary Sector in Palmerston North and the issues facing them and their clients. Unpublished report from BSW placement (Contact: Ian Ritchie)

Community Development and Health, 1998. Minutes of Committee meeting held on 4 February.

Dennis Morgan, 1998. Latest Research on Income Inequality. Report prepared for the (PNCC)

Community Development and Health Committee, 14 August.

Jim Veitch, 1998. The Hikoi of Hope Messages and Ways to Repair Our Community, http://www.nzdances.co.nz/public/community/message.htm

Jo Ihimaera, 1991. Worker/Low Income Consultative/Advisory Committee to Council. Report, prepared for the Community Development Committee, 16 April.

Judith Reinkin, 1998. Palmerston North Electorate, Deprivation Deciles.

Liz Gordon, 1998. "Family of four forced to live on $79 pw" Press Release 18 November 1998

Sue O'Neill, 1994. Worker/Low Income Sub-committee Review. Report prepared for the Community Development Committee, November 23.

Susan Gray, 1998. Mayor's Relief Fund. Report for the Community Development and Health Committee, January, 1998.

 

Family of four forced to live on $79 p.w

A Hamilton family of four is trying to live on just $79 a week and the Education Ministry is threatening to send in debt collectors after assessing the family's $5000 annual income as $13,000.

33 year old Doug Weihing is studying engineering at Waikato Polytech. Doug, his wife Ruth and two children were paid student allowance and family support totalling $279 a week.

Their problems began in May when Ruth was offered three months work at Inland Revenue for $3000. The Education Ministry does not recognise temporary work and assessed Ruth's income as the equivalent of a full-year income of $13,000, exceeding the $12,700 income limit stipulated in Student Allowance regulations.

Doug's student allowance was then cut to just $52 a week. Ruth gave up her job because the couple's earnings were now below the total received before she started work. Even though she had actually earned only $873 from IRD, the Ministry is demanding repayment of a so-called over-payment of student allowance of $904.

The Ministry has now cut off all student allowances completely leaving the family to live on family support alone, and it has warned them debt collectors will be sent in on 7 December.

In the meantime, the Ministry is refusing to enter correspondence with Alliance education spokesperson Dr Liz Gordon over the issue because it says the cost to the taxpayer of considering the case is disproportionate to the amount owing.

"This is state institutional violence against a family that is only doing what the Government says it should do -- upskill," Liz Gordon told Parliament today.

"The Ministry has berated the family for not acting promptly, when the Ministry itself has taken weeks and months to respond to letters and phone calls.

"How can an institution like the Ministry of Education use its rigid rules to wrongly demand repayment of a debt that does not exist? The family's only crime is that Doug decided to return to tertiary study to upgrade his qualifications to improve his work skills and income."

[back]

http://www.wairaka.net/ubinz/IR/PovertyPN.html

[Ian Ritchie] [Hikoi]