The long game

Written By: - Date published: 7:35 am, September 15th, 2012 - 41 comments
Categories: ACC, benefits - Tags:

The government recently released a figure of $78 billion as the ‘lifetime cost’ of the benefit system. That number is the estimated answer to the question: ‘how much would we have to have put aside now to pay for the expected future cost of benefit payments to all current beneficiaries’. But the really question is: why would you want to know that?

It’s the same concept as ACC’s fully funded model. ACC has $19.5b in the bank and rising to $24b, which is intended to pay the future entitlements of all current claimants. ACC spends $3b a year.

The only point in having full-funding for ACC is privatisation – because private insurers have to be fully funded to be solvent. The plan goes: first get ACC running on the same financial basis as private insurers with reserves equaling its liabilities – then sell it.

So, what does that say about the benefit system? It, too, can be seen as a kind of insurance system and could be privatised in the long-run with everyone compelled to pay an income insurance levy to a private insurer, just like they dream of doing with ACC.

As with ACC, it wouldn’t make any fucken sense to privatise it from the point of view of the country as a whole or the ordinary joker because private insurance is inherently more expensive and you would lose the nice counter-cyclical changes in net government spending. But, it would be good for National’s private insurance friends.

With ACC they ‘only’ have to build up $24b of reserves to cover the existing claimants’ costs, which the private insurers would never want to be burdened with. But building up $78b for fully-funding the benefit system prior to privatisation? That’s crazy talk. Isn’t it?

Unless. Maybe, it’s what they plan to do soak up the money once they start running surpluses again – which are forecast to total over $70b by 2025 under National’s tight spending projection. That would pave the way for privatisation and simultaneously allowing them to keep the chokehold on public services spending. That could be the long-term option they’re exploring with the exercise.

Of course, more likely, they’re just bene-bashing.

41 comments on “The long game ”

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  1. just saying 1
    15 September 2012 at 8:17 am

    The “Rebstock Report” recommended running social welfare along the lines of ACC. ACC has been operating as a private insurance company for some time according to the actuarial-relase model with its inherent aggressive and unethical (and as proven in the US, illegal) tactics for removing expensive and/or long term claims.

    So no, this isn’t just bene-bashing imo. More the beginnings of a long term regime of brutal treatment towards those who are unable to support themselves.

    edit: in order to extract profits from the least fortunate, to put into the pockets of the private profiteers

    • muzza 1.1
      15 September 2012 at 8:58 am

      edit: in order to extract profits from the least fortunate, to put into the pockets of the private profiteers

      JS – Agree with your sentiment about this being not just about bashing people, IMO, this is about killing people off, which is what happens when you greak the human spirit, and forceably, via policy push people into killer poverty, suicide, or servitude (those who last).

      The direction this country is being taken is should have been raising alarm bells a long time back, but these days people seem to just shrug, and keep going. I imagine just hoping they can see out time in this consciousness without “too many hassles”..

    • xtasy 1.2
      15 September 2012 at 8:02 pm

      Yes, and guess who sits on the ‘Social Welfare Board’ and now also heads the ‘ACC Board’?

      What a bloody co-incidence! Must be the NatACT right wing dream set made for a “brighter future”.

      A true “culture change”, I trust?!

  2. Bill 2
    15 September 2012 at 8:27 am

    Why would individuals have to pay a private insurance outfit when the government can simply divert tax payer money through a private conduit as per the UK model?

    And again. The figure is not all current people on entitlements but all people who claimed an entitlement at any point at all over the period in question…it’s an exaggerated total because people moving off of entitlements were not taken into account and a grand sum total arrived at instead…a total that was then extrapolated into the future until each and every person was aged 65.

  3. Barry 3
    15 September 2012 at 8:29 am

    Isn’t that what Labour tried to do for Super with the Cullen fund?

    The problem with moving to a fully funded scheme is that the current cohort gets to pay twice. Both for future liabilities and to cover past and present requirements.

