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Dr Muriel Newman

Transforming welfare

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11 February 06

Transforming welfare

Jamie is 20. He has never had a job. He didn’t really have an education either: because his mother never bothered with preschool, he always lagged behind the other kids, and so right from the beginning started playing truant whenever he could.

Jamie still lives with his mother and siblings. She’s on a domestic purposes benefit, and has been on it for all of his life. His real dad has been in and out of prison. Jamie doesn’t really know him.

His mother’s boyfriends have come and gone over the years. They have never really liked him and whenever they moved into the house, he tried to stay away as much as he could. Home was always pretty chaotic – lots of booze and drugs, and never enough to eat.

Jamie is on the dole. His caseworkers say that he should go on a training course, but he doesn’t want to. They can’t make him go on the course.

Jamie’s had a couple of job interviews, but he hasn’t been offered a job. The employers don’t like his attitude.

He’s got an “attitude” because he believes that he’s hard done by. The dole is his entitlement, but it doesn’t pay him enough to run a car and have a cell phone, CDs, booze and drugs. As a result, he’s ‘forced’ to do some petty crime on the side. He brags to the younger kids about the “jobs” he’s done, and they look up to him. Doing crime makes him think he’s cool. It makes him feel like a man.

Unless Jamie gets a real job he has no future. He couldn’t provide for a wife and children – no young woman keen to make something of herself would want a partner with no prospects.

But Jamie is not alone. He lives in a state housing area where no one works for a living. The children growing up in that neighbourhood have no working role models. There is no one who has achieved in education.

For people like Jamie, the welfare system should offer a lifeline. It should provide a helping hand into employment. It should not allow Jamie to accept a lifetime of dependency. Nor should it condemn taxpayers, struggling to make ends meet themselves, to have to pay endless benefits to people who could and should be working.

This week’s Household Labour Force Survey (click to view ) hides the truth about people like Jamie. Although he’s on the dole and been there for some years, the HLFS doesn’t count him as unemployed. Instead he is labeled as “discouraged” and is not reflected in the official unemployment figures.

Jamie’s mate Matthew is almost 30. He too has been unemployed since he left school, but because the local publican paid him for an hours work unloading some crates from a truck, the HLFS counts him as being “employed”.

The Government crows about New Zealand ’s low unemployment rate – currently 3.6 percent – but the reality is that the picture painted by the HLFS is ridiculously over-optimistic. By counting anyone on a benefit who works for an hour or more a week as being employed the number in employment is dramatically overstated. And, by failing to count those on a benefit who have not been actively looking for work as unemployed, the number of unemployed is greatly understated.

Using the HLFS figures, if the 75,500 “officially unemployed” people are added to the 69,200 people like Jamie who are out of work but don’t fit the HLFS definition of being unemployed, then the number of jobless people in New Zealand rises to 144,800. Using that figure, the ‘unemployment rate’ would be a more realistic 6.8 percent. If all the beneficiaries like Matthew, who were only working a few hours a week, were then added in, the unemployment rate would be even higher.

Another way to look at the state of welfare is to examine the benefit figures published by the Ministry of Social Development (click to view ). The December quarter statistics reveal that there are 302,083 working age people receiving welfare: 106,083 on the Domestic Purposes Benefit, 74,500 on the Invalid Benefit, 51,426 on the Unemployment Benefit, and 46,862 on the Sickness Benefit. Of those, more than one in four are Maori, and one in five have been on a benefit for longer than ten years.

If those DPB parents whose children are at now at school are added to the number of unemployed, we are paying over 100,000 people who are able-bodied and capable of working to be on welfare at a time when small businesses up and down the country are crying out for workers. It is a dreadful indictment of a welfare system that is clearly failing to reduce dependency.

Welfare should give people a hand up to work, independence and a better future. It was never meant to allow Jamie and others like him to choose to waste their lives and become a long-term cost on taxpayers.

Professor Peter Saunders and his colleague Phil Rennie of the Centre for Independent Studies have authored a paper on the status of welfare in Australia (click to view ). What it shows is that the Australian Government is more willing than ours to ensure that beneficiaries, who are capable of working, get jobs.

Having said that, both Australia and New Zealand have a long way to go to catch up to other countries around the world that have taken a far more pragmatic approach to welfare and put in place systems that work far better then ours.

