NZ Centre for Political Research

My Door's Always Open, Mr Key
by Hon Sir Roger Douglas, ACT New Zealand
Friday, 24 July 2009

ACT New Zealand Welfare Spokesman Sir Roger Douglas today called for a genuine rethink of how we deliver welfare services in New Zealand in light of startling figures showing that - since the introduction of Working for Families in 2004 - the ratio of workers to beneficiaries has steadily dropped to a point where it now takes the efforts of almost three working New Zealanders to support two beneficiaries."

"No economy can sustain such an imbalance – especially at a time when it is difficult enough for working New Zealanders to provide for just themselves and their families," Sir Roger said.

"Unfortunately, the Government is completely unwilling to address this issue or even consider possible solutions – highlighted when Mr Key dismissed a recent report on welfare published by the New Zealand Business Roundtable out of hand, labelling it 'draconian' without even reading it.

"Meanwhile, Labour continues to push its tired old barrow – now demanding that the welfare burden on hard-working New Zealanders be increased by making it even easier for people to receive a benefit.

"The problems facing our economy, especially those around welfare, need to be tackled with real and innovative solutions – not by Labour's old chestnut of spending ever more money for little gain, or by National simply sticking its head in the sand.

"This Government is so focussed on staying in office for a second term that it is following in Labour's footsteps and is only prepared to do what they think will retain or win votes.

"This has left ACT as the only Party that can honestly say it has the innovative policies and real solutions to move the country forward and create more wealth for every New Zealander.

“That's why I am suggesting Mr Key, Mr English and Mr Goff take a break and meet in an endeavour to come up with solutions. If they are bereft of ideas - as I suspect they are - then I am happy to supply a basic policy document to get the ball rolling," Sir Roger said.

Fall in working poor may be 'as good as it gets'
By TRACY WATKINS - The Dominion Post

The numbers of "working poor" have dropped sharply but that could be "as good as it gets", a report suggests.

For the first time in 25 years, the incomes of those in lower brackets grew more quickly than those on higher incomes, the Household Income Survey by the Social Development Ministry found.

It credits Working for Families with the turnaround and says it also helped avert a sharp rise in child poverty. Without it, child poverty rates would have risen to as high as 30 per cent on some measures. But, the report says, this may be "as good as it gets", indicating a rapid turnaround as the recession forces more breadwinners out of work and figures show unemployment rising rapidly.

The report was a snapshot taken before the recession, for the year to June 2008.

While numbers on the unemployment benefit have risen faster than expected, the hidden toll is also showing up in numbers on the domestic purposes benefit, which have shot up for the first time in five years. After falling below 100,000 in 2007, they have soared to 104,400 up 8000 on the year before.

Labour MP Annette King said it showed unemployment was worse than thought.

Numbers on invalid and sickness benefits had also risen by 10,000 but the Government was in denial, Ms King said.

"We have heard a lot of talk about taking the sharpest edges off the recession but in reality they have done little or nothing to help the nearly 52,000 additional people on benefits."

Social Development Minister Paula Bennett said the rise in numbers on the DPB was a reflection of the job market.

"It gets to a place for some women where, if they're not getting enough hours at work, it just gets a bit too hard for them."

It meant the costs of working outweighed the benefits of being at home.

But the impact was being felt more widely than just among those who showed up on unemployment or DPB rolls.

"I'm really mindful of those people who lose their jobs but don't get a benefit because it's a second income and their partner makes too much ... boy, it makes a difference to families that are struggling."

But she was confident that once the job market had improved, numbers on the DPB would drop again.

"In fairness to the Labour government, Working for Families made a big difference to these people. Once they could see [their income] could be topped up with that big incentive, it made a big difference to them going to work."

The household income report found incomes rose in real terms for all income groups between 2004 and 2008, mainly reflecting rising incomes for two-parent households, with more having both partners working fulltime.

Dole numbers worse than expected
4:00AM Monday Jul 13, 2009
By Claire Trevett

Auckland is the city worst-hit by a sudden surge in the number of people claiming the unemployment benefit. Photo / Herald on SundayYour Views Is the government doing enough to stimulate the economy?

The number of people claiming the unemployment benefit has topped 50,000 - almost three times the 17,710 at the same time last year.

