Michael Bassett: Dealing with the underclass

The Bible tells us in several places that the poor will always be with us. It’s doubtful whether Jesus or any of the others who used that phrase ever imagined the numbers would be on today’s scale. Poorhouses, workhouses and charitable aid existed from early times. And then along came the welfare state with Dick Seddon then Mickey Savage pledging to guarantee better lives for the poor. What was on offer was a hand-up, not a hand-out. Walter Nash, Labour’s Finance minister to Savage and Peter Fraser made it clear that work was required from everyone if they were to improve their lives. Unemployment benefits weren’t designed to be permanent income for anyone except for the severely handicapped. There were to be no free lunches. As late as 1966 there were only 133 people in the whole of the country receiving an Unemployment Benefit, and 5,000 on Sickness Benefits.

Things started to change in the late 1960s. Maori had come to town and were separated from the extended families that traditionally assisted with child rearing; religion was fading, taking with it taboos on carefree sex; the number of babies born out of wedlock or long-term relationships crept up, despite the easy availability of contraception, notably the pill. In 1970 Keith Holyoake’s government established a Royal Commission into Social Security. Amongst other changes, it recommended what became the Domestic Purposes Benefit (DPB) that came into effect in 1974. With National’s agreement, the Third Labour government’s legislation meant that a single mother with a baby could receive a cash benefit. But she was expected to identify the father of her child so that he contributed to the care of his progeny. Debates on these matters were full of sentimental claptrap about how lives would be transformed by more tender loving care from the taxpayer. As I re-read the debates, they sound like an early version of Jacinda Ardern’s meaningless prattle.

It was bullswool, of course. Human behaviour always follows incentives, and in 1974 they pointed towards climbing onto the gravy train of “free” money from the taxpayer. The number of recipients of DPBs rose from 4,000 in 1974 to 56,500 in 1985, to 113,000 in 1998. By the turn of the century, Unemployment Benefits were being paid to 154,000, Sickness Benefits to 33,000, and Invalids’ Benefits to another 50,000. According to one estimate, about 20% of New Zealand’s people of working age were now on a Social Welfare benefit of some kind. A whole industry has formed up around welfare led by the likes of the Child Poverty Action Group and its membership of hopeful social workers and wonky economists. The cost of it all to the taxpayer is through the roof, while the bleats for yet more assistance are deafening. The homilies preached by Savage, Nash and Sir Apirana Ngata about the need to work in order to receive payments had long been forgotten. More and more partners of single women receiving the DPB fell behind with their payments towards the care of their children. The government kidded itself that receipt of money under the name of an Unemployment Benefit was not a permanent state of affairs, and renamed it the Jobseekers’ Benefit, which it no longer was.

All sorts of additional social problems followed the easy money gravy train for what was becoming a rapidly ballooning underclass. A Women’s Refuge Movement got underway with 50% of the users being Maori women. Male partners made up more than 70% of their abusers. Mum’s new de facto was too frequently a threat to her children. With nobody working in many households, children grew up in environments without role models except the occasional gang thug. School attendance became spasmodic for many children, meaning that educational achievement levels amongst the mushrooming underclass steadily fell away.

Much of this is obvious to anyone thinking seriously about New Zealand’s future. But who is promising to do anything meaningful to turn things around? After half a century of pouring easy money over beneficiaries we are faced with “homes” where children are not only hungry but terrified much of the time. There are declining numbers in prisons, many more gangs, rampant ram raiding, and lower achievement levels at every level of the educational system. This Labour government displays no alternative but to pour good money after bad. Carmel Sepuloni seems totally without understanding or empathy for the children being born into this serpents’ den. She has pushed up basic benefits to levels that mean no one in today’s underclass can improve their incomes by working. Having another baby is more lucrative. And she abolished the requirement for a DPB recipient to name the father of her children. That won't make much difference anyway. As it is around 34,000 fathers pay less than $3 a day to support their children (probably from their own benefit). Amongst the underclass a tomcat’s licence has been in force for many years.

How to solve all this? First is to turn off the tap. Every applicant for a DPB has to be informed that the benefit is strictly time-limited, and there will be no pay increase for a second or third child. At the initial point of registration for a benefit, free contraceptives should be provided. There will be accidents, of course, and this might lead to a temporary spike in the number of abortions. But the message will sink in. Secondly, how to deal with the huge and growing underclass already in existence. Bill English pioneered a rather laborious way of dealing with individual families, one at a time. It showed signs of working, but Jacinda Ardern arrogantly flicked it away. Young people will need to be provided with discipline, education and job training. Experience in the Army worked during the Great Depression in the United States and has done much for some Maori youth here. It can be financed by the money saved from current lavish welfare top-ups. Conservation projects could also use assistance and give the participants some pride in their achievements.

I make no claim to be a policy expert, but I’m willing to give alternatives a go. Half a century of shallow thinking and carelessness has delivered us a mountainous problem which must be climbed. Doing nothing but encourage it to grow yet higher isn’t a long-term solution. Which political party has the intestinal fortitude to face up to this issue?

Historian Dr Michael Bassett, a Minister in the Fourth Labour Government, blogs HERE.