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.
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