    OTOH It does make sense to build up reserves when things are going well (for some definition of “well”) to cover your needs for a rainy day. I would rather see the money invested in infrastructure and training so that as a society we are better equipped to cope with disasters and downturns.

    There is a problem with insuring against recession and baby boomer old age (or saving money), and it is the same problem as doing nothing. The rest of the world has those needs at the same time and everyone is trying to convert cash assets into care for unemployed or aged. This can only come by expecting the employed population to work harder or accept a lower standard of living (relatively). Eventually it is a recipe for revolution.

    Whereas, if we invest in infrastructure and training then more can be produced to go around and everyone is better off.

    • lprent 3.1
      15 September 2012 at 8:47 am

      The Cullen fund was to provide a partial buffer to handle the peak in the number of people on super starting in about 2025. The intent was to put in some relatively small amounts of investment capital early and continuously and grow it to cover a known future commitment by the government.

      The alternative would have been to disband national super because the current funding model wouldn’t be able to sustain the large numbers of baby boomers in retirement.

    • Draco T Bastard 3.2
      15 September 2012 at 4:54 pm

      Whereas, if we invest in infrastructure and training then more can be produced to go around and everyone is better off.

      Bingo!
      Saving money will never achieve what the politicians and economists say it will as money is not a resource.

  4. Lanthanide 4
    15 September 2012 at 8:52 am

    Nah, I think the “lifetime cost” is just to scare rednecks or ignorant people into how much those bennies are sucking out of their hard-earned money clips.

    • aerobubble 4.1
      15 September 2012 at 3:23 pm

      As per usual Labour, the left pickup the wrong end of the stick….

      We do not have a CGT in NZ, it shows in less productive economy, more developer
      mismanagement seeing shonkey housing, leaking housing, land ridden problems,
      scarcity of housing.

      You see Bennett hands the left this gift, shonkey analysis, and does Labour take this
      to the bank, no. Bennett decides to speculate that the cost of bennies will be what?
      under 100 billion., what was the losses, for the lifetime of investors in the finance
      sector? Trillions and counting. The losses from even those in the Chch earthquake
      after they get paid out? Over their lifetime in lost interest on money to get back to
      where they were. Please, what’s even worse! If you calculate the tax cuts for the
      richest National gave out, and forward audited the asset sales.

      So lets put some sense in what Bennett is saying, Bennett says its okay to
      calculate future losses of a segment of the community. Lets take high income
      earners, for example, who obvious are not going to earn at the same rate they
      have into the future, but lets project out that they would have, that’s lost
      taxes on future profits. Yes, ever minute that Bennett, and Key, dither over
      introducing a CGT is billions dollars of losses on NZ, from more shonkey
      homes and buildings put up (lol they are knocking buildings down built AFTER
      the first major Earthquake in Chch because of building compliance problems!!!).
      We under tax the building sector, they have a lot of extar cash to push
      politicians to weaken legislation, and put up yet more shonkey buildings,
      and that cost is much much higher than Bennett’s sub-100 billion.

      But wait, unless Bennett is promising to remove poverty and unemployment
      there will always be some costs from welfare, and so its not only high dubious
      putting a figure on the cost but also loathsomely dumb, because when has
      Bennett ever promised to rid NZ of poverty and unemployment.

      Okay, they might be very effectively losing huge numbers of skilled people to
      Australia, and killing off large numbers from suicide and preventative diseases
      here, and no doubt that’s where they will get the future cost savings from.
      But really, at the high point of unemployment (if you are to believe Key that
      we have whether the worse) how hard would it be to see that cost as the
      high tide point, nothing actually to worry abiut unless Key is wrong about the
      global depression ending soon.

      If English had future guessed tax revenues from the top end of town, and
      then came out with spending plan now, there would be uproar, but since
      its only Benefitaries being denied basics food,, access to the cost of a doctor,
      etc, then that’s okay to worry about.

      Low life are called that for a reason, they exploit the poorest for the rich
      to become ensconced in a life they’ve been accustomed to, and have a
      privileged right to continue. That’s not capitalism, the rich do not have
      an welfare insurance right in the Human rights Charter, the poorest however do.
      Least we forget why the masses fought two wolrd wars to stop such fascism.

