Good to see Ruth Dyson finally admitting we have left beneficiaries behind. I would hope now that there would be a lot more done than simply indexing benefits to wages though. Increasing the benefit to real pre-1991 levels would be a good start.
A lot of people know about the benefit cuts but not many know about the rationale behind them. At the time the plan was to increase the “gap” between welfare and work in order to make people compete harder for jobs. Effectively it forced people to take lower and lower wages for any job they managed to secure.
The figures treasury and the National party used for the benefit cuts were based on what they called the “New Zealand income adequacy standard”. In theory this was a poverty line. In effect it was well below that. Figures for the cuts were based on research from Otago University’s department of human nutrition which determined the lowest level of income people could survive on while maintaining basic needs such as balanced dietary intake. Unfortunately this lowest level was based on things such as bulk purchasing, slow-cooking cheap cuts of meat, making food from scratch and a whole lot of other saving methods that presumed time and skill. The Dunedin researchers discovered that in practice nobody was able to feed themselves properly on their minimum food budget but that didn’t stop the National Government adopting it and cutting it a further 20%.
The results were predictable. Coupled with other National party policies such as market rents for state housing tens of thousands of New Zealanders fell into extreme poverty, food-banks sprang up and third-world diseases such as TB, glue-ear and meningitis ran rife. In 1996, 473 New Zealanders ended up in hospital with rheumatic fever – a poverty-related disease that was virtually unknown in most western countries since the 1960s – and one in four of them died from it. The next year the National Government launched a publicity campaign that misrepresented benefit fraud levels and attacked beneficiaries as bludgers. Prior to the 1990’s people who could not get a job were thought of as vulnerable people we should all look after. No longer.
Some of the worst effects of the cuts have been ameliorated by income-related rents, PHOs and the fact that we have had a period of strong economic growth and at the moment there are few people on a long-term benefit and there are plenty of jobs. But if the economy slows we’ll find out how little we’ve moved on from the 90’s. Until we increase the benefits to a meaningful level and start thinking about social welfare as, well, integral to the welfare of our society then we will not see wages for low-skill jobs increase without minimum-wage intervention and tens, if not hundreds, of thousands of New Zealanders will continue to risk the same poverty we saw in the 1990’s if we have a downturn.
As an aside, I note that Judith Collins claims better budgeting advice is all that is needed. It reminds me of how in the late 90’s Jenny Shipley claimed beneficiaries just needed to grow their own vegetables and everything would be fine. I hope Labour does something to fix this. After reading Collins’ delusional comment I know National won’t.