Lindsay Mitchell: Methodist attack on WWG misguided

Media Release and Rebuttal:
METHODIST ATTACK ON WWG MISGUIDED
Monday, March 21, 2011

The Christchurch Methodist Mission has published a misguided and unwarranted attack on the work of the government-established Welfare Working Group. Welfare commentator Lindsay Mitchell said today that the four page pamphlet Facts about welfare in New Zealand is highly selective, contains inaccuracies and misleads.

"The Mission accuses the Welfare Working Group of 'misuse of data' and having 'manufactured a crisis that doesn't exist' and urges its members to write to newspapers and MPs to ' challenge ill-informed criticisms of beneficiaries and welfare support'. "

"It selectively uses data relating to the unemployment benefit and DPB to claim that 'most people receive social support for limited periods to make it through particular challenges or crises'. But the data used contrasts strongly with more in-depth analysis supplied to the WWG by the Ministry of Social Development."

"The Welfare Working Group found that, '... in 2008, just prior to the recent recession, and after a decade of economic growth, roughly ten percent of the working age population, or around 286,000 people were receiving a benefit...one in five children were living in benefit dependent families...170,000 had been on a benefit for at least 5 out of the last ten years...in 1960 only 2 percent of the working-age population were receiving benefits' ."

And according to Mitchell, "Other MSD research shows that over half of DPB recipients had spent 8 of the last 10 years dependent on welfare."

"Yet the Methodist Mission insists that ' the Welfare Working Group has painted a picture of long term welfare dependence that is just not reality'. "

The Welfare Working Group had at its disposal the best advice and data available from MSD, Treasury, the OECD and many other international experts in their field.

Denying there is a dependence problem denies an attempt to address it. That will not help the thousands of children and adults whose lives welfare reform seeks to improve. Ends

Detailed rebuttal: The Facts About Welfare In New Zealand by the Christchurch Methodist Mission

The Christchurch Methodist Mission has produced a tract that purports to be The Facts About Welfare In New Zealand. It was triggered by the work of the Welfare Working Group, established by government to examine long-term welfare dependence and how to reduce it.

The Methodist Mission’s claims follow in italicised type:

1. The total number of people receiving benefits has dropped over the past decade

> the number of unemployed has declined significantly.
> the number of sole parents needing support has also declined.

Facts:
Total number receiving benefits in December 2000 was 392,307 (MSD Benefit Factsheets)
Total number receiving benefits in December 2010 was 352,707
Total number receiving the Unemployment Benefit in December 2000 was 146,692
Total number receiving the Unemployment Benefit in December 2010 was 67,084
Total number receiving the Domestic Purposes Benefit in December 2000 was 109,663
Total number receiving the Domestic Purposes Benefit in December 2010 was 112,865

Their third claim is incorrect

Notably, the Mission fails to mention throughout the publication the ever-increasing numbers of people reliant on a sickness or invalid benefit and the degree of that reliance.

2. Most people receive social support for limited periods to make it through particular challenges or crises.
> Less than 1% (0.2 percent) of those currently needing the unemployment benefit have received it continuously for 10 years or more.
> Clients who have received a Domestic Purposes Benefit continuously for 10 years or more made up only 0.4 % of the total working-age population

Both of these statements are factual and are taken directly from MSD benefit Factsheets. However, the second hides more than it reveals. Contrast their facts to Ministry of Social Development data:

On average, sole parents receiving main benefits had more disadvantaged backgrounds than might have been expected:

• just over half had spent at least 80% of the history period observed (the previous 10 years in most cases) supported by main benefits
• a third appeared to have become parents in their teenage years.

Contrast their facts also with findings reported in the Welfare Working Group Issues paper;

“In 2008, just prior to the recent recession, and after a decade of economic growth, roughly 10 percent of the working age population, or around 286,000 people, were receiving a benefit. At that time, about one in five of New Zealand’s children were living in benefit dependent families.
At the same time, roughly 170,000 people had been on a benefit for at least 5 out of the last 10 years. That is the equivalent of the cities of Dunedin and Invercargill combined. “

And:

In 1960, only 2 percent (1 in 50) of the working-age population were receiving benefits. By April 2008, after a decade of strong employment growth, around 10 percent of the working-age population (around 278,000 people) were receiving a benefit.

Note that the Christchurch Methodist Mission goes on later to say:

The Welfare Working Group has manufactured a crisis that doesn’t exist and painted a picture of ‘long term welfare dependency’ that is just not reality.

3. Benefit spending is predicted to decline substantially as a share of GDP, for the next 40 years.

This is in direct contrast to estimations made by the Welfare Working Group based on current trends:

“In looking to the future, many of the historical social and economic drivers of increasing rates of benefit will continue. While there is considerable uncertainty about the future, there is a clear possibility that the current recession, labour market changes, globalisation, and continued family changes will lead to a growing proportion of the working age population receiving benefits. This is particularly important in the context of population ageing and a shrinking proportion of the population in work. In the Working Group’s Issues Paper we highlighted that if the long-term upward trend in Sickness and Invalid’s beneficiaries continued, as it has done in many countries with higher levels of benefit receipt than New Zealand, then benefit numbers could rise to 16 per cent of the working age population by 2050. “

In any case long-term Treasury predictions, if that is what the claim is based on, are invariably inaccurate.