As a Parliamentarian, my ambition was to become the Minister of Social Welfare so that I could get our welfare system working properly. However, the election and the democratic process put paid to that goal! But for the record, you can read what I would have done to fix the system (see below) – my mission would have been to replace our dependency culture with an opportunity society, providing a strong and generous safety net for those in genuine need, and requiring people like Jamie who are capable of working to get jobs!

This weeks poll. Do you believe New Zealand’s welfare system is doing enough to eliminate welfare dependency? To take part in our online poll Five Steps to Transform Welfare

With the present abundance of jobs, there has never been a better time than now to completely overhaul the welfare system. We need to urgently return it to the original purpose envisioned by its creators of being a hand up to work, independence and a better future.

Based on successes both here and overseas, I recommend that the following five principles to reform welfare be implemented:

Introduction of a single benefit

Annual benefit re-application process

Time limited work-search period

Pro-active case management

Full-time work-placement programme

Details include:

1. Introduction of a single benefit

Firstly, to simplify the benefit system and send a clear message to the able-bodied that welfare is only available for temporary assistance in times of need, all benefits – including the dole, the domestic purposes benefit, the sickness benefit and the invalid benefit – should be replaced by a single ‘temporary’ benefit. This will be categorized according to the status of the beneficiary: jobless, a single parent with dependent children, or unable to work due to sickness or disability.

Exemptions from the need to look for work will be applied to single parents with very young children, those who are too sick to work, and those with permanent disabilities who will never be able to support themselves. For that minority of citizens, welfare must provide on-going security and should be generous enough to provide a decent quality of life.

Further, due to concerns over the dramatic rise in the number of people of working age who claim they are unable to work due to sickness or disability, a designated doctor programme will be introduced along with intensive case management which, like ACC, will be able to access capacity in the private sector to fast-track people back into the workforce where appropriate.

2. Annual benefit re-application process

Secondly, an annual benefit ‘re-application’ process will be introduced. This means that on an annual basis everyone will be asked to re-apply for their benefit in order to reduce the widespread fraud and abuse that presently blights the system and to ensure that everyone is receiving the appropriate level of assistance.

3. Time limited work-search period

Thirdly, a ‘time limit’ on welfare will be introduced once beneficiaries are categorized as being fit for work. This will take the form of a six-month “work search” period during which time they will be required to find a job in their own way.

4. Pro-active case management

Step four of the system is designed to help those people who have been unsuccessful in finding a job during their six-months free ‘work-search’ period. They will be provided with professional support through a pro-active programme of case management. This will help them to overcome their individual barriers to work so that they will be successful in getting and keeping a job.

In some cases, the support of a financial planner will be needed so they can get their personal finances sorted out and under control. In other situations assistance may focus on child-care help, transport, relocation, or even the provision of interest free loans so they can buy the clothes or tools they need for a job.

5. Full-time work-placement programme

Finally, this pro-active case-management process will operate in conjunction with the fifth step of ‘work placement’. For those who have spent an unsuccessful six months hunting for a job, work placement will involve forty-hours-a-week of work, training, or job search. This full-time programme will be designed to help them gain the habits and skills of the workplace as well as to enable them to engage in the informal networks, which more often than not, lead to a job. An approach designed to eliminate dependency

Based on approached that have been implemented overseas, the key to the success of this five-step process is getting the incentives right: sending a strong signal that welfare in New Zealand is there to provided work for those who can and security for those who can’t. The system is designed to help people to help themselves into a job and independence from the state. The key requirement of the welfare department is to ensure that beneficiaries receive the appropriate professional support to enable them to become work-ready and get a job.

Further, this re-vamped welfare system will ensure that once again, the majority of New Zealand children can look forward to a future where they are no longer trapped in families plagued by intergenerational welfare dependency and its associated problems of social exclusion, but are brought up by parents who value work.

Finally, this five-step process will eliminate much of the fraud and abuse that has for too long plagued the welfare system. It will enable the cost of welfare to be significantly reduced, providing an ideal opportunity to lower the tax burden on working New Zealanders. This in turn will boost the economy and improve the standard of living for all families. It is the key to taking the country onto the path to prosperity that should rightfully be our destiny.

Reader’s comments will be posted on the NZCPD Forum page click to view .

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