Welfare working group tries to create a crisis

Written By: - Date published: 11:47 am, August 10th, 2010 - 43 comments
Categories: benefits, class war, unemployment - Tags:

Typically, the media’s coverage of the Welfare Working Group’s report has been critique-free: who are the members of this group? What are their interests? And do their findings actually stack up? r0b, NRT, Gordon Campbell, and others have done some good analysis, to which I’ll add my two cents.

The Welfare Working Group was handpicked by Paula Bennett and is stuffed with rightwing ideologies – most importantly Chair Paula Rebstock and fromer ACT President Catherine Isaac. They were always going to present a paper that attempts to create an air of crisis around welfare and undermines its legitimacy by claiming that beneficiaries are all bludgers (the same approach National is using on state housing and ACC). And that’s exactly what this report does.

Let’s look at some specifics:

“In 2008, just prior to the recent recession, and after a decade of economic growth, roughly 10 percent of the working age population, or around 286,000 people, were receiving a benefit. At that time, about one in five of New Zealand’s children were living in benefit dependent families. At the same time, roughly 170,000 people had been on a benefit for at least 5 out of the last 10 years.”

Reality – nearly none of the people on benefits in 2008 were unemployed, they were nearly all sickness and invalid beneficiaries, or DPB mums. Those 170,000 long term-beneficiarues – only 1% were on the dole.

So the implicit condemnation – if you are on a benefit when unemployment is low, you must be a no good bludger – doesn’t hold water. Most people weren’t on benefits because they weren’t getting work, they were on benefits because their life circumstances prevented them from trying to get work.

Despite the clear focus on employment in the Social Security Act 1964, most people receive benefits that have no or only a weak focus on employment. They are not expected to participate in employment or are given much assistance to find a job.

The subtext – the system allows bludgers to hide from work.

The reality – The most common reason for people going off benefits is that they got work. When there were jobs to be had, the numbers on the dole and DPB fell. Now, they’re rising. It’s not a matter of people not wanting work, the problem is there are no jobs.

“The failure of the benefit system to adequately assist people into employment has become clearer in recent decades. Over the last 30 years, many people have entered the benefit system, and remained there for long periods, and some remained almost permanently.”

The reality – most people move off benefits very quickly but there are peple who are permanently disabled or sick and they stay on benefits longer. And its not like getting on the sickness or invalid’s benefit gives you a free pass. The report itself admits: “New Zealand’s rate of employment for disabled people is one of the highest in the OECD. Around two in three disabled people, with low or medium levels of support needs, are in employment.”

“Current welfare policy does not encourage most beneficiaries to find a job and is at odds with evidence that shows that participation in paid work is important to people’s long-term mental and physical health and social and economic well-being.”

The reality – most beneficiaries return to work within a short time and the fact that the number of beneficiairies fell so much when there were jobs to be had shows that the system doesn’t keep people from going back to work. There are 350,000 jobless Kiwis who desperately want to work but can’t find a job – that’s the problem, not some unproven, imagined discouragement to work caused by the benefit system.

What does discourage people getting back into work is the punitive abatement rate on benefit payments. It’s literally not worth going into low-paid part-time work from the benefit when you’re losing 70 cents in the dollar before tax. But the report doesn’t address that.

“However, when the total cost of the benefit receipt is estimated over time, the fiscal cost for each individual experience on a benefit is large. The Ministry of Social Development estimates the total cost of each person currently on a benefit to be around $141,000 over the period they remain on a benefit. The total future costs for all those currently on a benefit amounts to around $50 billion.”

A nice but meaningless statistical trick. You can make anything sound terribly expensive if you add all the future costs – how much is the total future cost of the current prison population? What’s the total future cost of the motorway system? The future payments of benefits do not have to be funded now, they will be paid out over decades with revenue raised at the time.

The cost of the benefit system is not unaffordable and the best way to lower it is to create jobs. But it is clear that is not on the Welfare Workings Group’s agenda. Their job is to paint beneficiaries as bludgers, the welfare system as broken and expensive. Their job is to pave the way for welfare cuts that will leave the poorest Kiwi families more impoverished. They’ve made a good start.

