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Cost of benefit system plummeting

Written By: - Date published: 1:40 pm, April 17th, 2008 - 25 comments
Categories: economy, election 2008, john key, labour, national, workers' rights - Tags: , , , , ,

Continuing our benefits theme, here’s a look at how much the benefit system costs you. The figures are the combined expenditure by the Government on the Unemployment, Sickness, Invalids’, and Domestic Purposes benefits per day per working age New Zealander, in 2007 dollars.


Sources: MSD (1,2,3), StatsNZ (4,5)

The portion of the working age population receiving a benefit is also included. As you can see, the numbers getting benefits and, so, the amount spent on benefits has fallen rapidly under Labour. The system costs less than $4 per adult a day.

Now, the Right tends to have a very punitive approach to benefits. They stereotype beneficiaries as lazy or morally deficient. John Key spoke of mothers on the DPB ‘breeding for a business‘ and, wrongly, said the numbers on the DPB were growing. With this view, they seek to punish beneficiaries with stricter requirements, lower payments, and ‘work-for-the-dole’ schemes. None of that ever works. In fact, when National made their infamous ‘Black Budget’ benefit cuts in 1991, they slashed beneficiaries’ spending power so much that other people lost their jobs and ended up on the dole queue too. Again, National is attempting to solve the symptom, not the problem; targeting beneficiaries, rather than the lack of decent jobs.

Labour has a full employment policy, and its approach in government has been to assist, not coerce, people into work. This approach is based on a fundamentally different worldview to National’s: people want to work, people do not choose to scrape by on $200 a week of handouts, they would prefer a job with the dignity, sense of purpose, and income it brings. This full employment policy and positive assistance to beneficiaries, through work training schemes and staff that don’t just hand out benefits cheques but work with individuals to get them in jobs again, has seen the number of people on benefits fall dramatically.

It’s pretty clear what policy produces good results.

25 comments on “Cost of benefit system plummeting”

  1. Steve Pierson 1

    incidentally, in the same article that Key raved about mothers “breeding for a business” someone else said:

    “I’m not your DPB-bashing sort of person… Most of the people I meet on the DPB are pretty motivated people who have the same dreams and aspirations as the rest of us. Beneficiary bashing is a most unsatisfactory practice. It doesn’t really take you anywhere.”

    that was Katherine Rich. National’s last decent MP. http://www.parliament.nz/en-NZ/PB/Debates/Debates/f/6/2/48HansD_20080213_00000830-Debate-on-Prime-Minister-s-Statement.htm

  2. rjs131 2

    Any comment on Labours last decent MP – Taito Philip Field.

    I guess calling Rich decent fair, she has at least commented on teh F& P job losses unlike the other local MPs

  3. Can you add in the cost of Working for Families?

  4. dave 4

    Steve, does this include the IYB, WB, Training benefit, accommodation assistance, special benefits, money spent on grants, advances, overpaymentsby WINZ staf and fraud recovery? Does it include advances and grants and supplements given by WINZ to low income families?

    or just sickness, Unemployed invalids dpb and unemployment. or dont you know.

  5. rjs131 5

    Plus will you also make any comments on international economic conditions vs Welfare spend?

  6. Hey guys – I’ve got a good idea. How about you stop your shrill hysterics and stop demanding the owners of this blog post on what you want them to. You are like spoiled children.

    Oh and dave, I wouldn’t knock the benefit system too much if I were you, ‘cos given your obvious lack of talent the only thing that’s keeping you out of it is record employment.

  7. Matthew Pilott 7

    dave – instead of asking facile questions, why don’t you read the post. It is spelled out, clear as day, what is graphed.

    If you think this is in some way misleading, say so. If you think there are omissions, you could take some time to add the cost of said omissions, and present them to us. We could hten have a nice chat about them. That would be a lot more productive.

    rjs131 – why don’t you make some comments on international economic conditions vs welfare spend, if it’s of interest and importance to you?