4. Benefit fraud is minuscule – fraud as a proportion of the total benefits paid was only 0.1% last year.

This figure is based on prosecutions. Actual incidence is unknown. However, the Welfare Working Group was more concerned with benefit misuse. In principles that should guide future policy they include:

1.1.1. Principle 4: Be efficient and free from misuse

Focussing on fraud is somewhat a red herring

5. Numbers of people on benefits is dependent on the availability of suitable jobs – it is as simple as that.

The number of people on benefits is dependent on far more than just this one factor. It is affected by fertility and marriage rates, educational attainment, hospital waiting lists, availability of medical treatment, counselling and addiction treatment services, societal attitudes to benefits, and more. If the last claim was true, when New Zealand enjoyed the lowest unemployment rate in the OECD (2007) there should have been very few people dependent on a benefit. That was not the case. It is a naive claim at best.

6. Average benefit payments as a proportion of the average wage have fallen more or less steadily since the 1970s. In the late 1970s, it reached around 44%, by 2009 it was well under 30% of the average wage. (my emphasis)

The current basic DPB rate is $278.04 per week

Average benefit payments usually refer to the basic rate and do not include add-ons like the accommodation supplement.

According to MSD a typical weekly all-inclusive DPB payment for a parent with two children living in Auckland is $580.

According to Statistics NZ the average ordinary time female weekly wage for the fourth 2010 quarter was $686.55 (before tax).

$580 per week is above female wages for some industry sectors such as accommodation and food services, retail, arts and recreation services.

7. There is no evidence that anyone has babies to get more welfare – and there is no relationship between the provision of welfare and the number of children welfare recipients have.

At the end of June 2006 27,210 recipients of the DPB had added extra children to their existing benefit. 8,708 had added more than one additional child.
In 2006 New Zealand Medical Association deputy chairman, Don Simmers, told a conference that too many women were contemplating pregnancy on a benefit.

8. Very low benefit levels make it harder to get off a benefit. And for those who have to stay on a benefit, a much lower chance of belonging and contributing to society.

Rather, it is generous benefit levels that make it harder to get off a benefit.
Social reporter for the NZ Herald, Simon Collins, highlighted this phenomenon last year when interviewing mothers on the DPB in South Auckland:

“Connie Raiwhara, who runs the Pikorua community house where Ms Heremaia attends a sewing class, said many sole parents had no qualifications and would not give up the benefit for a minimum-wage job.

A sole parent with three young children paying the $332 average rent for a three-bedroom house in Papakura would get $206 in family support and $165 in accommodation supplement on top of the $278 DPB, a total of $649 a week.
"A lot of our solo parents get well in the $700s. They are not going to go from $700 to $400," Ms Raiwhara said.”

9. Recommends…Adequate income support, including income support at a level which enables people to meet their basic needs and to participate fully in community life.

OECD research has shown that raising benefit levels results in more workless households. European and US research shows that raising single parent benefits results in more unmarried births.

10. Recommends… Restoring Training Incentive Allowance (TIA) at degree level

The Treasury Report to the WWG found that the TIA may actually have resulted in people staying on benefit longer.

11. Recommends…Removal of financial sanctions - The benefit system is already paid below the poverty line; cutting family incomes further by sanctioning their benefits is not in the best interests of children.

Without sanctions any attempts to impose reciprocal obligations (an important tenet of charitable giving) will be unworkable. It is not in the “best interests of children” when their parents have no conditions put on receipt of welfare. For instance the WWG recommended that where drug abuse is preventing employment a beneficiary must accept, where available, treatment. It is not in the “best interests of children” to have a parent who is abusing alcohol or drugs.

12. The Welfare Working Group was established in April 2010 to “conduct a fundamental review of New Zealand’s welfare system and to make practical recommendations on how to improve economic and social outcomes for people on a benefit and New Zealanders as a whole”. In August 2010, the Welfare Working Group published "Long-Term Benefit Dependency: The Issues". In late November 2010, the Welfare Working Group completed an “Options Paper”.

Both reports are notable for their misuse of data and ideologically loaded language while ignoring the reality and causes of unemployment in New Zealand today. The Welfare Working Group has manufactured a crisis that doesn’t exist and painted a picture of ‘long term welfare dependency’ that is just not reality.

There is a crisis in our country but it's not a crisis of welfare dependency. It's a crisis of a depressed economy and failed economic policies – that do not treat full employment as a goal – causing many tens of thousands of New Zealanders to face a precarious existence with either no work or poorly paid, insecure work.

The Methodist Mission accuses the WWG of misuse of data with no evidence to support this claim. They have themselves wilfully misrepresented the current situation in New Zealand by selective use of data. The WWG group was tasked with examining long-term welfare dependency which exists mainly among domestic purposes, sickness and invalid beneficiaries, not those on unemployment benefits. In its own report to the WWG, Treasury found that the benefit with the most potential for reform was the DPB followed by the Invalid’s benefit.

13. Finally the Mission urges its members to:

Write a letter to the editor of your local paper. Challenge ill-informed criticisms of beneficiaries and welfare support.

The Christchurch Methodist Mission should itself have become better acquainted with the ‘facts’ about long-term dependence before launching an attack on the work of a group which had at their disposal the best advice and data available from MSD, Treasury, the OECD and many other experts in their fields. Instead it has produced an emotive, misleading and somewhat pathetic piece of propaganda that will do nothing to improve the lives of those people welfare reform is intended to help.

Interview with Larry Williams, NewstalkZB (starts at 20:00)