NZ Centre for Political Research

The Welfare State Neutralizes Opponents by Making Them Dependent on Government

Political analysts have noted that because the number of those in the ruling elite amounts to only a small fraction of the number in the ruled masses, every regime lives or dies in accordance with public opinion. No matter how powerful or pervasive a regime is, it can still be overrun by the sheer superior numbers of the people it governs. However, this traditional political framework has been undermined by the development of the modern welfare state, says Robert Higgs, a senior fellow with the Independent Institute.

While the original framework would dissect the country into two populations, the gladly ruling and the reluctantly ruled, the welfare state has created a third group: dependents. Though they are most certainly ruled, they are often fierce defenders of the regime and its advocated status quo, thereby breaking ranks with the rest of the ruled who only tolerate it. They do this because the welfare state allows the current regime to be the primary provider for an ever-growing body of dependents, and this dependency engenders loyalty.

•An index of dependency developed by the Heritage Foundation found that the metric increased from 19 in fiscal year 1962 to 272 in fiscal year 2009.
•The Heritage researchers found that in 1962, 21.7 million persons depended on the government-run programs included in their index, yet this same figure for 2009 had grown to 64.3 million.
•Adding dependents not included in the Heritage study might easily increase the number to more than 100 million people, or to more than a third of the entire population.
The handouts of the welfare state exploit this large swathe of the population and earn their repeated and unwavering votes by perpetuating the status quo. As greater portions of the population come to rely on the government for their livelihood, the more clout it will inherently have as its number of detractors dwindles.

An additional symptom of this growing trend, which can be seen in the current political sphere, is that the creation of a status quo-supporting population inherently causes increased resistance to change. This conservativeness manifests itself in a lack of radical policy and in the loss of personnel turnover in Washington.

Source: Robert Higgs, "The Welfare State Neutralizes Opponents by Making Them Dependent on Government," Independent Institute, December 8, 2011.
For text: http://www.independent.org/newsroom/article.asp?id=3199

Working for Families Tax Credits
Working for Families Tax Credits are entitlements for families with dependent children 18 years or younger. There are four types of payment and you may qualify for one or more, depending on your personal situation.

1.Family Tax Credit
This provides ongoing financial support for families. You can get it while on a benefit or while you’re working (Inland Revenue pays it if you work). The other payments have different rules and you can only get them if you’re not on a benefit.

2.In-Work Tax Credit
This is a payment for working families with dependent children. To get this payment, at least one parent must be working for salary or wages, and normally work for a minimum number of hours each week. You can get in-work tax credit if you’re self employed. It’s not available to families receiving an income-tested benefit or student allowance.

3.Minimum Family Tax Credit
This payment ensures that the total income for families with dependent children does not fall below a certain amount each year. To get this payment, at least one parent must be working for salary or wages for a minimum number of hours each week.

4.Parental Tax Credit
This payment helps with the costs of a new baby for eight weeks after your baby is born. The amount you can get depends on your family income and if you received weekly accident compensation payments, an income-tested benefit, a Student Allowance or New Zealand Superannuation during the first eight weeks after your child was born.

What kind of life for a child?
By Kirsty Wynn
http://www.nzherald.co.nz/nz/news/artic ... d=10762570

A toddler lived in a "houseful of druggies" surrounded by violence, syringes and burnt spoons for months while calls to support agencies went unheeded.

Landlord Larry Palmer said it was only once he had the woman forcibly evicted that social services acted.

Work and Income finally moved the evicted tenant out but left him to clean up syringes, needles and burned spoons.

The Taupo retiree had to return to work to pay for $3500 rent arrears and damage caused to the property in the seven months the woman - who has a 2-year-old son - rented the property.

Palmer, 70, tried for three months to move his tenant from the house after hearing reports of violence at the hands of the woman's former partner and continued drug use at the property next door to his family home.

He contacted WINZ, Child Youth and Family and the Taupo police but said his concerns fell on deaf ears. Even when a woman died of a suspected drug overdose at the house, Palmer said he was kept in the dark. "It has been an absolute nightmare," Palmer said. "Everyone said it was out of their jurisdiction. We finally got her out through Tenancy Services."

Palmer called CYF out of concern for the woman's toddler but said the case worker made him feel "like a second-class citizen" and told Palmer the boy was fine.

"I said to her he might be getting his tucker but what is it doing to him? He's living in a house full of druggies," Palmer said. "You have no idea the mess this house was in. We found drugs, syringes, needles and every spoon in that house was burnt."

Palmer said an eviction notice was finally served through the Department of Building and Housing. Then CYF took the woman and her son to a safe house and put her furniture in storage.

"They came, took all this woman's furniture away and left us with the mess. They said 'we don't pay for the mess to be taken away'," Palmer said.