43 comments on “Welfare working group tries to create a crisis ”

  • Comments are now closed

  1. Bored 1
    10 August 2010 at 12:36 pm

    The most sickening thing about the likes of Paula Rebstock and former ACT President Catherine Isaac is that they have been party to a better world where there was a cross party consensus upon full employment. Like myself I can pretty much guarantee that they arrived at their first job (with no student debt) with zero difficulty except choosing what their job would be and who would be their employer?

    In short these despicable apologists for a failed theory had the best of things but now advocate punitive terms on those who can no longer enjoy the privileges that Rebstock and her motley associates enjoyed. From this lofty position they advocate pain. I for one am all for it as long as those advocating the pain take the first measure. It’s all too easy to pronounce from a distance; in fact it is intellectually dishonest, antisocial and cruel.

  2. Kevin Welsh 2
    10 August 2010 at 12:42 pm

    Who would have guessed that the Nact logic on ACC would be transferrable to welfare.

  3. loota 3
    10 August 2010 at 1:04 pm

    Good to see the Government getting full, fair, impartial policy advice relevant to the well being of our citizens.

    • Draco T Bastard 3.1
      10 August 2010 at 2:02 pm

      You really should add a /sarcasm tag. Irony and sarcasm don’t transmit well through text.

  4. tc 4
    10 August 2010 at 1:11 pm

    Classic ‘Yes minister’ stuff’ ……” never form a committee bernard unless you can be sure of what their answer will be…” humprey advised.

    Dutifully achieved by Rebstock following on from her inept and pathetic performance as CC chair where her commission handed certain industries to pre-existing dominant players on a plate.

  5. BLiP 5
    10 August 2010 at 1:17 pm

    The report has the stench of a Crosby/Textor approach to policy: propose a completely unacceptable model and then, after much “consultation” proceed with Plan B (which, all the time, was actually Plan A). What’s the chances it will be just the Unemployment Benefit that goes down the insurance scheme path?

  6. hellonearthis 6
    10 August 2010 at 1:27 pm

    The money paid out on benefits doesn’t just disappear, it’s spent on rent, food, power, phone… All of that money goes straight back into the economy, it’s really a subsidy for the whole of NZ in some kind of trickle down and around process.

    • millsy 6.1
      11 August 2010 at 9:12 am

      Exactly. You chop the benefits, there are going to be a lot of landlords not getting any rent, and in turn banks not getting any mortgage payments.

      When the recession (it looks like we are in for a long depression, not a great depression) first started, most of the mortagagee sales were the rental properties – as the tenants had lost their jobs, and couldnt pay the rent, so ended up leaving, as a result the landlords were forced to sell their houses.

  7. Draco T Bastard 7
    10 August 2010 at 1:58 pm

    The cost of the benefit system is not unaffordable and the best way to lower it is to create jobs.

    Nope. The best way to “fund” it is to ensure that the wealth of a country is shared equitably through a democratic system rather than through the unfair, sociopathic capitalist (authoritarian, dictatorial) system which ensures that the psychopaths in the community end up with most of the wealth.

  8. ZB 8
    10 August 2010 at 2:02 pm

    US economic recovery loses momentum shrieks headline.

    Man their welfare system must be destroying their economy AGAIN!

    National are a despicable bunch of lazy bums if they think voters don’t see their
    misdirection!

    Unemployment is the problem, not welfare!

  9. Policy Parrot 9
    10 August 2010 at 2:08 pm

    With regard to the long-term unemployed (60,000 was the quoted stat), people might not like the fact that there are people who seemingly abuse the system, but unfortunately it does happen.

    However, to go after these people, make them jump through all the hoops and get them into permanent part/full-time work is almost impossible, even in good economic times, unless they really want it. The cost-benefit ratio of coercive action in the case of these people would more than likely be negative.

    It seems a shame to write these people off, but since our resources are scarce we should be focusing them on those who remain an opportunity to get into/back into paid employment, and also breaking the generational cycle of unemployment.

    One must remember the context of living off a benefit, it is hardly comfortable living. For those who conduct nefarious money-making activities whilst on a benefit, prosecute them for the actions, and don’t penalise the opportunity of their dependents to escape from a life of drudgery.

    • Bored 9.1
      10 August 2010 at 2:37 pm

      One day in 1974 the total unemployed in NZ was about 10….no bull. The number speaks volumes about peoples preferred option, work.