    Nicholas O’kane – given that WFF is a tax credit, adding it on here is a bit disingenuous. For someone on WFF, let’s imagine they are paid $400 a week gross, and are taxed $100 of that. They then get $60 back because they’ve got a couple of sprogs. The cost to them is $60, and the benefit is the same.

    This is discinctly different to people working, receiving no tax credit, but paying a few dollars per day, on average, to support New Zealand’s benefit system for those not in work.

    The four benefits Steve has used are the four that are traditionally targeted during beneficiary bashing sessions by certain parties, which is why (I’m assuming) they are the ones graphed here – so we can see the cost to workers, in real terms.

  8. mike 8

    “Can you add in the cost of Working for Families?”

    Steve has this wierd theory that WFF is a tax cut and not targeted, means tested welfare for the middle class. Besides it would make his pretty graph look funny.

  9. Santi 9

    No more of this graphs guys because I’m starting to believe I live in paradise! Even better than Sweden, the dream of any decent socialist.

    The numbers will go up slightly when you add some of 430 people made redundant by F&P this morning in Dunedin.

    Another fine achievement of the Labour government (quick press release from Goff to deny any involvement).

  10. Stephen 10

    Well going on the shortage of skilled and unskilled labour we have, I doubt they are ALL going to fall onto the unemployment benefit.

  11. Matthew Pilott 11

    Santi, do you think the government should have subsidised F & P, or perhaps engaged in some other protectionist behaviour?

    Maybe they should have a few more regulations, engage in some heavy market intervention to keep manufacturing jobs here.

    For a right-winger (forgive the assumption if you’re not), it’s hard to see your angle. Apart from the obvious one, Way of the Troll…

  12. Steve Pierson 12

    Nic O’Kane. WfF is a tax credit. It would simply be weird to start adding the costs of tax rebates, tax credits, and tax cuts to the benefit system.

    Santi. Pretty scummy gloating over 430 people losing their jobs. Fortunately, in this economy most of them will soon have news jobs and their union will ensure they get redundancy to see them through the gap.

  13. Steve Pierson 13

    dave. my sources are listed, as the the contents of the graph.

    you’ve not no substantive come back, you can’t deny the fact that the numbers on benefits are falling and so is the cost of supporting them, so you try to pick at the margins. unimpressive.

    captcha: annulment Louise (she saw it coming)

  14. The costs of benefits may have gone down under this Labour Government, what you fail to point out though, so has wages. Jobs which four or five years ago could earn you $15-20 dollars an hour, are now at $12, and that is a bigger crime, than having low cost benefits to the NZ public.

  15. Tane 15

    Brett, care to provide a source? Which occupations, and in which industries?

  16. mike 16

    “Maybe they should have a few more regulations, engage in some heavy market intervention to keep manufacturing jobs here.”

    No Matt , as F&P said “the increasingly complex and costly compliance costs of manufacturing in its home countries had not helped.”

    Sounds more like Labours red tape is to blame… RMA, ACC, EPMU…

  17. Tane 17

    Yes Mike. It’s the right to workplace accident compensation that’s to blame, not the fact F&P wants to make use of the cheap exploited labour of Mexican workers. For a cheerleader of capitalism you don’t seem to know a lot about how it works.

  18. Steve Pierson 18

    Brett Dale. You’re just making that up.

    Here’s an actual fact, the minimum wage has been increased 9 times since 1999 (lifting it was one of Labour’s first acts in government). It’s now 70% higher than it was when National was booted out.

  19. Matthew Pilott 19

    mike, these compliance costs are presumably also high in the US and Australia – so is it the Rebublicans’ and Conservatives’ red tape as well?

    Or is that part and parcel of being a developed country, not a ‘low wage’ country?