  5. captain hook 5
    15 September 2012 at 8:56 am

    uh… did the national party have some spare consultants sitting round and they gave them this to make work for them so they wouldn’t have to go on the dole?

    • marsman 5.1
      15 September 2012 at 9:26 am

      No they paid an Australian company $800,000 to come up with the shonkey data.

      • mike e 5.1.1
        15 September 2012 at 10:10 am

        the $78 billion figure is a total beat up I did the figures and according to MSD’s own figures
        This figure relies on a beneficiary being on a benefit for an average of ten years when the average is less than three tears.
        so the real figure should be $24 billion,

        • aerobubble 5.1.1.1
          15 September 2012 at 3:27 pm

          Worse, when a burger bar ain’t going to hire extra staff unless subsidies are paid
          (as they are now). And so how much is it costing government to keep unemployment
          down has to subtracted as well.

          And let’ not forget, you sack one person and replace them, they are likely to go
          back on the benefit anyway. So unless Key has some jobs policy in mind,
          any future cost would be stagnant under current government policies, unless
          they mean to drive up costs from more sick people without food, disease
          ridden, living in private landlord ghettos, in and out of jail…. …because that’s
          the obvious consequence of halving the benefit for some.

      • mike e 5.1.2
        15 September 2012 at 10:18 am

        Now National is going to hirer these consultants every year now when MSD already put up the same figure for no extra cost!
        It would be interesting to see the break down for the years labour was in power and the average stay on the benefit was less than 6 months.
        There was 100,000 less on benefit as well.
        Come on labour and green researchers come up with the figures and show up national.
        It would not take anywhere near $900,000 to come up with the figures. maybe a couple of thousand dollars.

        • Mary 5.1.2.1
          16 September 2012 at 12:06 am

          “Come on labour and green researchers come up with the figures and show up national.”

          When it comes to welfare it’s a complete waste of time asking Labour to come up with anything to refute what National says or does. Labour’s cheering them on. Look at all the welfare policies National failed to implement in the 1990s (the totally over-the-top ones that seen as going too far) but that Labour then managed to introduce under Clark and that set the scene for National to go even further from 2008. Ask any Labour MP about what they did to welfare and they turn into clams.

  6. tc 6
    15 September 2012 at 9:06 am

    How about the opposition counter with future costs of the power sell off, ETS taxpayer subsidies to farmers, tax cuts etc etc…..come on this is easy.

  7. ianmac 7
    15 September 2012 at 10:19 am

    Will they stop the Privatisation at ACC and Welfare? How about the Public Health System as is happening in Britain?

    • ianmac 7.1
      15 September 2012 at 10:22 am

      Or Schools as in Christchurch. Are 13 schools earmarked for Chartering and/or Public/Private Partnerships?

  8. Tiger Mountain 8
    15 September 2012 at 11:13 am

    The ticket clipping class would like to privatise everything direct to their accounts, which is why they like surveillence states as the UK has become. Know most everything about most people and you can predict behaviour and control behaviour.

    Do NZ torys have a long game? (apart from transferring wealth upstairs). I always feel they are incrementalists and the inflated $78 Bill is just a giant TINA exercise cruising on the anti bennie sentiments of too many self absorbed kiwis.

    As someone suggested earlier “work is disappearing” and work as we knew it prior to the mid 80s has gone alright. Replaced by service, aged care, retail and logistics sector precarious joblets. Every tinpot independent contractor or freelancer living with his mum or ‘flatting at 50’ knows about the joys of 21st century work. 350,000 union members are the ‘filthy few’ that have dared hold the line and actually got wage rises and Collective Employment Agreements during the ShonKey regime.

    So something has to give-current high unemployment and a punitive welfare system whose role is to deny and hinder the vulnerable. As for the future no work and no welfare-welcome to Mumbai kiwi style.

