“Who else loses 25% of a salary increase”, asks a beneficiary

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A man says it's not fair that he automatically loses 25% of the benefit increase.

Rebekah Parsons-King/RNZ

A man says it’s not fair that he automatically loses 25% of the benefit increase.

Some recipients are unhappy that part of the increase in their benefits has been swallowed up by an automatic increase in the cost of their social housing.

When people live in social housing, the amount of rent they pay is linked to their income.

Singles pay 25% of their income in rent when they earn up to $462.94 a week, then 50% of the amount over that threshold.

For people with children, the threshold at which 50% begins to be deducted is $712.22.

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A recipient, who wanted to be known only as Mike, said that was not fair. “Who, other than the beneficiaries, gets a 25% reduction in their salary increase or cost of living payment?

All major benefits are up $20 a week this year from last July.

Mike said he was now told he would lose $5 in rent.

“Social housing tends to group people, myself included, who have generally had a less pleasant life to live in and are therefore more vulnerable to drug addiction, illness-related crime…in areas of where it is more difficult to move.

“However, they are beginning – albeit slowly – to benefit from better maintenance, healthy homes [standards].”

People on the allowance receive a payment for winter energy, so they are not eligible for the cost of living payment.

Child Poverty Action Group spokesman Alan Johnson said the increase should not have come as a surprise.

He said there were a lot of situations where the clawback would reduce the value of the money people were getting. It could also deter people from accepting even part-time work, he said.

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But he said there was a ‘horizontal equity’ issue and that people who lived in public housing tended to be better off than those who lived in private rentals, which had no restrictions on who amount of their income that their rent could represent.

Mike said while it was true that private tenants didn’t have the protection of an income nexus, it wasn’t that simple.

“There is also no stigma attached to certain areas of social housing.”

Green Party MP Ricardo Menendez March said the fact that people are still struggling after this year’s increase shows benefits need to be increased across the board.

He said thresholds at which a higher proportion of income was taken in rent seemed counterproductive if the government wanted to encourage people living in social housing to work.

Graham Allpress, director of customer service delivery at the Department of Social Development, said he reviews rent payments every year to ensure people are paying the right amount.

“Generally, the review takes place on the anniversary of the start date of the tenancy or when a person requests a review, or there has been a change in circumstances, for example when their income has increased or there is a change in the number of children in the care of the person.Revisions may also result in lower rents if the persons income has decreased.

“Generally, when there has been an increase in benefit rates, the [rent] would not be considered immediately. It would be captured in the next annual review, or when there has been a change in household circumstances. People receive a notice letter five weeks before their exam date.

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