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Lindsay Mitchell

The Social Assistance Bill

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Last week I made the following submission to the Social Services Select Committee:

The stated purpose of this bill is to “…break the cycle of welfare dependency”. Central to that cycle is the domestic purposes benefit (DPB). To that end this bill legislates to re-introduce work-testing of DPB recipients when their youngest child turns six.

The most pressing problem with the DPB is not the mother who enters the system with a work history fresh from a relationship breakdown. Many of those women will only use the DPB short term and do not lack the motivation or ability to re-enter the workforce.

The urgent problem is the young, sometimes very young mothers (around six to seven hundred 16 and 17 year-olds are typically on the DPB/EMA at any given time) who come into the benefit system with no educational qualifications or work skills and cannot thereafter easily command an income equal to or better than the inclusive DPB package.

When the Ministry of Social Development (MSD) provided me with data dating back to 1993 (their earliest date for reliable information) it showed that 40 percent of single parents on the DPB at that time began on welfare as teenagers – not necessarily on the DPB. Most first appeared on the unemployment benefit and gravitated to a sickness benefit for pregnancy reasons and then the DPB. The percentage would most certainly be much higher if data from pre-1993 was available. At September 2006 37,609 DPB recipients had first received welfare aged under 20;

Many of these youngsters will have grown up in welfare dependent homes and this is the group that you need to target if you are serious about breaking the cycle of inter-generational dependency and its associated social problems. Promising to work-test the DPB when the youngest child is 6 isn’t going to deter them from defaulting to a benefit. Some point 6 or more years into the future is a long way down the track to a teenager.

Work-testing when the youngest turns six also introduces an incentive to ensure that the youngest is always under 6. Adding a child to an existing benefit is already a reasonably common occurrence. Again, in response to an Official Information Act request MSD wrote to me in July 2005,

“…of all the people receiving Domestic Purposes Benefit at the end of February 2005, 23% had additional children while on benefit.” (Data received post-submission updates this figure to 22%)

Each year around 10,000 babies are either added to an existing or newly granted domestic purposes benefit – nearly one in six births. To avoid working (or to attain or increase income) is a very poor motivation for having a child and doesn’t auger well for that child’s future circumstances. At the very least work-testing rules should apply to the age of the youngest child at the time the benefit was granted.

Furthermore, the following is a quote from a letter I received from MSD in May 2005 which also begs the question, why return to work-testing when…

NZ has been fiddling about with the DPB for too long. The next quote is from the NZ Social Policy Journal, Facilitation of Sole Parents into Paid Work, July 1994;

“Breaking the dependency cycle is one of the two top priority outcomes for the Department of Social Welfare in the 1993/94 year, and a number of new initiatives have recently been undertaken aimed at facilitating the “welfare-to-work” process.”

The result?

New Zealand needs to get serious about returning welfare to what was intended – temporary assistance for all but the most disabled. Many European countries (see example below) and the US exercise quite stringent time limits. And NZ will ultimately have to go in the same direction. This bill just delays that eventuality.