  20. Steve Pierson 21

    Isn’t Colin Espiner the one that said a government can’t make wages drop? oh yeah – http://www.thestandard.org.nz/?p=1252

  21. randal 22

    compliance costs are necessary because otherwise standards, specifications and tax evasion wil run rampant over the economy as the rugged individuals left to self regulatate themselves will cheat, chizel and go at it till they have debased and defiled everything and anything they get their greasy hands on. It is ingrained in their nature to get something for nothing and to stop at nothing till they finished it off.

  22. dave 23

    How can benefit nunbers be dropping when according to the MSFDs own fact sheets, the number on main benefits have gone UP from September to December and the numbers of the Unemployment beenefit have remained constant. dpb numbers have increased by 1,000 every quarter from June- September 2007 , the invalids benefit numbers increased by 10,000 since June, but sickness benefit numbers increased by only 1000 because so many of those on the sickness benefit were transferred to the invalids benefit.

  23. r0b 24

    How can benefit nunbers be dropping when according to the MSFDs own fact sheets, the number on main benefits have gone UP from September to December

    Dave, you must know by now that you’re simply wrong. There is monthly variation in the figures. You manage to pick two points (September and December) that give you the opportunity to say that benefits went UP. But in fact the trend each year and long term is DOWN:


    Key Facts at the end of December 2007 …

    At the end of December 2007, 270,000 working aged people (aged 1864 years) were receiving a main benefit. Over the year to December 2007, the number of recipients of a main benefit decreased by 17,000, or six percent.


    Key Facts at the end of December 2006 …

    At the end of December 2006, 287,000 working aged people (aged 1864 years) were receiving a main benefit. Over the year to December 2006, the number of recipients of a main benefit decreased by 15,000, or five percent.


    Key Facts at the end of December 2005 …

    At the end of December 2005, 302,083 working aged people (aged 1864 years) were receiving an income tested benefit. Over the year to December 2005, the number of recipients of an income tested benefit decreased by 17,616, or six percent.

    and so on. You then say:

    and the numbers of the Unemployment beenefit have remained constant.

    Wrong again. http://tvnz.co.nz/view/page/1706036

    Unemployment lowest since 1979
    Apr 12, 2008 3:44 PM

    The government is hailing figures showing the number of unemployed has dropped to its lowest level since 1979. The number of people receiving the unemployment benefit has fallen to just over 19000. Helen Clark says that’s an 88% drop from December 1999, when more than 161000 people were receiving the benefit.

    National has said previously that the unemployment rate is falling because more people are being moved onto other benefits. But the government says the number of people receiving the sickness benefit is 45000 – the lowest in three years.

    In short Dave, you’re either spectacularly impervious to facts, or you’re deliberately lying, and I’m starting to think it’s the latter.

  24. Lindsay 25

    Steve, Some people – the last figure I saw was 66,000 – receiving WFF payments receive more from the government than they pay in tax. They are not receiving a tax refund. Call it a credit if you will but it is still welfare. In fact the In Work Payment, Child Tax Credit and Family Support are included under the welfare category by Treasury. The last figure I saw was 66,000. I have the Treasury NZ superannuation and welfare benefits figures and forecasts here;


    You have no argument with me that benefit numbers have fallen but I explained yesterday why that masks a deeper underlying problem so I won’t start again. Based on 2007$ you can show a decline in spending in the main benefits for working age people but add in all the extra targeted family assistance and you will find you are on shakier ground.

    Note also that Treasury are not forecasting DPB to drop further. That is my expectation under current policy. I’d be happy to be proved wrong:-)

    Jum, if you are reading, I sent a response to you yesterday but it seems to have disappeared. I am not a National person. Have never voted National but have voted for Labour. Now I vote ACT. Economically and socially liberal.

    [lprent: You have to be quite careful with the recaptcha. Sometimes due to javascript it looks as if the comment was ok, but it didn’t make it to the database. Use the arrowed circle symbol until you get readable and writeable text. Avoid punctuation.
    I really need to write a page saying all this so the moderators and I can just link to it.]

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