    • Lats 9.2
      10 August 2010 at 4:30 pm

      With regard to the long-term unemployed (60,000 was the quoted stat), people might not like the fact that there are people who seemingly abuse the system, but unfortunately it does happen.

      However, to go after these people, make them jump through all the hoops and get them into permanent part/full-time work is almost impossible, even in good economic times, unless they really want it. The cost-benefit ratio of coercive action in the case of these people would more than likely be negative.

      I’m prepared to live with a few abusing the system. Rather that than that some who were truly needy ended up dying from malnutrition or freezing to death in order to stop the abuse of the system. I don’t doubt this already happens, especially with some of our older folk.

  10. NickS 10
    10 August 2010 at 2:39 pm

    Heh, you’d think such glowing intellects as those behind this working group would actually grasp that not only are there different types of benefits, but also that the cost of those benefits is mitigated by the the reduction is such silly things as expensive early mortality, full on child hunger and associated, expensive, developmental delays, and all sorts of petty and not so petty crimes that some end up turning to just to live. Let alone that the number of those on benefits is a function of the number of jobs available + skill level + access to job location + job hours vs the loss of income from secondary tax and benefit payments. With the number of jobs available being the main factor, thus making any complaints about the number on the unemployment benefit, rather farcical, but what else can you expect from RWNJ who still can’t grasp basic logic, or the simple science behind climate change/evolution (see Ian Wishart).

  11. belladonna 11
    10 August 2010 at 2:44 pm

    By transferring people from sickness/invalid benefits to unemployment benefit which is a lower benefit is a cost cutting measure. Invalid beneficiaries have to go through strigent testing b y their doctor and a WINZ designated doctor to get on this benefit and must be deemed to be unable to work for at least 2 years so how is it that suddenly they are ‘cured’ of their diseases. Wow they must have received the healing hands of National – that John Key can do anything!

  12. Danyl Mclauchlan 12
    10 August 2010 at 3:35 pm

    One day in 1974 the total unemployed in NZ was about 10 .no bull. The number speaks volumes about peoples preferred option, work.

    Unemployment in the 70s was actually pretty high (oil shocks, common market). In 1959 only 21 people were officially unemployed – I’m guessing that’s the statistic you’re thinking off. It was artifical though – governments used New Zealand Forestry and the Railways as job creation schemes. It’s true that we didn’t have loads of people on the DBP back then but it’s also true that teenage mums were often imprisoned in mental hospitals and their children became wards of the state, so y’know – there’s that.

    • Draco T Bastard 12.1
      10 August 2010 at 3:46 pm

      It was artifical though governments used New Zealand Forestry and the Railways as job creation schemes.

      Which actually proves that capitalism is bunk as it cannot produce enough to keep the rich and the poor even though we have more than enough to keep everyone in a modest life. With the huge productivity seen from the 1950s we should be down to about a 10 “working week” with time for more important stuff like self-governance and research and development. Instead all of that time and ability is used up in making the rich richer.

      • The Baron 12.1.1
        11 August 2010 at 5:21 pm

        Honestly, where do you get this stuff Draco – 10 working week to spend more time on brutally equal “self-governance” huh. What a utopia that would be. Pfffffffft.

        • comedy 12.1.1.1
          11 August 2010 at 5:45 pm

          Chill, It is a parody-bot not a real person.

          • felix 12.1.1.1.1
            11 August 2010 at 7:36 pm

            Wow, that must suck – a parody-bot being so much smarter than both of you that the only response you can muster between you is “pffffffft”.

      • loota 12.1.2
        11 August 2010 at 6:24 pm

        DTB, seems like the powers that be don’t like the idea of people having the time and resources to reflect on their lives and on their roles as citizens within the wider community.

        Easier and more profitable to keep everyone on the treadmill methinks.

    • Olwyn 12.2
      10 August 2010 at 8:15 pm

      In the seventies, when the DPB was introduced, it was assumed that most people on the DPB would marry, and that others would build careers for themselves. And in fact I suspect that most did marry back then, since it was what people did.

    • RedLogix 12.3
      10 August 2010 at 8:21 pm

      @ Danyl,

      governments used New Zealand Forestry and the Railways as job creation schemes.

