Lindsay Mitchell: National right to put welfare reform at centre of election

A recent NZ Herald editorial suggested the government should be putting the economy at the centre of its election campaign - not welfare reform. Apparently there is some work evasion going on but now is not the time to talk about work-testing because that only highlights unemployment.

The writer overlooks that welfare reform is about much more than addressing work evasion. Primarily it seeks to improve the lives of existing and potential beneficiaries, especially children. According to the Welfare Working Group,"Recent analysis has shown that one in five children spent at least seven years of their childhood in households that rely on benefit income." This during the last period of strong economic growth when New Zealand's unemployment rate plummeted.

There is little disagreement that long-term reliance on welfare is associated with poor childhood outcomes. It reduces children's educational achievement and compromises their health. Some will go on to experience mental ill-health, alcohol or drug abuse, indulge in criminal activity and be beneficiaries themselves. While it is common to blame their disadvantage on childhood poverty, the lowest median incomes in NZ actually belong to Asians, who do not feature prominently in the benefit system or poor childhood statistics.

While bringing children into the world to avoid working almost certainly happens, in general the welfare choice is probably passive. Forty percent of Maori women between 20 and 29 are on welfare. That is about learned expectations. Early childbearing outside of the nuclear family is a well-established pattern. Before the DPB it meant care-giving by the wider whanau or adoption. Now it means long-term reliance on a benefit.

Treasury recommended to the Welfare Working Group that the benefit with the most potential for reform is the DPB. But they were looking at both the social and economic benefits.

Governments do the same. The two cannot be disentangled. It is all well and good to talk about the areas government should be investing in for the sake of the economy, like mining or research and development, but first it needs the resources. Resources in terms of funding, and/or labour capacity. Too much potential labour capacity is wasted because more than one in ten working age New Zealanders is benefit-reliant. Until the intergenerational cycle of welfare dependence is well and truly broken NZ will not be running on all cylinders.

Where Key could have gone further with his embrace of welfare reform as a major election platform, is to promise to raise the age of Super entitlement. Life expectancy grows steadily yet no adjustment is made. Billions could be saved in this area.

As for sickness and invalid benefits, the receipt of which also grows unrelentingly, and disproportionately to the population, the editorial writer suggested it is the doctors who sign off certificates that need attention. Well here's a radical idea. Why not move responsibility for these benefits to the DHBs? Cap the funding in line with other health funding and the focus on getting people back to health would sharpen very quickly. Many sickness and invalid beneficiaries are not avoiding work. They are simply parked at the Work and Income holding bay.

Whatever the merits of this suggestion, it has to be more useful than merely renaming and redesigning all benefits into one single entitlement. That action will cost a fortune in administrative change alone.

Nevertheless National should be applauded for having the bottle to try to understand and resolve all the reasons why New Zealand has gone from having two percent of its working age population on welfare, to 13 percent some 40 years on. If it doesn't get a mandate for meaningful reform this time around, the problem will only hold us back for many more decades to come.