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Lindsay Mitchell

Welfare reforms are in the interest of children

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Welfare reforms the government will legislate for later this year have been typically denounced by opposition politicians and child advocates. Many have railed in particular against the idea that mothers with children as young as 1 year-old will be expected to be available for part-time work, which, incidentally, may involve as few as 12 hours per week. Sue Bradford, now acting for Beneficiaries Advocacy and Information Service (BAIS) called the reforms shocking.

In parliament Green MP Metiria Turei , asked John Key why the government was intent on forcing single parents with little babies as young as 12 months into work? The answer is to discourage women from adding babies to their benefit. They are being told that they cannot avoid working simply by growing their families.

The new policy of requiring a mother to be available for part-time work when an additional child turns one represents the first attempt by a New Zealand government to stop beneficiaries exploiting the DPB (and other main benefits). Each year around 5,000 children are added. At any given time this results in almost a quarter of the DPB population having had extra children on welfare.

In 2006 deputy chairman of the NZ Medical Association Don Simmers told a conference that too many women were contemplating pregnancy on a benefit. More recently I spoke with the head of an organisation working with beneficiary families who was in no doubt that women plan a pregnancy as the prospect of pressure to work looms (there was a work-testing regime in place in the late 1990s). She believes the new policy will make a difference.

Some American states attempted to deal with the same problem by introducing ‘family caps’ which limited cash assistance to a fixed number of children and no more. The results were mixed and such a move here would be met with objections about depriving additional children, especially from the Child Poverty Action Group.

So the government went with the one year exemption option. Metiria Turei describes this as forcing mothers into work but that claim doesn’t stand up under scrutiny. Nobody is forced to have a baby on a benefit – a benefit provided because she is already unable to independently support her children. Never before have women been better able to control their fertility. If she chooses to get pregnant and have the baby she will be doing so fully aware that if a part-time job is available when that baby turns one, she will be expected to accept it (along with the childcare assistance needed to do so.) The choice is ultimately hers.

Freedom of choice is what the reforms are essentially about re-balancing. True freedom of

choice can’t encroach on someone else’s. Most voters are behind the reforms because they feel unfairly treated when one group is allowed to make a choice that they are denied. Why is it fair for single parents to be supported to stay at home indefinitely when most partnered parents go back to work quite quickly? It becomes especially gruelling for working mothers to then hear that putting their young children into day care is a form of child abuse, an argument advanced by the opposition to reject the reforms.

Children who spend many years on the DPB generally have much poorer outcomes. This is well-documented. To knowingly exacerbate this situation by adding more children to a workless household can’t be defended at any level. In the interests of children the government is entirely justified in trying to break this habit.

The other major objection to the (largely) DPB welfare reforms came in the form of, where are the jobs? While the economy is constantly creating jobs this objection appears to hold more water than the prior. But when the demographic change New Zealand is facing is taken into account, it is clear that labour force is going to shrink in relation to the non-labour force.

The graph below shows that the ratio of the combined 0-14 and 65+ populations is going to grow from around 0.5/1 today to 0.7/1 over the next twenty years. The demand for goods and services continues from the non-working population thus increasing demand on the working age population. Hence it is so important for the government to set in place the legislation that requires beneficiaries to work when jobs are available.

Source: Facing Fiscal Futures (http://www.treasury.govt.nz/publications/media-speeches/speeches/fiscalfutures)

Although it has grown, New Zealand still has one of the lowest rates of single parent employment in the OECD. This is, at least in part, a reflection of New Zealand’s historically open-ended and relatively generous DPB.

Sole parent employment rates across the OECD, around 2007

Source: OECD family database (www.oecd.org/els/social/family/database)

So there is ample evidence jobs will be there, particularly in the care and health sectors, and ample economic imperative for more sole mothers to participate in the workforce.

However, to my mind, an even more important aspect of increasing their participation is the positive benefit for their children. Breaking the inter-generational cycle of welfare dependence won’t happen until children live with at least one working parent who is building their own expectations of a similar life.