Two economists are calling for a fundamental rewrite of New Zealand's welfare system because of the numbers of people being made redundant who cannot get the dole because their partners are still working.
Dr Susan St John, of Auckland University, and Keith Rankin, of Unitec New Zealand, say the system is based on "outmoded social concepts" such as assuming everyone lives in single-income families where fathers go out to work and mothers stay at home with the children.
On this basis, the unemployment benefit is clawed back by 70c for every dollar earned above $80 a week by either the main earner or his/her partner.
This means anyone with a partner earning more than $534 a week cannot get even a partial benefit.
In Australia, the dole is reduced by only 60c for every dollar of a partner's income above $A387.50 ($NZ485) a week, so a partial benefit is available until the partner earns $A1069 ($NZ1340) a week.
Mr Rankin said New Zealand's much tighter treatment of partner income was probably the single main reason why a Social Development Ministry analysis last week found that only 32% of the unemployed get the dole in this country, compared with 99% in Australia.
A paper he has written with Dr St John, "Escaping the Welfare Mess", argues that all main benefits should be assessed on the basis of individual, rather than household, income.
"Anachronistic requirements to meet hours worked or to force couples to aggregate their incomes for benefit purposes need to be progressively removed," they write.
Dr St John said: "The use of the married couple as the unit is as antiquated as the fax machine - it reflects the refusal to recognise the welfare mess and the lack of consistency with the tax system [and NZ super and ACC where the unit is the individual]."
Social Development Minister Paula Bennett said any change to the system would have a huge economic impact.
"While I sympathise with the situation an increasing number of family breadwinners find themselves in, this is no different to how the country's welfare system has always operated," she said.
Les McDonald, a self-employed contractor in Western Heights, Waitakere, lost the house that he and his wife had owned for 20 years the last time work dried up after the "IT crash" in 2001.
This time, he has been refused the dole because his wife earns about $30,000 in a part-time job.
"The only way to get additional assistance [unemployment benefit] is to separate and leave my family," Mr McDonald said.
"I've been given that hint by some people at Work and Income indirectly.
"I know people who have done that. The husband moved out, the wife gets the domestic purposes benefit and they come around to stay for extended periods."
Mr Rankin said the "incentive to separate" had been heightened in recent years because sole parents were allowed to earn up to $180 a week before the 70c clawback cut in, whereas the $80 limit for the unemployment benefit had not changed since 1986.
However, the conservative Maxim Institute said it would be better to solve the problem by assessing income for both tax and welfare purposes on a household basis, rather than shifting both to an individual basis.
Maxim policy manager Alex Penk said allowing two-income couples to split their income for tax purposes would automatically reduce their taxes if one partner losthis/her job.
Revenue Minister Peter Dunne said an update of the welfare system would be a "massive undertaking".
"The system has grown haphazardly over many years. [Revision] is not going to happen this year, next year - it will happen over a long period of time."
Mr Dunne said the delivery of a new welfare system would be as important as the policy.
"It would be as much about bringing the technology up to date as the policy."
