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Lindsay Mitchell

Welfare reform becomes political football – again

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Earlier this year the National government appointed a working group to look at ways of reducing welfare dependence. The group has consulted widely, too widely in my opinion. But they wanted to be seen to be making a fair job of it. The conference they ran at Victoria University in June gave the first public indications that all would not be plain sailing, and it was naive to assume it could be. The traditional left/right divide became quickly apparent with many attendees characterising the initiative as ‘beneficiary bashing’. Prominent in the detraction were Sue Bradford, the Child Poverty Action Group, the ex Children’s Commissioner, and various church and community groups who have latterly joined forces to form an alternative welfare working group.

On Monday last week the official group released its first paper, Long-term Benefit Dependency: The Issues. This 76 page report aims to describe the problems inherent in the current system and the dimensions of dependence. Its significance lies in the second aim. Prior to this effort no real attempt has been made to quantify how long people rely on benefits for. The Ministry of Social Development provides data about average spells but this ignores that many individuals have repeated stays on welfare. Nothing is known about cumulative time spent dependent. Additionally the Ministry only has individual benefit history post 1996. Again this creates a substantial shortfall in what is known about patterns of dependence.

However the report looks at how long beneficiaries at June 2009 had spent on welfare in the preceding 10 year period and found that over 170,000 had “been on a benefit for most of the past ten years”. It also identifies long-term dependence in particular groups, importantly, those who start on welfare very young. They are disproportionately Maori which contributes to the startling finding that 40 percent of Maori women in their 20s are on a benefit, usually the DPB.

It contrasted overall welfare dependence in 2010 (13 percent of the working age population) to 1960, when only 2 percent were dependent. It also controversially calculated future liabilities for those currently on welfare and produced a figure of $50 billion.

The responses to the report have been largely negative. They take the form of denial or diversion. The Greens said the report was an attempt to ‘manufacture a crisis’. This was picked up by the media and affirmed by Guyon Espiner on Breakfast television the following morning. Brian Rudman followed with a column in the Herald pointing out that during the 1990s more people had been on welfare but the economy had survived. What Rudman doesn’t appreciate is that far more people were on the unemployment benefit during that period. Long-term dependence occurs primarily among DPB and Invalid’s benefits. The number of people on either a sickness benefit (a gateway benefit), or invalids benefit averaged 64,000 annually through the nineties. Today the combined total exceeds 140,000 and is growing constantly. The DPB total is over 100,000 and has fluctuated around this level for the last twenty years. Note that this is despite the strong economy of the mid 2000s when NZ briefly enjoyed the lowest unemployment rate in the OECD.

Labour leader Phil Goff went into denial and diversion. According to the NZ Herald:

Labour leader Phil Goff said that rather than a culture of long-term welfare dependency, the numbers on benefits reflected economic conditions. It’s not that people don’t want to work; the jobs simply aren’t there at the moment and the situation’s getting worse.

There is also a strong element of opportunism here. After all National making welfare and unemployment an election issue is a gift for Mr Goff.

What Mr Goff ignores, but I suspect understands, is that long-term dependence is caused by other factors beyond unemployment. If he read the report he would discover that one of the significant identified factors leading to long-term dependence is entering the benefit system aged 16 and 17. This group has the greatest risk of staying on welfare long-term. It is clear to me that an expectation of eligibility for a benefit leads to educational under-effort and a subsequent failure to acquire skills or qualifications. Over time these youngsters make up an increasing share of the total reliant at any given time.

A further factor leading to long-term dependence is people adding children to an existing benefit, also detailed in the paper, along with the passivity of the current benefit system. Mr Goff refuses to acknowledge that even when the economy is strong the deeply entrenched dependence problem persists. Therefore other factors beyond job scarcity are driving it.

Unfortunately the easiest message for the public to absorb is, there are no jobs. And they will be inundated with this mantra from the very loud and well-organised groups best described as on the left of the political spectrum. The protests from opposition politicians and the alternative welfare working group will produce the squeakiest wheel despite being shallow in their content.

At the outset of the June conference Paula Bennett warned that this exercise would get nasty. She was right. For example, from the Labour- supporting left blog, The Standard

“… nothing shrivels a Tory heart like the idea of sharing their wealth. While unable to deny the need, they become so obsessed with the small minority of bludgers that they can’t help but attack the system, and in doing so they attack the support for the overwhelming majority of perfectly genuine welfare recipients.”

When I politely responded to this assertion, pointing out that for many, wanting welfare reform is not about meanness but concern about the damage it is doing I was told to f.___ off back to my ACT mates. I relate this to illustrate that the old class warfare mentality is alive and kicking and the expression of it will dominate the debate provoked by the welfare working group.

In turn this cannot but have an effect on how far the government will be prepared to go when the group makes its recommendations at the year end. The people who will oppose those recommendations do not sit around saying they can’t make a difference. They will use their considerable collective capacity to turn public opinion their way.

And what of the views of those who want to see more New Zealand children realise their potential in life rather than grow up with the same low expectations and sense of entitlement as their parents? Who are alarmed at the economic implications of allowing long-term dependence to continue growing? Who are convinced that welfare has had a hugely detrimental impact on the family?

Don’t wait for the media to come looking for them. Sensible is not sexy.

Which is why the Issues Paper provides an opportunity for every interested party to make their view known. It poses a number of questions that can be answered as briefly or as fully as your time permits. But make the effort because this government is as poll-driven as any other. They need to know they have support for change. They need a mandate to accept at least some of the recommendations that the group will make in December this year. Don’t let the naysayers carry the day again. If this opportunity is lost we may wait years for another.