    • aerobubble 8.1
      15 September 2012 at 3:44 pm

      The Uk riots had three purposed, they dispersed likely future rioting, they exposed
      the information network security risk to the state, and they provided the government
      immediate consent manufacture for future draconian laws. All in a good day for a
      security service. I mean what was the five terrorists in the Forest but an obvious
      distraction from the fact that Tuhio would get a special deal, can you imagine the
      outcry had that had not had the terror raid backdrop.

      Arab terrorist used US planes on 9/11, now they are using public protests to
      kill diplomatic staff, and all because western governments cannot (or don’t
      want to) separate religion from politics. Nobody’s religion says its okay to
      kill a diplomat because a citizen makes a obviously designed video to stir up
      muslims, and does so. Its counter productive, and therein lies the lie, the
      purpose of mulism terror has always been to support muslim governments
      introduce new laws and build infrastructure to control muslims.

  9. infused 9
    15 September 2012 at 3:03 pm

    You’d be stupid to not know. You should know how much you are spending. I can’t actually comprehend why you think that we shouldn’t know.

    • fatty 9.1
      15 September 2012 at 3:34 pm

      “You should know how much you are spending”

      That’s true…so how much are we spending on welfare? And why did they release a fantasy figure of $78 billion?

    • Murray Olsen 9.2
      15 September 2012 at 4:21 pm

      We still don’t know because the figure is meaningless. That makes at least one of us here stupid.

      • The Peanut Monster 9.2.1
        15 September 2012 at 4:46 pm

        Good point. What IS this figure telling us exactly? Does this imply that we do not want to bear this cost? How can anyone work out the “future” cost until the end of time anyway?

        If this is the cost of paying for those who need support, then that’s the cost. I’m sorry but it has to be paid. I’m not going off onto a “dole bludgers” debate, because yes, if people can work, and they are not, then they should. But what percent of this figure is these people? How much would it cost to move them into work? Now that IS useful information.

        • Colonial Viper 9.2.1.1
          15 September 2012 at 5:12 pm

          Yep. Everyone capable of working full time and wants to work full time, should be in full time employment.

          Now, if the private sector is unable or unwilling to create that employment, than the Government must. Looking around, there is plenty of useful work in society and in communities all over the country to be done.

        • blue leopard 9.2.1.2
          15 September 2012 at 5:58 pm

          @ The Peanut Monster

          I believe it has been long presumed that it is more expensive to move people into work than it is to pay them out an unemployment benefit.

          However, now that an Aussie accountancy firm has rummaged up some large numbers for the Gnats [sic] to play with, perhaps, hopefully, someone might realize that the numbers involved with moving people into work include saving some of these large numbers mentioned in the report and also involves more large numbers returning back into the coffers in the form of tax.

          I am of the understanding that no one in a right wing party to date has had the capacity to perceive the benefits of ensuring high employment…requiring as it does, that of holding more than one concept in one’s mind at the same time.

          • Colonial Viper 9.2.1.2.1
            15 September 2012 at 7:01 pm

            I believe it has been long presumed that it is more expensive to move people into work than it is to pay them out an unemployment benefit.

            And that’s because they only bother to measure the financial cost as the only real cost. The cost of unemployment to individuals, communities and families is way higher.

            • blue leopard 9.2.1.2.1.1
              15 September 2012 at 7:38 pm

              @ CV

              Yes, I wasn’t even mentioning the non financial costs of unemployment.

              I was attempting to point out that, hopefully, the type of information in the report stating the costs of benefits over a lifetime (whatever that means) might allow some slow witted politicians to join the dots and work out that even a financial analysis of the situation indicates that keeping high employment rates is worth it.

              Judging by the all important bottom-line of any decision that is ever made “for the good of all” the conveying of this fact would be of far more effect than trying to relay to persons only capable of number-crunching all the other merits of ensuring employment for all.