Grant Bennett, from Child Youth and Family, confirmed the mother and son had been provided with new, supervised accommodation.

"As part of an urgent safety assessment, social workers spoke to the woman's landlord, who also expressed serious concern for the safety of this child," Bennett said.

"Child, Youth and Family have arranged supervised accommodation for mother and child and have placed her belongings in temporary storage while we complete our assessment of the situation."

Janet Grossman, of Work and Income, said the agency provided assistance with accommodation costs but the housing arrangement was between landlord and tenant.

"There are legal avenues open to landlords, including the tenancy tribunal and the courts, to recover unpaid rent or compensation for damages," Grossman said.

St John Ambulance operations manager Graeme Harvey confirmed they were called to the address on September 22 and found a woman had died.

"We attended to a female patient in her 40s but, unfortunately, she was already deceased. She was in the main living area of the house."

Key admits underclass still growing
By Claire Trevett
http://www.nzherald.co.nz/politics/news ... d=10759869

Prime Minister John Key has acknowledged that the "growing underclass" he promised to tackle in 2008 has probably grown further - rather than decreased - during his first term in government.

Mr Key made the concession yesterday when asked about progress with the underclass, saying it depended what measures were used but recessions tended to disproportionately affect low income earners and young people.

He said he had visited a number of budgeting services and food banks "and I think it's fair to say they've seen an increase in people accessing their services. So that situation is there."

He did not believe the government had not acted on its promise to tackle the issue.

"It's a long, slow job and there's a lot more to be done. I don't accept there's nothing that can be done, but it will take a long time to make those changes."

He said he believed welfare reform - planned for National's second term - would help lift people out of poverty. So too would education policies.

Mr Key made the "growing underclass" a major feature of his 2008 campaign, raising the topic in both his 2007 and 2008 State of the Nation speeches and promising it was a priority, including tackling welfare dependency, crime, illiteracy, drugs and parenting skills.

He also visited McGehan Close, in Owairaka, Auckland, as an example of the type of community he wanted to help.

Yesterday, he denied that the Government had not acted, saying it had put in place initiatives across the board - including more flexible training for students, targeting early childhood education at Maori and Pacific communities, and health initiatives for poor regions such as immunisation programmes.

He said the Government had also done the best it could, in difficult times, to insulate people from the recession.

The whole system needs to be scrapped and new ways of supporting people with new and stringent safeguards need to be introduced. It has got completely out of control with people rorting the system left right and centre!

Single mum on DPB for decades
NICOLA BRENNAN-TUPARA
http://www.stuff.co.nz/national/5652215 ... or-decades

A single Waikato mother of six children has been receiving benefits for almost 30 years.

She is one of an army of long term Waikato beneficiaries revealed in information released to the Waikato Times under the Official Information Act.

Social Development Ministry statistics show 1647 people in the region have been receiving some form of benefit for 15 years or more.

A further 1500 have been on it for between 10 and 15 years, 3655 between five to 10 years, 6309 between two to five years and 12,904 for less than two years.

Nationally, welfare payments cost taxpayers about $7.6 billion a year.

According to the ministry's information, Waikato's longest claiming beneficiary first started receiving the Domestic Purposes Benefit in 1982 and is still on it. The ministry would not say where the woman lived or give details of how much she received.

If she was to receive the present DPB rate for the Domestic Purposes Benefit of $288.47 for the next 30 years it would cost taxpayers $449,280.

A spokeswoman for the ministry said the beneficiary had been raising six children during that time – three of whom were still dependent on her.

She also started caring for her sick, elderly mother in the past 10 years.

The Times understands the women's children are aged over six, meaning under the new Future Focus regime she would need to find part-time work, but because she is also caring for her sick mother, she does not have to.

Social Development Minister Paula Bennett admitted the country had a problem with long-term beneficiaries, but changes to the welfare system were helping rectify that.

While she didn't know this beneficiary's circumstances, she said: "Spending 30 years on a benefit is neither good for an individual or, really, the children growing up in that family.

"All they have seen is the benefit receipt and no real evidence of work or what that means – or the value of it."

Ministry of Social Development chief executive Peter Hughes said the majority of long-term beneficiaries (70 per cent) in the Waikato were receiving an invalid's benefit.

"Many for lifetime conditions, such as intellectual disability," he said.

"Almost all of the remaining 30 per cent [long-term beneficiaries] are receiving the benefit because of caring obligations."

Mr Hughes said no Waikato person had received the unemployment benefit for more than 10 years.

Mana Party candidate, and former Green MP, Sue Bradford said the vast majority of people receiving welfare payments desperately needed them.

"We shouldn't begrudge them for that," she said.