      At that time these govt depts you mention, NZR, NZF, MoW, Post Office, Hydro NZ and so on acted (to a greater or lesser degrees) as what is known as an ’employer of last resort’. Google that phrase and you will find it’s a very respectable economic idea…. proposing that it’s far more efficient for the State to have people employed in these kinds of social service/infrastructure enterprises, even if their productivity is marginal, than it is for them to be unemployed on a benefit of some kind…where their productivity is guaranteed to be zero or negative.

      Also overlooked is that these organisations were also very good technical and trade training organisations, arguably more more effective than the polytechs in some ways because the work they did was hands-on, real-life problem solving. There is no better way for most people to learn.

      And of course the now well-understood corrosive psychological effects of un-employment, the sheer lack of purpose and direction, creates a whole other raft of social costs that were largely mitigated as well.

      I don’t claim all was fine and dandy with them; most could have stood a bit of re-structuring and a managerial sprucing up… instead we got a wholesale slaughter that we are still paying the price for.

      • ZB 12.3.1
        10 August 2010 at 9:02 pm

        The psychological effects of un-employments are in part due to the way both the left and right clump everyone on the dole into one too hard basket and then belittle them. Fact is there are lots of people on benefits doing volunteer work! People on a benefit have a lot of spare time, they don’t just all stare at the ceiling, they blog, they think, they research, and yes some do crime. But the funny stupid way we look an welfare means we count the increase in in productivity in the prisons! Not the unemployed person who shows tourists around, or the street bum who entertains us with a song.
        The ability of the under-employed to help our economy is hampered by the very bureaurcrats who would be thrown out of work, the welfare system is a job scheme. A negative productivity scheme designed to stop new comers competiting with incumbent businesses, and provide them cheap workers. If we are to grow the NZ economy we need to grow the trade between citizens in NZ, a while back Bennett and the Key government got quite irate at an unemployed person going out and making a fuss about a political issue. This youn gman got off his backside, got out there in front of a crowd and got attention for himself, now that’s what I call marketing. The stupid Nationals thought this was should mean the guy should lose his benefit, I thought this guy is doing nothing more than what the benefit system told him to do ‘seek work’, and working in public relations that means getting attention.
        So basically whats holding us back in NZ, what’s holding people on welfare, is the same thing holding unemployment high, a bunch of lazy media and government elites who have vested interests in not doing their jobs, i.e creating jobs, creating the opportunity for job creation, and providing resources to those most in need to scare the living bejesus off business in NZ. The under employed.

      • KJT 12.3.2
        11 August 2010 at 6:12 pm

        Those “job creation schemes” produced: Hydro dams supplying our current energy. Forests which are being exported as timber now. Built roads and rail lines. Kept our current account in credit by making many things in NZ, which are now imported at great cost in international borrowing, to offset the trade deficit.

        They laid the foundations of the NZ economy until they were given away to burglars.

        Too a large extent we are now living off the investment in infrastructure and production from these schemes.

    • Bored 12.4
      11 August 2010 at 6:33 am

      Danyl,

      October 1974 number was 1560 total registered unemployed. Bit more than 10 I grant BUT I expect they all got jobs within weeks.

  13. Pete 13
    10 August 2010 at 4:08 pm

    It’s worth a visit to the Welfare Working Group’s ‘discussion board’ – interesting questions posed by the WWG, and some typically unimaginative responses in there too.

    http://wwgissuespaper.wikispaces.com/message/list/home

  14. innocent bystander 14
    10 August 2010 at 9:34 pm

    Marty honestly your selective quotes are beautifully misleading.

    I found it very interesting that the increase in sickness and invalids benefits doesn’t stack up against the improvements made in health and independence outcomes ie we’ve become much more well as a society yet at the same time the welfare system has seen increasing share of its support go to people that are “unwell” due to increased demand. How does that stack up against your arguments of the benefits gained in the health system for the three terms of the labour coalition government?

    Further interesting evidence suggests that for people who reported that they had low to medium disability needs, a dispproportionate number of these people are unemployed relative to non-disabled people and the fact that some people who self-reported the same level of disabilities are in paid employment. Take a look at the Office of disabilities briefing to their incoming minister in 2008 – it says the same thing and advocates that government do something about it.

