Friday, June 17, 2011

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.


Anonymous said...

What has never escaped my attention is that Asians and Indians work with their families. Kiwi's have grown up with Indian and Chinese families, these families own the local dairies and chinese takeaway, they have no expectation of a Welfare Cheque.

Anonymous said...

Next time you go to a Pac'n Save supermarket, take a look around at some of the parents there. I often see parents there who seem to have had children to avoid working. Yesterday I saw two parents buying a tin of baby formular at the supermarket checkout. She was sickly and looked drug addled and he was dirty,unkept with cavernous eyes, they looked like they were both in their late twenties. I may be wrong but my guess is they were on a benefit and that their baby's life would be hell on wheels. Why do people have children when they don't have the capacity to look after themselves let alone a child? Answer because the benefit system, rewards it.


Anonymous said...

Ahh Lindsay, Lindsay, Lindsay, always missing the key point:

welfare reform is about much more than addressing work evasion. Primarily it seeks to improve the lives of existing and potential beneficiaries, especially children

No! No! No! Welfare reform is about stopping spending money we don't have. Pure and simple. We can't afford welfare. Every single dollar spent on welfare the last two years has been borrowed: we simply can't afford it any more.

The only real welfare "reform" in NZ was Ruth: chopping ever benefit by 30%. Well we need to do that, and again, and again, until there are no benefits left. It really is that simple.

The rampant leftists on the Welfare Working Group (the real one, not the alternative one) have all sorts of nice ideas for case management, for moving people off benefits. For the DBP, that's huge provision of state-provided, state-run subsidized childcare for young children and then after-school and before-school care for school-age kids. Not to mention all kinds of training, financial support for commuting to and from work and childcare, and on and on and on.

Even the WWG say that their platinum-plated "reforms" will be much more expensive than our gold-plated welfare system we have now.

There's only one real reform that needs to happen: just stop welfare. From the Dole to the DBP, from the Sickness to Super:

just. stop.

Anonymous said...

As for me, I think Lindsay makes precisely the right point and, as importantly, one that resonates with the voters.

People are more resilient than the welfare lobby credits, and there is a form of stress - eustress - which motivates change and leads to better outcomes and improved self-esteem.

Most fiscal conservatives I know are truly compassionate and remain in favour of support for those truly in need of maintenance income.

One other benefit is worth mentioning: the residential care subsidy (RCS). Too many Kiwis protect their assets in family trusts or pressure the legislature to increase the asset limit where the RCS kicks in. Rich people should pay their own rest home fees and forgo Working for Families. It isn't just the "drug- addled" and "unkept" beneficiaries who are rorting the system. The amount of corporate welfare is also breath-taking.

Anonymous said...

With regard to the sickness and invalid's benefits...

As a doctor formerly working in the NZ public health system I recall a number of perverse incentives in place. There is significant pressure placed on (often very junior) doctors to sign the requisite paperwork; this comes from both the patient and their "advocates". The latter include many social workers from both hospital and community groups.

The pressure is not always subtle; I recall one professional acquaintance who declined to sign an invalid's benefit form. His practice was burnt down the next night. Simply signing the form and getting peace and quiet to get one's work done is, unfortunately, all too easy an answer.

I would suggest an alternative. Retain the sickness benefit for a maximum of, say, 3 months. There will always be people with a broken leg or whatever that will require that. For any invalid's benefit (ie "you are too sick to ever work again under any circumstances") or longer term sickness benefit one should be required to be assessed by a Work & Income-appointed specialist (with appropriate right of appeal). This would significantly reduce the number on the benefits!

At the moment it is unfortunately easy to get a longterm benefit with many advantages over the unemployment benefit. Asking the GP or hospital junior doctor to be the gatekeeper to such is doomed to failure.

Anonymous said...

Most fiscal conservatives I know are truly compassionate and remain in favour of support for those truly in need of maintenance income.

Just answer me this question: where's the money coming from?

Well you can't: there isn't any money.

And, of course, the single biggest bottomless pit down which we flush borrowed money isn't the DPB: it's the Super. Then Health. Then Education. Then the Dole.

I would suggest an alternative. Retain the sickness benefit for a maximum of, say, 3 months...

I've better, simpler, easier to understand and much cheaper plan: just stop all welfare.

See? How's that!

Ray said...

I will probably be labeled as daft, (who cares) but answer me this 11:19PM, if all welfare was stopped overnight, which would effectively take billions of dollars out of circulation, what would be the result of that. Those billions are circulating in the system, they dont go offshore, well at least not until offshore investors get hold of them. So answer me, what would be the effect?

Anonymous said...

You wouldn,t train a race horse up the way some young are trained for fitting into society. That race horse would be useless. Need I say more? Until important values are back in place in young people,s training or upbringing, call it what you like, Welfare is here to stay. It takes generations to change rearing attitudes.

Anonymous said...

if all welfare was stopped overnight,... what would be the result of that.

About 2 Million Kiwis would suddenly discover the virtues of Work and Thrift. The birthrate to under-20s would drop to zero within six months. And NZ would go from borrowing $400 Million dollars every week, to starting slowing to pay it back.

Next time you go to a Pac'n Save supermarket

Unlike you, I'm not on a benefit. I never go to Pak'n'Save.

Claire said...

I would love to go back to work. As a DPB bludger my rise in social status would be much more incentive than anything monetary. BUT I can't get a job. As a single parent I am much too unreliable to be taken seriously. If my son gets chicken pox and can't go to daycare for 2 weeks I have to stay home and look after him. If my 13 yr old misbehaves at school I have to take time off to go to the school to sort it out. My ability to be a reliable employee is tied up with my children and my ability to find suitable provisions for other people to parent my kids. There is after school care but only til 5 and most jobs finish at 5, no before school care but most people start at 8. The solution is leave the kids to fend for themselves. If the little one is sick the big one doesn't go to school but stays home to look after him. Bigger ones get to be sick home alone. Hang on that's illegal... Tell me how to do it people? And to be able to convince an employer that I am worth the risk when there are so many "unencumbered" unemployed out there.

At the risk of upsetting the masses perhaps this is also the simple explanation for women being "less productive" than men in the work place. Men go to work and then come home. Most issues with childcare and family needs falls to the mother.