"That could be any one of us if we had an accident tomorrow – or if we had a substantial mental illness, we would hope the state would support us. I would hope New Zealanders were compassionate to understand that. Our benefit system is there to support people who can't support themselves through no fault of their own.

"Would people rather they were begging on the streets or killings themselves, which becomes the only options you have?"

Ms Bennett said there was still a lot of work to do, though she would not reveal yet what plans she would implement if re-elected in November.

She said "a lot" of money still needed to be spent helping the long-term beneficiaries to get work-ready.

LONGEST SERVING

Waikato's longest serving beneficiary:

has been on the DPB for 29 years, six months

has received $450,000 in tax payer's money during that time

has six dependent children

cares for her elderly, sick mother

- Waikato Times

Damien Grant: Morgan's welfare revolution fails on the details

Gareth Morgan has produced a comprehensive and interesting book on the failings of our welfare industry and has proposed an alternative.

His solution - the unconditional basic income (UBI) - is simple, dramatic, and wrong.

The first part of the book, The Big Kahuna, is an excellent and well-researched summary of how we found ourselves with the current mosaic of conflicting, confusing and mostly ineffective social welfare policies.

This alone is worth the price of admission.

The solution proposed by Morgan is to scrap the entire regime and replace it with a UBI of around $11,000 a year, paid to all citizens regardless of circumstances.

He also advocates a revamped tax on capital that I shall not deal with today.

Morgan provides some costings. By his analysis, government spending will rise from the current $68 billion to $84 billion. Our nominal GDP is around $190 billion. Forty-four cents in every dollar earned would go in tax.

National Super, Working for Families, DPB, the accommodation supplement and random ex-gratia "recoverable assistance" would all be scrapped.

He is not advocating abolishing taxpayer funding of health or education.

The Morgan plan has advantages. It is simple, reduces incentives to game the social welfare system and creates social opportunities not available at present.

But these advantages are paid for by staggering tax increases imposed on those remaining in employment.

The Morgan scheme does two things. It increases the demand for leisure by paying people not to work and reduces the demand for working by increasing taxation.

Morgan is confident that the introduction of a UBI will not result in the beaches at Piha becoming crowed mid-week - and I agree - but in reality it doesn't really matter.

Economically, the unskilled are irrelevant. They are a commodity.

Only talent matters and a progressive tax system hurts the most productive members of the community.

High-income earners react to increases in tax by working less, thus paying less tax. Worse, they take their skills offshore.

Talentless poets would remain. Radiologists would depart.

Those with skills who remain will work less, making access to them more expensive, which will make the UBI worth less, leading to demands that it increase.

To be fair, most of the extra tax would be recycled straight back to those remaining in employment but even a marginal change amplifies quickly. Ten thousand leaving the workforce means millions upon millions in lost taxes.

That must be recovered by taxing the remaining workers more, who react by working less, and so on.

This is not to defend the current scheme. Morgan is right, it is beyond repair. We need a radical solution, but the answer to a broken social welfare state is not to make everyone a beneficiary.

Welfare has failed Maori - Brash
Colin Williscroft

Welfare has had a destructive impact on Maori, Act leader Don Brash will tell a Tauranga audience tonight.

In a speech to mark the launch of Act's one law for all policy, Mr Brash will hark back to a warning, given by Sir Apirana Ngata, an MP from 1905 to 1943, that not only would welfare be destructive, giving Maori special legal status was hugely counterproductive and would creative a societal divide.

In a statement released this afternoon preceding the speech, Mr Brash said New Zealand needed to face up to the fact that while Maori comprise only 15% of the population, they make up 35% of unemployment benefit recipients, 42% of DPB recipients, and 51% of the prison population.

“The shocking over-representation of Maori in all the worst social statistics is a product of failed policies,” he said.

“Our education system has tragically failed Maori, producing an appalling rate of literacy and numeracy problems among Maori and one of the longest tails of educational underachievement in the OECD.

Mr Brash said New Zealand's minimum wage laws have created a vicious cycle, whereby many young Maori, already robbed of a decent education, are priced out of the job market.

“Prior to the introduction of welfare policies in the 1970s, Maori health statistics were gradually improving, but right from the inception of the DPB the tide turned and – for example – Maori women became heavily over-represented in the sole parent category that qualified for the benefit.”

Moves to lock in a separate legal status for Maori were totally contrary to the Treaty of Waitangi, he said.

“The Maori electorates, special Maori advisory boards in local government, hugely inefficient clauses in the RMA, and special tax laws for Maori commercial companies are all examples of creating a special legal status – but have any of these measures reversed the slide into over-representation in the negative social statistics?”

The Treaty of Waitangi clearly stated all New Zealanders are to have the rights and privileges of British subjects, Mr Brash said.