Aucklanders account for almost half of the increase. About 15,000 more are on the dole than in June last year.

White-collar workers are also being increasingly affected and next month the Auckland Chamber of Commerce will start a scheme with Work and Income to help professional workers having trouble finding new jobs but who are reluctant to go to Work and Income.

Employment Minister Paula Bennett said the number of people on the unemployment benefit was manageable - it was similar to the number in January 2006 - but she was concerned at the speed of the rise.

"The concern for us is that it's happening so quickly," she said.

"It is happening over a shorter time than expected, and in higher numbers. We are hoping it plateaus, but it is a sharp incline, especially over the past six weeks."

Labour leader Phil Goff said the increase showed National needed to revise its approach to saving jobs.

Almost one in three of those on the benefit in Auckland is young - aged between 18 and 24 - a much higher figure than the one in five of a year earlier. Mr Goff said other options needed to be found for young workers, such as more training when they left school.

Maori and Pacific Islanders are also struggling, making up almost half of those on the benefit in Auckland.

Ms Bennett said jobs were still available, but many small and medium-sized businesses in particular were struggling because of the recession.

Winter months were traditionally grimmer because the "winter blues" affected consumer spending, pushing retailers to lay off staff.

The minister hoped the country would get some relief over summer. "But I am concerned about early next year."

The Auckland Chamber of Commerce scheme will offer CV and interview training for workers with office skills or in professional roles.

The chamber is also using its business networks to seek vacancies on offer - it advertised a fortnight ago for any jobs and was sent 76 by businesses around Auckland.

Chamber chief executive Michael Barnett said the usual avenues for professionals or administrative workers seeking new jobs, such as word of mouth or contacts, had dried up.

Many of those out of work did not realise their skills would transfer well to other positions, he said.

It was also hoped people reluctant to go on the unemployment benefit would feel more comfortable about approaching the Chamber of Commerce, which had access to a wide range of employers.

"There are people who have more skills than you would normally see in an unemployment situation."

Ms Bennett said Work and Income had found many people were waiting until they were desperate and behind in their mortgage payments or rent before asking for help.

'We've got a different type of person coming on to the benefit. They are people who are either more skilled or have been in a job for a long time. They have never been on a benefit before.

"Many have little idea how to get a job because they haven't had to for the past 25 years. It's a different world out there now."

Numbers on the unemployment benefit are forecast to reach 90,000 in 2011 and the unemployment rate - now about 5 per cent - to reach 7.6 per cent in the same year.

The figures are still well below those of the late 1990s and early 2000s, when the number out of work was well above 100,000.

The road to Hawks Nest started back in the Seventies

To understand how ‘Ebony’ could starve to death in suburban Australia, we have to understand the institutional and ideological shifts that have occurred in child protection.

The establishment of government-run child protection authorities staffed by university-trained social workers in the 1970s led to a series of changes in child protection policy and practice.

The major change is that the traditional role of child protection work (the assessment and forensic investigation of reports concerning children in danger of abuse and neglect) has been crowded out by other forms of social work and community services, especially drug counseling, that focus on working with parents and preserving and reuniting families.

A corresponding shift has seen the core principle of child protection – that the state has a duty to intervene to remove and protect vulnerable children in the child’s best interests – replaced with a new and radical approach to protecting children.

This new prevention focused credo promotes the idea that the best way to protect vulnerable children, including children at serious and imminent risk of harm, is to keep families intact. Family support and other services should be provided to meet parents’ needs and address risk factors such as parental mental health issues and drug abuse.

There is no evidence that this approach is effective. Most studies that have examined child abuse prevention programs have not even measured the impact on child protection reports or the outcomes for at-risk children.

Nevertheless, child removal has been relegated to a last and reluctant resort, and the permanent removal and adoption of vulnerable children is now unacceptable.

One measure of these changes is the tiny number of children adopted from Australian birth parents. Only 70 local adoptions occurred in Australia in 2007–08 (compared to 270 overseas adoptions).

As a result, increasing numbers of children such as ‘Ebony’ are being exposed to greater risk of potentially fatal harm.

The further tragic outcome is that many more disadvantaged children have their development permanently damaged and their educational and life opportunities curtailed.