    There’s probably a complex range of factors that influence these trends including the one you like to suggest the welfare working group is saying “people bludge”, the barriers to employment that many government’s have created over time through welfare and other policy settings, and societal attitudes towards disabled people.

    A key strategic goal of the last government was to create a nondisabling society in which disabled people could experience as close to possible independence in their communities. The government never got there but they made a start.

    Addressing the barriers to employment created by the welfare system and other areas of government is a lofty goal and one which we should all support. Quibble about the policy options, don’t quibble about the evidence that disabled people are not given the “hand up” they often need nor are encouraged too by the system we currently have.

    I look forward to the working groups recommendations. I find their summary document was relatively balanced on a first read, one that has involved input from a number of acletic sources, including I believe from a range of government agencies.

    Your post, as far as it goes, is just shallow political spin that doesn’t help disabled people enjoy many of the things the rest of us take for granted like the feeling of self worth one has when they know they are able to apply themselves, be involved in their communities, and not just scrap through on the small amount money they receive from government.

  15. innocent bystander 15
    10 August 2010 at 9:48 pm

    Marty honestly your selective quotes are beautifully misleading.

    I found it very interesting that the increase in sickness and invalids benefits doesn\\\’t stack up against the improvements made in health and independence outcomes ie we\\\’ve become much more well as a society yet at the same time the welfare system has seen increasing share of its support go to people that are \\\”unwell\\\” due to increased demand. How does that stack up against your arguments of the benefits gained in the health system for the three terms of the labour coalition government?

    Further interesting evidence suggests that for people who reported that they had low to medium disability needs, a dispproportionate number of these people are unemployed relative to non-disabled people and the fact that some people who self-reported the same level of disabilities are in paid employment. Take a look at the Office of disabilities briefing to their incoming minister in 2008 – it says the same thing and advocates that government do something about it.

    There\\\’s probably a complex range of factors that influence these trends including the one you like to suggest the welfare working group is saying \\\”people bludge\\\”, the barriers to employment that many government\\\’s have created over time through welfare and other policy settings, and societal attitudes towards disabled people.

    A key strategic goal of the last government was to create a nondisabling society in which disabled people could experience as close to possible independence in their communities. The government never got there but they made a start.

    Addressing the barriers to employment created by the welfare system and other areas of government is a lofty goal and one which we should all support. Quibble about the policy options, don\\\’t quibble about the evidence that disabled people are not given the \\\”hand up\\\” they often need nor are encouraged too by the system we currently have.

    I look forward to the working groups recommendations. I find their summary document was relatively balanced on a first read, one that has involved input from a number of acletic sources, including from a range of government agencies such as MSD (the scenario model u refer to) and the Treasury.

    Your post, as far as it goes, is just shallow political spin that doesn\\\’t help disabled people enjoy many of the things the rest of us take for granted like the feeling of self worth one has when they know they are able to apply themselves, be involved in their communities, and not just scrap through on the small amount money they receive from government.

  16. Irascible 16
    11 August 2010 at 8:05 am

    I recall Muldoon or one of is successors declaring during an election campaign in the late 70s-early 80s that in order to encourage competition in the work place and boost productivity NZ needed a pool of unemployed of at least 25000. These people would be put to work when, where and if needed.
    There was a brief burst of out rage that was drowned out in the media chorus of agreement with such a daring economic theory being put into practice.

  17. dave brown 17
    11 August 2010 at 6:02 pm

    The NACTs attack beneficiaries as bludgers so as to offside them with working class taxpayers. You know, the scare figure of $50 billion blown out welfare costs covered at $10 a week by taxpayers. Oh gee we have to stop this, it is unsustainable on the taxpayers. Calling everyone taxpayers hides the fact that they are also members of social classes. This divides the working class and demonises the underclass which is blamed for all societies ills rather than the rich overclass which profits from poverty.
    While we are taxpayers some taxpayers are different from others. In reality incomes are just a distribution of the value that is produced by workers. The workers retain some of this value as their wages while the bosses pocket the surplus value as their ‘income’. Only then do they pay taxes. But in fact all taxes are paid for out of the labour value of productive workers. Harping on about taxpayers keeps us divided and ruled.
    Capitalism is a giant welfare state where the wealth is produced by workers for the bosses welfare.

