Saturday, August 6, 2011

Lindsay Mitchell: Greens plan is a blueprint for poverty

The Greens plan to lift 100,000 children out of poverty is unworkable and defies reason on a number of counts.

First the definition of poverty is relative. It puts a number of children below a specified threshold. Arbitrary thresholds are exceedingly troublesome in their own right. The US is currently grappling with a new and better way to measure poverty. In the UK not so long ago hundreds of thousands of children were lifted out of poverty overnight simply by moving the threshold! A move no less silly than the Green's proposal as we shall see.

In New Zealand poverty is usually defined as falling below either 50 or 60 percent of the eqivalised (adjusted for number of householders) median household income. But difficult-to-measure outgoings are just as important as incomes. Most of the 100,000 children the Greens target are in DPB homes. Yet there are nearly twice that number relying on that particular benefit. The government tries to make payments to them that are as equitable as possible. Yet some fall below the defined poverty level when others don't. Which straight away indicates that some have greater outgoings than others. For beneficiaries, outgoings are more amenable to change than incomes. Adjusting expenses will do more to alleviate their children's poverty than waiting for an income increase, all the while racking up debt.

The Greens don't want them to wait. They want a parent who does not work to receive the incentive, the In Work Tax Credit, given to a parent who does. How silly is that? Even the Human Rights Tribunal found that the government was justified in discriminating against non-working parents. If they weren't then welfare advocates could demand beneficiaries receive 100 percent of the median household income!

But just imagine for a moment the Greens achieved their desired rise in benefit payments. An abundance of international research has shown a link between level of payments and rate of unmarried births. Put simply, the more the DPB pays the more people will choose it over work. Children that enter the benefit system at birth stay the longest and subsequently cumulatively cost more. That means what the Greens have budgeted is less than the actual cost over time. But hey what doesn't grow exponentially when it comes to handouts. Paid Parental Leave is a great example. It now costs twice what Treasury initially forecast it would.

The next part of the Green's plan is to re-introduce the Training Incentive Allowance yet Treasury reported to the WWG that this allowance probably contributed to beneficiaries staying on welfare even longer ( as studying became the modus operandi?). In reality there is no case for a beneficiary to not have to get into the same debt as other students do to fund the education they choose. Exceptions only produce incentives for people to make bad choices eg having children before acquiring any means of supporting them.

Raising the minimum wage barely warrants comment. What hasn't been said, and demonstrated, before about the effect minimum wages have on overall employment? They reduce it. When the cost of labour increases, all else remaining equal, employers buy less of it. Extra unemployment incurs additional burden on the benefit system. Which means that again the Greens have under-calculated the cost of such a move.

The last part of the plan is the require rental homes to be insulated. The additional expenditure will end up in the tenant's hands as increased rent. There goes the extra benefit payment which is the first step of the grand plan.

We all know that the Greens are economically the most socialist party in the political spectrum. And we all know that socialism makes countries poor. Socialism makes children poor.

What the Greens have produced is not a plan for less poverty but a blueprint for more.

1 comment:

Jens Meder said...

Yes, it is pretty certain that the Greens' hidden agenda is pure socialism, and that they deliberately wish to bankrupt our private ownership and entrepreneurship based economic order just like the communist led militant trade unionists of 60 years ago.
But - in my mind - that should not stop us competing with them through practical proposals and resultant policies - (not just wishful theories of what freedom is capable of delivering) - of more widespread wealth creation and personal ownership through a systematic personal (long term retirement)wealth creative savings rate built into our taxation system.
In other words - their higher taxation proposals for more wealth redistribution against ours tax for direct personal wealth creation and ownership.
It would be to the eternal shame of our liberal establishment, if it should happen that the Greens were persuaded to agree with that before our taxation wary "shakers and movers".