The standard cycle sees increasing numbers of children churned through the system. These children experience multiple and poor quality out-of-home care placements that frequently break down, interspersed with repeated failed attempts at family reunion.

In many cases, this cycle will almost certainly perpetuate the inter-generational cycle of parental dysfunction, abuse and poverty. Child protection authorities that are increasingly confused about their core responsibility, have turned a blind eye to this cycle and its terrible consequences.

Dr Jeremy Sammut is a Research Fellow at the Centre for Independent Studies. His report Fatally Flawed: The Child Protection Crisis in Australia was released by the CIS this week.

Broken Marriages
Study Details High Economic Costs of Divorce

By Father John Flynn, LCROME, JUNE 21, 2009 (Zenit.org).- Family breakdown is causing social anarchy, according to a speech by an English judge, Justice Paul Coleridge. A senior Family Division judge for England and Wales, he addressed the Family Holiday Association charity on Wednesday evening.

Coleridge accused mothers and fathers who fail to commit to each other of engaging in a game of "pass the partner" that has left millions of children "scarred for life," according to a June 17 report in the Daily Mail newspaper.

In his speech supporting marriage, Coleridge called for a change in attitudes, so that the destruction of family life would attract social stigma.

"What is a matter of private concern when it is on a small scale becomes a matter of public concern when it reaches epidemic proportions," he added.

The public dimension of marriage breakdown was the topic of a recent report by the Institute of Marriage and Family Canada. Titled, "Private Choices, Public Costs: How failing families cost us all," the Institute detailed the economic impact of marriage failure.

The study made an estimate of the cost of family breakdown in relation to government spending for the fiscal year 2005-06. The impact on the budget of help to broken families amounts to around 7 billion Canadian dollars (US$6.1 billion) a year.

The report also highlighted how marriage breakdown has a particularly damaging economic impact on women, leading to what it termed "the feminization of poverty."

Although the study concentrated on the economic costs of family failure, it did also acknowledge the impact on children. Not only is divorce linked to poverty, but a large body of research demonstrates that children are better off being raised in a married, two-parent home, the institute pointed out.

Social impact

"Where families fail, as they so often do today, it is up to the rest of us, via government agencies and institutions, to pay for those failures," the report commented.

Family breakdown is more than just divorce, the study pointed out. It includes couples who cohabit, single mothers who have never married or lived with the fathers of their babies.

Some affirm that family structure does not matter, the report observed. Family life, however, is not just a matter of consumer choice, the institute argued and given the economic impact of such decisions it is perfectly legitimate for governments to be concerned about the future of family life. These choices are more than just a private arrangement, but are a vital part of society, the study affirmed.

While government programs can offer some support, they are a poor substitute for a strong family life. The institute cited a 2005 report that looked at the situation of people on social assistance in the province of New Brunswick.

In the study people commented on the great loss of self-esteem and the feeling of helplessness from being dependent on welfare. The institute added that family breakdown leads to what has been described as the three Ds: "dissolution, dysfunction and dad-lessness."

The Canadian report referred to a study published in 2007 in the United Kingdom that examined the problem of poverty. To a great extent, the British study concluded, attempts by the government to alleviate poverty have failed and the poverty of those living on the margins of society is, instead, becoming more entrenched.

The breakdown in family structures has played a significant role in the problem of poverty in the United Kingdom, the study noted, leading to the conclusion that committed married couples lead to the best results for both children and adults.

The Canadian study admitted that intact families also require state help through welfare or subsidies. The proportion of those who need such assistance is, however, much lower than single-parent families.

Impact on children

The Institute commented that when divorce laws were liberalized in Canada it was generally assumed that what is good for the parents would be good for the kids. Subsequently, empirical research shows this has not been the case.

"Whether couples are married or not is a remarkably accurate predictor of outcomes for children on many social science scales, even when economic factors are excluded," the report said.

A whole range of social outcomes, such as drug use, academic results, health and happiness, are affected by family structures. Both children and adults fare much better in a stable married situation.

"The point of debate should not be whether a lack of two married parents matters for children but rather what to do with the reality that it does," the report commented.

