Mike Butler: Tinkering with welfare

The Government’s move this week to push beneficiaries into work has been called reform, but closer inspection reveals that the changes have high political marketing appeal but will bring little actual change. The initial appeal was reflected in a totally unscientific opinion poll, conducted on Yahoo Xtra’s web site, which showed 76 percent in support of the $88-million package.

The proposed package:
1. Expects part-time work for single parents on the domestic purposes benefit when their child reaches six and for people on the sickness benefit deemed capable of part-time work.
2. Allows Work and Income case managers to cut benefits by half as a sanction, followed by a full suspension then a cancellation.
3. Limits employment benefits to a year. Beneficiaries must reapply after a year with a comprehensive work assessment.
4. Requires more frequent assessments of people on a sickness benefit, with three medical assessments during the first twelve weeks, a further assessment every twelve weeks thereafter, and a more comprehensive reassessment after 12 months.
5. Increases from $80 to $100 the amount that people on the domestic purposes benefit for single parents and the invalids’ benefit can earn each week without affecting their benefit. (1)

Among the array of reactions and related welfare stories during the week was the report of the conviction of a Christchurch woman on charges of defrauding Work and Income on charges of claiming extra accommodation supplements and additional grants worth $12,000. She had claimed she was renting Christchurch homes for more than she was actually paying, or for homes she was not even living in. (2)

The Ministry of Social Development last year released data showing the woman and her partner, a former gang leader, were one of about 300 couples to draw $1000 a week in benefits.

New Zealand's biggest-ever benefit fraudster was jailed for eight years for defrauding the Ministry of Social Development for a total of $3.4-million and forging birth certificates and other documents to create 123 unique identities. He began offending in May 2003. National MP Judith Collins wanted to know how the fraudster managed to get $54,000 a fortnight of taxpayer money. (3)

A simple first step to sift out benefit fraudsters would be to have everyone on a benefit reapply – a daunting mission for the Ministry of Social Development.

Neither is there any mention, in the package that takes effect from September, of anything like Work for the Dole, a scheme that was abolished by the previous Labour government in 2001, but which has continued in Australia since 1998.

There, placements are available in a wide range of areas including heritage, the environment, arts, community care, tourism, and sport. Upon successful completion of a Work for the Dole placement, participants are eligible for a training credit ($800 for six months, less for less time), a Passport to Employment package of job application training, and a fortnightly transport supplement. (4)

There is scope for that sort of work to be done in New Zealand, and Work For the Dole does get people to get back into the workforce by “improving their work ethic”, by getting them into the habit of being able to get out of bed in the morning and be work-ready during the day.

A sobering fact well known by the Government is that benefit consumption is not spiralling out of control. In fact, the total number of recipients of all main benefits has decreased in 10 years, from 401,415 recipients to 345,476, according to key facts from the Ministry of Social Development at the end of December 2009. This compares with 320,000 in December 2004 and 286,000 in December 2008. (5)

In that time, unemployment benefits decreased from 161,128 to 66,328, and that DPB decreased from 110,285 to 109,289. The increases were in sickness benefits, from 32,870 recipients to 59,158, and invalids, from 52,195 to 85,038.

Psychological or psychiatric conditions are the main disabilities cited for those on an invalid’s benefit (29.1 percent) and sickness benefit (41.1 percent). About 6000 drug and alcohol abusers are costing taxpayers more than $50-million a year in sickness and invalid benefits. (6)

The proposed changes require more doctor visits, which will provide more income for doctors. The problem of variable standards of assessment and doctor intimidation remains untouched. And if psychological or psychiatric conditions are the main disabilities, there is no indication that beneficiaries are required to see psychologists or psychiatrists. This implies GPs are carrying out assessments beyond their area of expertise.

The requirement for able sickness beneficiaries and DPB recipients to work is likely to go the same way as the present requirement for those on unemployment to seek work. Regarding the proposed new ability of Work and Income staff to halve or stop benefits, payments are already routinely stopped if a beneficiary fails to respond to a letter or fails to provide a medical certificate.

If the Key government were serious about welfare reform, a study of the United States Personal Responsibility and Work Opportunity Reconciliation Act of 1996 would be worthwhile. That package aimed to:
1. End welfare as an entitlement programme;
2. Require recipients to begin working after two years of receiving benefits;
3. Place a lifetime limit of five years on benefits paid by federal funds;
4. Encourage two-parent families and discouraging out-of-wedlock births.
5. Enhance the enforcement of child support. (7)

Welfare and poverty rates in that country both declined during the late-1990s.

Sources:
1. Welfare reform aims to get more into jobs – Key, NZ Herald, March 23, 2010. http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10633815&pnum=0
2. Wife of gang boss admits fraud, YahooXtra, March 26, 2010.
http://nz.news.yahoo.com/a/-/latest/6982506/wife-of-gang-boss-admits-fraud/
3. Ministry fronts up over $3.4m benefit fraud, Stuff, Last updated 00:00 12/10/2007, http://www.stuff.co.nz/national/politics/22361
4. Work for the Dole, Wikipedia, http://en.wikipedia.org/wiki/Work_for_the_Dole
5. NZ benefits key facts, http://www.msd.govt.nz/documents/about-msd-and-our-work/newsroom/factsheets/benefit/2009/december/10-year-benefit-time-series-dec-2009.doc
6. We pay $50m for drug abuse, Stuff, http://www.stuff.co.nz/national/health/2330268/We-pay-50m-for-drug-abuse
7. Personal Responsibility and Work Opportunity Act, Wikipedia, http://en.wikipedia.org/wiki/Personal_Responsibility_and_Work_Opportunity_Act