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Lindsay Mitchell

National’s welfare reforms – observations and assessment

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In the early 1990s the National government introduced welfare reforms that were met with enormous resistance and provoked a good deal of public sympathy for the plight of beneficiaries.  The reforms featured benefit cuts which reduced most incomes by around 10 percent, with some losing as much as 25 percent. These cuts affected hundreds of thousands of beneficiaries and their children directly, and others, like retailers and landlords, indirectly. While the government needed to both save money and increase the gap between benefit incomes and wages to incentivise greater productivity, unemployment was above ten percent.

In addition to the benefit cuts, the 1991 Child Support Act, to be administered by the IRD, came into force. It’s been unpopular ever since, so non-custodial fathers were angry.  Dissension over the Employment Contracts Act also resulted in unions joining forces with poverty activists. A keen advocate of welfare reform, even I was personally dismayed as increased hardship became evident (and as a consequence have never advocated cutting benefits).

The scene was set for nationwide protests. Bitterness towards the National government boiled away throughout the 1990s and culminated in their resounding election loss in 1999.

Against this backdrop, it is fascinating to observe the lack of formalised and widespread protest against National’s second attempt at welfare reform, promised prior to the 2008 election and delivered over the next two terms.

Not only have the dissenting voices been weak, but two polls have shown strong support for the reforms. An on-line NZ Herald poll with 13,450 votes showed 58 percent of respondents believed the reforms were “sensible and about time”. Only 13 percent thought they were “totally unjustified”.  A Stuff poll of 8,300 votes found 52 percent thought they were “needed”. Interestingly, 21 percent thought they were “not going far enough” (I agree and will explain why soon.)

So why the change between the two decades?

There are a number of reasons. Firstly, more and more mothers are working, usually out of necessity. They often feel guilty about putting their children into childcare, getting pressure from those who still think a mother’s place is in the home. Their patience is tested by beneficiary mothers who complain about the unfairness of work obligations and inability to meet them. The working Mum is the new norm.

Secondly, the Minister overseeing the reforms, Paula Bennett, has ‘been there and done that’. She is Maori and was, herself, a teenage sole mother on the DPB. She strikes a welcome contrast to predecessors like Ruth Richardson and Jenny Shipley, having credibility with the very people she’s endeavouring to influence, even if her opponents like to brand her a “traitor”.

Another contrast working in Bennett’s favour is that between herself and the ineffectual, idealistic Jacinda “zip it sweetie” Ardern, Labour’s shadow Social Development Minister. It’s the Greens making all the running against the government’s reforms (partly due to Labour’s loss of credibility over their 180 degree reversal on the In Work Tax Credit policy which they don’t want put under the spotlight). Labour now appears ambiguous and ambivalent when it comes to welfare policy.

Thirdly, New Zealand’s population is becoming more multi-cultural and many immigrants, especially Asians, have little time for welfarism.

Fourthly, and perhaps most importantly, the link between child neglect and abuse, and long-term benefit dependence, has now been confirmed and publicised. Auckland University found that 83 percent of children who had a substantiated finding of abuse by age 5 had appeared in the benefit system by age two.  Similarly, the media has exposed case after case of horrific abuse and even death, where perpetrators have been living highly dysfunctional lives fuelled by welfare money. As a result, the tolerance for benefits as a lifestyle has diminished considerably.

Most people, however, want to see genuine cases looked after and understand that the reforms will not hurt this group. People moved to the Supported Living Payment, who were previously on an Invalid Benefit due to chronic or terminal illness or psychiatric/intellectual disabilities, will not be subject to cuts or unreasonable expectations. Indeed, no beneficiary is going to be subject to payment cuts unless they fail to meet what the average person thinks are reasonable expectations; to have their child enrolled with a GP, enrolled at pre-school from 3, at school from 5, to be drug-free for jobs that demand such status, to not have outstanding arrest warrants, to accept drug treatment when offered and to accept work when offered. None of this seems ‘brutal’ or ‘draconian’, words that now fail to stir antipathy for the government.

Politically National has the balance just right – for now. The new Sole Parent Support is still too generous in terms of how long a person can rely on the taxpayer for. For a young, potential sole parent, five years before being asked to look for as little as 12 hours work a week, and 9 more before being expected to work full-time, is still a reasonably comfortable prospect. Other countries – the United Kingdom and Australia – have been more stringent in making a their single parent benefits less attractive. The United States, of course, introduced time limits, a debate New Zealand still needs to have.

There’s also the problem of unemployed beneficiaries who use recreational drugs. To avoid drug tests and sanctions, it is in their interests to be re-classified as ‘addicted’ because those on welfare for the primary reason of ‘substance abuse’ are not  work-tested. Yet we’ve heard little about rehabilitation plans for the 6,000 plus already in this group.

Disappointingly, the government has set itself a soft ‘public service target’. It aims to reduce the number on the new Job Seeker Support (previously unemployment beneficiaries,  DPB and widows with children aged 14 and older, and some sickness beneficiaries) from 78,000 to 55,000 by 2017. Put in context, there are currently 310,000 working age beneficiaries, so at best, reaching the target will only take the total beneficiary count back to where it was when National took office.

All in all though, National has enhanced its prospects of re-election with the reforms so far, and that is of paramount importance. Otherwise, there is a very real danger of Labour returning to power and, as it did after 1999, undoing worthwhile changes National has made. Or even expanding welfare, if buckling to Green demands.

As always, politics is the art of the possible.