Unfortunately, the study continued, the proportion of married-parent families is unmistakably decreasing, as the number of common-law and lone-parents families increase. This trend is also detrimental to economic stability, the report pointed out, given that married adults tend to participate more fully in the economy and generate increased tax revenues.

Economic burden

The report noted that opinions differ as to why being part of a married couple brings with it economic benefits. Some speculate that marriage promotes greater responsibility in both spouses, while others look at economic explanations, for instance the ability of two partners to specialize and divide the many tasks of providing and caring for a family according to their own talents and abilities.

Whatever the reason there is most certainly an economic impact. The institute referred to a variety of international studies on the cost of family breakdown. A February 2009 report from the British Relationships Foundation, described as a non-partisan think tank dedicated to enhancing and improving relationships for a stronger society, put the cost of family breakdown there at 37.03 billion pounds ($61.07 billion) annually.

Another report, this one by the London-based Centre for Social Justice, put the cost of family breakdown in the United Kingdom at an annual rate of 20 billion pounds ($32 billion).

Returning to Canada, the institute calculated that if family breakdown could be cut in half, the direct taxpayer costs of poverty alleviation for broken and single-parent families would be reduced by close to 2 billion Canadian dollars (US$1.76 billion) annually.

Canadian census data shows that two-parent families are the least dependent upon government assistance, single-father households are more dependent, and single-mother households the most dependent.

Happier and healthier

In addition, such a reduction would also greatly reduce the suffering and trauma of family breakdown. "Members of families that remain intact would be happier, healthier and wealthier, but there are also benefits that extend beyond these families," the report added.

Society needs healthy families in order to flourish. "Neighborhoods in which adult male role models are scarce contribute to a culture of machismo, violence and irresponsibility for young men which harms even those children who live with both their parents," it argued.

The institute concluded the report with a list of recommendations. They ranged from marriage education at high schools to making information available on the public benefits of marriage, and the costs of divorce.

The report also called for the government to publish clearer data on how much is spent supporting cohabiting and single parents. It also recommended reforming the taxation system to give a break to married couples.

Governments need to understand the difference between marriage and cohabitation, and they should promote marriage for all the benefits it offers over cohabitation, the study urged. Valid points founded on strong empirical evidence.

Unemployed teens cost Govt $1b a year
By REBECCA TODD - The Press

Rising unemployment in the 15 to 19 age group is costing the Government $1 billion a year, a tertiary education leader says.

Manukau Institute of Technology (MIT) director, external relations, Dr Stuart Middleton, was speaking in Wellington yesterday at the Institutes of Technology and Polytechnics annual conference.

He said 20 per cent of those in the 15 to 19 bracket were not employed or being trained, and cost the economy $1b a year.

Offering vocational or technical education was vital to helping these people.

However, polytechnics needed to be more flexible in providing opportunities, Middleton said.

From next year, MIT would work with schools to identify students "at risk" of leaving or failing, and offer polytechnic education instead, he said.

The students would still be enrolled in school, but attend MIT. He said the plan had generated interest nationwide.

Finance Minister Bill English, who also spoke at the conference, said the Government was focused on the same age group.

Polytechs would be crucial to provide places in the Youth Guarantee Scheme, offering free training to 16 and 17-year-olds.

The scheme would be rolled out next year, a Ministry of Education spokesman said.

Its initial focus would be to provide "alternative pathways in tertiary education" for 16 and 17-year-olds most at risk of unemployment.

Blunt message for polytechnics

"Don't run out of money, because I'm not going to give you any."

That was the blunt message from Finance Minister Bill English at the annual Institutes of Technology and Polytechnics conference in Wellington yesterday.

The Government expected to be in debt for the next decade, meaning "restraint (was) now permanent", he said.

English wanted education institutions to get back to the basics, saying there would be no more "pots of money".

"Well-run institutions will succeed, regardless of size. Badly-run ones won't succeed and may end up going out of existence," he said.

"It's past the time Government can offer continuous support to reinforce failure. You fix it, or we will find someone else who will make the decision that needs to be made."

English said the Government was concerned about the large amount of money spent on low-level qualifications as there was little evidence of their worth in helping people into jobs. He also signalled a return to competition between polytechnics.

