That’s not an argument against raising benefits though. Benefit levels are shockingly low, $184 a week on the unemployment benefit is simply not enough to support a decent life for yourself, let alone a family, in most of New Zealand. The Government could and should increase benefits to a more decent level, say, the 28% of the average wage they were before the 1991 benefit cuts (they’re 21% now), and should be indexed to the average wage like superannuation is, rather than inflation. That would carry a cost but a relatively small one because so many people have come off benefits under Labour. The cost of the benefit system has fallen 36% under Labour because fewer people are using it, some of those savings should be directed towards remaining beneficiaries.
There is some basis to the idea that benefits can’t be too close to wage levels otherwise they will act as a disincentive to work but there’s a simple solution to that keep raising the minimum wage.
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