  10. Populuxe1 10
    16 September 2012 at 8:58 pm

    Clearly the benefit system does need reforming.
    For one thing it seems based on the premise that the people it’s supposed to help all own their own homes, transport, have savings and can survive on the caloric intake of an anorexic budgerigar – which has been nonsense for nearly forty years and even more nonsense now that the government is perusing some evil form of neo-feudal capitalist terrorism to inflict upon its citizens.

    • xtasy 10.1
      16 September 2012 at 11:01 pm

      Bring in a community wage, independent of whether you have a “job” in open employment, do voluntary work, study or else. As long as a person shows good will, studies, cares, works or else, then that should be paid, disregarding all the bureaucratic, right wing nonsense Key and his gang sell us.

      • xtasy 10.1.1
        16 September 2012 at 11:02 pm

        Naturally those too sick and disabled to work will get that and a top up as well! And keep the greedy “investors” out, that do NOT bother to “invest” also into the social and economic future of NZ, thanks!

  11. DIMI 11
    16 September 2012 at 9:16 pm

    Sundays dose of Bennie Bashing (Sorry Welfare Reform) “Benefits cut if you don’t return calls”
    What will Monday Bring? Bennie’s who pass wind 3 times will have heir benefits cut?
    Might be a big week with that new Tool

    http://www.3news.co.nz/Benefits-cut-if-you-dont-return-calls/tabid/1607/articleID/269478/Default.aspx

  12. xtasy 12
    16 September 2012 at 10:58 pm

    “The long game”, for heaven’s sake, the long neck sticking out for ACC and WINZ to CHOP it off, it more looks like, after I gathered further information. Maybe this story will enlighten a bit:

    http://www.stuff.co.nz/sunday-star-times/latest-edition/7686104/Winz-joins-ACC-in-firing-line-for-hatchet-doctors

    It is what I have been saying and commenting all along, finally some have done a bit of research and responded! Watch this space!

    • weka 12.1
      17 September 2012 at 12:12 am

      She pointed to a 130 per cent rise in the number of cases brought before Winz’s Medical Appeals Authority in 2008 and 2009. The board’s fees and expenses rose from $91,555 to $605,137 in the two years to June 2010, although last year that dropped to just under $450,000.

      Holy crap! 

      • xtasy 12.1.1
        17 September 2012 at 12:45 am

        I got all those figures and have proved the crap, but even presenting it to NZ Herald and others, they want NOTHING to do with it?!

        So that tells you something about MSM. This was only due to some good connex by a Green MP, tha tthis was even “passed” to be published. NZ is a media DICTATORSHIP otherwise, be sure of that!

      • xtasy 12.1.2
        17 September 2012 at 12:49 am

        This is why we need the Greens, we need NZ First and Mana in there, in that rotten Parliament, even Labour cover up, because they even started some of this shit!

        I have dug up a heap of crap, and some there, both in Nat and Labour camp will SHIT themselves, once the whole truth comes out! It is disgusting, really!

        Those figures do not represent all, I have more, even worse than that!

      • xtasy 12.1.3
        17 September 2012 at 12:52 am

        I trust Jan Logie is doing some real good work here (same as Kevin Hague), and the truth must come out. They are keeping the lot up there “honest”, or at least trying. I do not wish to divulge too much, but more is to come, a fair bit of really revealing crap!

    • DIMIT 12.2
      17 September 2012 at 10:14 am

      Thats been going on for a long time. It will get worse. “Special Doctors” (Insurance loss adjusters & accountants with a medical degree) I wouldn’t be surprised if The Govt declared that they think it in the best interests of Invalids to re-apply for a benefit to see if We are supporting them enough? (far to much evidence on file about each Invalids permanent medical condition, is not convenient for the minister of monies)

      The Sick and Invalid are the inconvenient Beneficiaries: useless as slave labor, but harder to publicly attack,won’t be a problem for this Govt tho, expect a gradual campaign to demonise & vilify the Sick. they will start with the Mentally Ill as bigoted rednecks will jump on the band wagon. SPIN: studies have found people are happier in employment

      disability allowances have already been de- medicalised to a point were they effectively in most cases don’t exist. & Invalids are been alienated from their own Doctors