Tuesday, October 5, 2010

Lindsay Mitchell: Treasury finds greatest opportunity for reform with DPB

A Treasury report prepared for the Welfare Working Group has correctly identified that the greatest opportunity for welfare reform lies with the Domestic Purposes Benefit. Treasury identified six ways in which welfare reform could improve outcomes for both beneficiaries and the economy. They are improved labour force participation; reduced poverty risk; fiscal savings; improved intergenerational outcomes; greater individual and social well-being and increased economic growth.

The DPB ticked 4 of these boxes as presenting a large opportunity. The Invalid's benefit ticked 2, the sickness benefit one, and the unemployment benefit, none.

Treasury has also identified the DPB as being the most expensive benefit at $1.7 billion in the last financial year, with the highest future liability costs. Liability associated with current domestic purposes beneficiaries is around $17 billion compared to only $3 billion for the unemployment benefit yet 'administration expenditure is primarily focused on Unemployment Beneficiaries'.

It has long been my contention that the DPB is most in need of reform because it is adversely affecting the lives of hundreds of thousands of children many of whom will grow up to be beneficiaries themselves. The report states that, 'child poverty rates are almost 75 percent for ‘work-less households’ compared to 11 percent where at least one adult is working-full time, ' and, ' living in a benefit dependent home has serious impacts on child wellbeing. '

In light of this, Treasury's recommendations are disappointing. Guaranteed entitlement based on having dependent children is preserved. There is no recommendation to cap the number of children a beneficiary can add to a benefit (with increased payments each time). While they identify that mothers entering the benefit system aged 16 and 17 have a high probability of remaining there for a very long time, changes to eligibility or conditionality for teenagers is not explored. Perhaps most surprising is a lack of discussion about time limits, which have the greatest potential to change expectations and behaviour.


Anonymous said...

The whole welfare system needs a complete overhaul. There are too many hangers on now for it to ever function properly.

I'm with you, Lindsay - the DPB is the one that needs the most attention so that it stops destroying the lives of children.

Anonymous said...

The DPB is sucking the life out of our well intended Welfere System,for it to continue to be viable,the fathers have to be named and held to account,no naming of the fathers,no DPB,simple as.

Anonymous said...

i was a beneficary and it was too easy to slip into ways of laziness and low self worth...out of three of my kids one is totally state reliant. too any of us when i was on dpb had a uniform of jeans and baggie tops, when i look at it now i cringe. the other thing that annoys me is when my employed daughter asked for a loan to buy alcohol i get anti but it is no different to the state bying mine earlier in my life. it is really very simple a helping hand is one thing but taking advantage is qite another...

Clive said...

Many good reasons for tightening up on DPB, but I reckon the most important is to reduce the number of NZ kids growing up not knowing what an ordinary Mum and Dad family feels like, and that's self perpetuating.

Anonymous said...

Yes, we do need reform but what is the best way to do it? Have any other countries solved this problem in a reasonable and rational manner?

Yes, we want people to pay their own way but if the jobs aren't there even for people who are willing to work - what then?

If a solo parent has a job but a child is sick what does he or she do? As a one time teacher I know some ill children are sent to school because the parent has to go to work and she is scared to leave the child home alone. Take time off? That's going to thrill the boss and hardly encourage him or her to employ solo parents in the first place.

In encouraging or requiring people on benefits to get off the benefit we should also acknowledge some difficulties some of them may face in actually getting to work. Is public transport running at the time they need it, and is it affordable? One does hear stories of how getting a job will actually bring in less money after transport and childcare costs are brought into the equation.

Yes, let's have reform by all means but let's not lose our humanity doing it!

Anonymous said...

Get rid of DPB .It originally was intended as a fill in help for distressed wives whose men had left them stranded with kids ( 1960s) then developed as a popular vote catcher to include anyone having a baby outside of marriage.Now we are paying our teens to have babies!!! I am a teacher I see the intergenerational effects, the too often slack parenting, the blatant sense of entitlement, lack of appreciation that successive govts are borrowing millions to pay for this privilege,at the same time mortgaging ALL NZers futures. DPB Must GO!!!