'Unacceptable' grants for gang family force Winz rethink
4:00AM Wednesday Jun 10, 2009
By Claire Trevett

Work and Income has set up special arrangements to deal with a Christchurch gang family after findings its staff gave unacceptable grants in an apparent attempt to keep a "rapport" and "establish trust".

Work and Income reviewed its handling of the Harris family after it was revealed it paid towing and impoundment fees for Marcia Harris' 2007 Chrysler saloon, despite Ms Harris being caught driving unlawfully on a suspended licence.

Ms Harris is the wife of Darryl Harris - a former Road Knight and founder of the city's Harris Gang.

In 2007, Work and Income also paid about $230 a night for the family to stay at The Towers in Christchurch for 10 days after their house burned down.

A summary of the report released under the Official Information Act said both decisions were "unacceptable".

It said the case manager dealing with Ms Harris had gone outside usual policies in an attempt to "maintain a rapport" with her. As a result, there was a failure to question Ms Harris properly or consider alternatives.

Yesterday, Minister of Social Development Paula Bennett said the family had an "extensive history" with Work and Income.

"They have a well-publicised history of intimidation and violence which Work and Income has to consider when working with the family."

She said she had made it clear the decisions were "unacceptable".

"I've been assured all future Work and Income decisions regarding assistance to the Harris family will be examined thoroughly, and I will hold the ministry to this. It is simply unacceptable for anyone to receive assistance from the State that they are not entitled to."

She said Ms Harris' file had been handed to another staff member, who was instructed to consult others on decisions. The original case manager was to have no further involvement.

The regional commission and regional director would also oversee the management of all Ms Harris' immediate family members who were getting benefits.

Much of the report is deleted, but it reveals Ms Harris had also received other payments - to such an extent that the file was referred to the ministry's fraud unit "to ensure there was no implication of staff fraud or collusion to commit benefit fraud".

The fraud unit checks showed some decisions were outside Work and Income's policy guidelines, but no staff fraud was identified.

The national director was to brief regional directors on the report to ensure any other "exceptional" cases were handled properly.

In January Work and Income's deputy chief executive Patricia Reade said Ms Harris would be required to repay the money.

The Herald could not contact Ms Harris.

Benefit spending soars to new high
By Dennis Cauchon, USA TODAY

The recession is driving the safety net of government benefits to a historic high, as one of every six dollars of Americans' income is now coming in the form of a federal or state check or voucher.

Benefits, such as Social Security, food stamps, unemployment insurance and health care, accounted for 16.2% of personal income in the first quarter of 2009, the Bureau of Economic Analysis reports. That's the highest percentage since the government began compiling records in 1929.

In all, government spending on benefits will top $2 trillion in 2009 — an average of $17,000 provided to each U.S.
household, federal data show. Benefits rose at a 19% annual rate in the first quarter compared to the last three months of 2008.

The recession caused about half of the increase, according to the report. Unemployment insurance nearly tripled in the past year. The other half is the result of policies enacted during President George W. Bush's first term.

Following the 2001 recession — when costs normally decline — social spending soared to pay for the Medicare drug benefit, expanded health care for children and greater use of food stamps.

The safety net is working, advocates say.

"We're not seeing the hunger we saw in the 1930s because the food stamp program is doing what it's supposed to do," says Florida food stamp director Jennifer Lange.

What's driving the $209 billion increase in benefit costs from a year ago:
•Unemployment insurance. One-fourth of the extra spending covers jobless benefits, a program started in the Depression. The stimulus law, passed in February, increased benefits.
• Social Security. The bad economy has prompted a 10%-15% jump in early retirements, the program's actuary says. A 5.8% increase took effect January 1. Bottom line: $55 billion in new costs.
• Food stamps. Enrollment hit a record 33.2 million people in March, up 5.2 million from last year. The stimulus law boosted the size of the benefit. Average March benefit: $114 per person.

"The increase in social spending is still relatively modest given the severity of the downturn," says economist Dean Baker of the liberal Center for Economic and Policy Research. "We're not France."

Adam Lerrick, economist at the conservative American Enterprise Institute, says the benefits' explosion will eventually lead to an economic crisis.

"We've seen this movie before in many countries. It always has the same ending," he says.

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