“That was an extraordinarily enlightened statement for 1840, and it rings clear still today – there can be no peace where people of different races have different legal rights, and we’re extraordinarily fortunate that our founding document already provides for such equal rights.”

John Key's clever politics have been to pick a group which cannot vote and which, as far as most people are concerned, needs firm direction and protection by the state.

Cautious Key making life tricky for Labour
By John Armstrong

It's welfare reform, Jim, but not as we know it. National's first substantial foray into territory from which it fled in undignified retreat in the Ruth Richardson-Jenny Shipley era is very cautious, very measured and very unthreatening. Deliberately so.

That poses some rather tricky problems for Labour. The centre-left was probably counting on National reverting to type and initially tackling its modernisation of the welfare state by rounding on the tens of thousands of people on the domestic purposes or sickness benefits and radically tightening eligibility, entitlements and obligations.

The Government has indeed been doing that with its "Future Focus" programme which, among other things, imposed stricter part-time work obligations on sole parents.

But Future Focus is more a case of tinkering with the existing system than the wholesale restructuring recommended by the Government-instituted welfare working group in February.

The challenge laid down by that advisory body was that a Government claiming to be serious about slashing the numbers on welfare had to have the necessary political bottle, plus a willingness to budget enough cash for back-up services so people had no excuse for staying on their benefit.

There are two ways of looking at the plan unveiled by the Prime Minister last Sunday to deal with "disengaged" youth.

The first is that it amounts to the first serious effort to ensure a segment of the population, albeit a small one, is no longer so prone to becoming reliant on a benefit.

The second is that some of those targeted - 16- and 17-year-olds on the independent living allowance - are already intensively "case-managed" by Work and Income and are obliged to be in school or some form of training. So what's new?

John Key's clever politics have been to pick a group which cannot vote and which, as far as most people are concerned, needs firm direction and protection by the state.

So it seems common sense to identify the 13,000 or so 16- and 17- year-olds who have left school but have no jobs and work with them closely to get them back into some kind of education and training so they can hold down a job.

Intriguingly, it is the more ideologically driven components of Key's plan which make it popular.

First, the mentoring and monitoring of the teenagers will be contracted out to non-government social services who will get bonus payments according to results. Second, the 1600 or so who are on the independent living allowance because of family breakdowns or the like will lose control over how they spend a large chunk of their benefit.

Removal of the supposed freedom beneficiaries have to drink, smoke or gamble away taxpayers' money will have widespread backing.

Even here, though, Key has been careful. It has gone unnoticed that National's plan stops short of the welfare working group's recommendation that teenagers receiving financial assistance from the state live with a "responsible adult" and their total welfare payments also be paid to that person.

That might have been seen as too punitive - and suggests that while Key will carry through with the broad thrust of the working group's recommendations, he will make them more politically digestible.

All this adds up to something Labour is finding extremely difficult to criticise without putting itself on the wrong side of majority opinion, while also driving a wedge between itself and what remains of its dwindling male, blue-collar constituency.

Labour is acutely conscious of the trap Key has set. It has limited its criticism to saying the plan is a con-job and an election stunt.

It says Key has promised to help younger members of the "underclass" before and nothing substantial has eventuated even though this must be at least the third National "youth package".

Labour has also waved a letter written by Social Development Minister Paula Bennett to a businessman in which she said the sort of oversight now planned for out-of-work teenagers was highly intrusive and the use of payment cards to stop beneficiaries buying cigarettes and alcohol was making moral judgments about individuals.

But Labour's prime means of undermining National's plan is to argue that making teenagers follow such a programme ignores the reality that with unemployment among 15- to 19-year olds at more than 27 per cent - compared with an overall figure for the labour force of 6.5 per cent - there are no jobs for them.

Labour has sought to widen the argument to the 58,000 15- to 24-year-olds who are not in work, education or training. Phil Goff has also cited a $145 million cut in industry training as proof National is not willing to match promise with delivery,

National does not dispute the figure, but points out the reduction is over several years.

As well, it says, Labour might have nearly trebled industry training's funding, but there was poor accountability, poor results and money was wasted.

An audit by the Tertiary Education Commission, for example, revealed a dozen cases of deceased people listed as being in training.

Such argy-bargy between the two major parties is somewhat removed from the question of welfare reform - a point of contention for National, which says it is simply giving priority to helping an age group which once it graduates to the benefit tends to stay on it for some time.

Labour may have had some success in shifting the argument on to a wider plateau. But eyes glaze over when politicians start throwing sets of statistics at one another.

In contrast, National organised its annual conference last weekend with the sole objective of ensuring nothing obstructed maximum television coverage for Key's speech.

National's strategy for welfare reform is clear - flag a gradual lift in the tempo and scale of reform it intends to carry out if re-elected while being careful to ensure it takes the public with it.

It seems to be working. But it is still very early days.