    • loota 17.1
      11 August 2010 at 6:09 pm

      Question: does the NZLP have the right strategy to unpick this piece of right wing PR connivance?

    • prism 17.2
      11 August 2010 at 10:02 pm

      Referring to taxpayers seems to be a political cliche these days – as in either John Key or Bill English talking today about I think private-public partnerships and referring to ‘hard-working NZ taspayers’ needing to know that their money is being spent wisely. Is tax paid, rated according to whether the person has worked hard or not? And who defines what the hard work level is? Don’t we All pay GST, the idea surely being that it’s a catch-all tax?

      And it takes a jerk to come out with that term ‘hard-working NZ taxpayers’ during each discussion on policy. Sounds a bit of a mantra, reminding me of ‘weapons of mass destruction’ which always had to be intoned in full as if by order from above.

      • dave brown 17.2.1
        11 August 2010 at 10:30 pm

        Right, and we know what happend with the imaginary WMDs – millions dead.
        The NACTs and the rightwing can only talk about justice or fairness in terms of individuals. That’s cause capitalism projects itself as one of free individuals exchanging in the marketplace. The bosses are hard working and self-reliant. No state subsidies for them. (Don’t talk about PPPs or Canterbury Water or PM Whine or Fonterra milk dispensers, no that’s hard earned yakker – irony).
        What this hides is the reality of class relations. If we are no more than taxpayers then we scrap over the redistribution of the value that is already produced by the working class and should be expropriated back by that class. The bosses hide behind the ideology of individual right, the nation, the heterosexual family blah blah, roll out the church to dispense charity (that is to boost the billionaires who are listed in the Rich List as ‘philanthopists’.) and Rugby World Cup (TM) to for the circus in election year. Hows that for screwed their profits out of workers then and preening themselves when they dispense some patronising charity to the deserving poor.
        To bad for the undeserving poor, they have to lose their benefits, houses, education, and health access, and get a job, or else…

    • innocent bystander 17.3
      11 August 2010 at 10:56 pm

      for all your huffin’ n puffin’ u ain’t achieving nuthin’

  18. Frank Macskasy 18
    11 August 2010 at 9:26 pm

    Welfare Minister Paula Bennet has announced the support package for parents to provide a ”home for life” for a child in care. Foster parents will recieve various packages including $130 p/w to assist in costs to foster a child.

    She is quite enthusiastic about the programme, saying,

    ” ”We have more than 5000 children in Child Youth and Family custody and every one of those kids deserves a secure home,” Ms Bennett said.

    ”There are over 2000 foster carers currently, many of who may be able to offer a child permanency, this package supports them to do that.” ”

    Sources: http://tinyurl.com/26ylgtf , http://tinyurl.com/253p9dy

    This is a great idea. Anything that gets children into caring, loving, supportive homes is definitely the right step to take.

    But one thing niggles me…

    This government has hardly been supportive of solo-mothers and beneficiaries. In fact, Bennet has been vociferous in her condemnation of people on welfare,

    “If we don’t do something in MSD you know in the best of times, and you know in the mid 2000s we saw still sort of quarter of a million New Zealanders reliant on welfare.”

    Source: http://tinyurl.com/2ce4xfb

    So why would anyone want to foster a child; becoming a recipient of a WINZ benefit; and become a target for bene-bashing ignoramuses and politicians???

    • B 18.1
      12 August 2010 at 10:18 pm

      Good point. And if any child needs a full time stay at home parent its foster kids who need full on support. Or will PB expect them to be palmed off to childcare as soon as theyre 6 as well. What a hypocrite.

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  • Humanitarian support for Ethiopia and Somalia
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  • Supporting better financial outcomes for Kiwis
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  • Trade relationship with China remains strong
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  • $41m to support clean energy in South East Asia
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  • Minister releases Fast-track stakeholder list
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  • Judicial appointments announced
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  • Comprehensive Partnership the goal for NZ and the Philippines
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  • Thailand and NZ to agree to Strategic Partnership
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  • Removing red tape to help early learners thrive
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  • RMA changes to cut coal mining consent red tape
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  • McClay reaffirms strong NZ-China trade relationship
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