Scoop Election 08: edited by Gordon Campbell

On the Welfare Working Group final report

February 24th, 2011

welfare working group, modest proposal, children of the poorBureaucrats and academics tend to enjoy playing God with the lives of the vulnerable – but evidently, even the Welfare Working Group members couldn’t agree on some of the loonier recommendations contained in their final report this week. Only ‘a majority’ of WWG members for instance, endorsed the notion that people who have a second child while on welfare should be required to search for work (and accept any ‘reasonable’ job offer they get) when their baby is only 13 weeks old. It would be interesting to know which WWG panel members baulked at this proposal. Maybe it was the health specialists, because they realized the danger to the wellbeing of children that this crackpot idea would pose?

In passing, one should add that this recommendation came encrusted with the sort of conditions you’d normally expect to find in a work of medieval theology. If the pregnant mother already has a child under three, then the Inquisition – sorry the Welfare Working Group – says that the threshold for when the work search becomes mandatory shall be determined by the age of that child (!) and not when the newborn babe turns 14 weeks… But conversely, if the woman is pregnant at the time of the marital breakdown and then goes on the DPB, no penalty shall accrue until the child reacheth the age of three – at which time both child and mother shall suffer the full consequences of the work test and may God have mercy on their souls… (I’ve changed the language slightly but not the Puritan zeal of the recommendation.)

Hmmm… So what will happen if after a relationship breakup, a mother applies for the DPB and then gets news from the clinic a month or so later that she is in fact pregnant to her former husband/partner? Does she have to go out to work three months after her baby is born, or three years later? That’s the sort of theological difficulty you get into when you choose to play God with other peoples’ lives.

This recommendation is only one of 43 contained in the Welfare Working Group’s final report released on Tuesday, just as the earthquake struck Christchurch. Recession or no recession, three-quarters of sole-parent, sickness and invalid beneficiaries will be forced to look for a minimum of 20 hours of part-time work – including every sole parent without children under 3 years of age, school holidays regardless. A new welfare bureaucracy called Employment and Support New Zealand will be created to manage the process. Its main duties will be gradually privatize the delivery of welfare, to reduce the numbers on benefits, and to slash the direct cost of supporting the poor.

The WWG’s avowed goal for this new bureaucracy is to remove 100,000 beneficiaries from the rolls by 2021. It estimates this will cost between $215 and $285 million per year in establishment costs and additional services (childcare, skills training new bureaucracy etc) which looks like an extremely low figure if the services involved are to be available nationwide, and at anything more than a token level of quality. On the rosy side, the WWG forecasts a reduction in forward liability from around $47 billion to around $34 billion by 2021. All up, the WWG’s guesswork is that its welfare crackdown might generate annual net savings of around $1.3 billion per annum by 2021.

While what follows is not a comprehensive review of the WWG report, a few initial points can be made about the package being proposed .

1. The reforms are benefit cuts in drag. Clearly, even a centre right government might feel nervous about openly promoting a plan to cut benefits during a recession, so the process has been (thinly) disguised. The existing major benefits will be eliminated, and anyone not already on the dole will be shunted down to that level of assistance. A single benefit called Jobseeker Support will be set at the (lower) rate of the dole, with all the extra amounts currently paid for sickness and disability and sole parenthood being turned into supplementary payments – and paid out at the discretion of the welfare delivery agents. For a while. As the bureaucratese of the report chillingly puts it:

We consider that these supplementary supports should in due course be reviewed with the aim of simplifying the system and promoting a greater focus on paid work.

See ? No benefit cuts at the outset– just a ‘review’ that ‘simplifies’ the system by removing the supplements over time and that deliberately uses the intolerable living standards this will create as a further lever to ‘promote’ paid work. It is a deliberate pogrom – mean programme – to make the poor poorer, and force them to pull themselves up by their bootstraps. In the interim, the mechanisms envisaged will also penalise those people who dutifully work for more than twenty hours a week, by stripping them of their existing welfare entitlements and putting them at the mercy of the tax system for relief, if and when the IRD ever gets its act together:

We propose that once a person in the new welfare system is regularly working 20 hours per week, they should be required to receive their income supplements from the tax system rather than the welfare system. Planned improvements in Inland Revenue’s ability to estimate income on a real-time rather than annual basis is an important element of smoothing the transition between the benefit and tax systems, and in our view should be given a high priority.

In other words, first launch the reform – then afterwards, add the tax mechanisms (have they even been costed yet?) required if the new system is to function with even a minimal degree of safety and fairness. In the process, universal entitlements available for decades and based on recognised differences (in benefit categories and related needs) will be scrapped – and put in the hands of private sector and voluntary groups whose ability to win contracts (and retain them) will be based on how readily they reduce both the numbers on welfare, and the amounts that claimants receive. The real ‘incentives’ in this brutal process are (a) to make profit from other people’s hardship (b) reduce the number of claims and (c) to reduce and/or deny entitlements.

The usual far right cocktail, in other words. Benefit cuts are being disguised as second and third tier ‘supplementary’ payments – and will be available in future only at the discretion of people who have a clear commercial interest in denying people the support they need for themselves and their children. Allegedly, these reforms will slash the number of working age beneficiaries by 100,000 over the next ten years. If the American models for these reforms are anything to go by, those 100,000 people will not simply vanish – they will turn up on our street corners, living out of cardboard boxes. Perhaps that could be an effective form of protest to our foreign visitors at the Rugby World Cup – lets speed up the process and put hundreds of people living in cardboard boxes on Queen Street right now.

2. This is a Manufactured Crisis. The vast majority of people on welfare already move off benefits as quickly as the state of the job market, their own sickness and disability, and the needs of their children can allow. Thus, there is no genuine need for welfare reformers to up-end the entire system to forcibly remind a relatively small minority of claimants that welfare is only a temporary crutch – given that the vast bulk of recipients already recognize this fact and use welfare on that basis.

As the stats indicate, most people spend a very limited time on the main benefits. (Even less time, when the economy is in good shape.) I would argue that most of them deserve to spend more time on benefits, not less. After all, the majority have paid their taxes – many, for decades – so that they and their children will be entitled to assistance in the event of unforeseen need – such as a marital breakdown or a jobs downsizing or a global recession, mid career. In the circumstances, it is outrageous that the well-paid mandarins (with tenure) on the WWG should be actively trying to stigmatise valid entitlements to assistance as being essentially unearned, and seeking to ration them out in as miserly a fashion as possible.

The myth of the undeserving poor is not the only stereotype that the WWG have bought lock, stock and barrel. In the final report, the myth of the teemingly fertile poor also gets a fair old run. The WWG talk of our teenage pregnancy rates being the highest in the OECD, and talk of freer access to contraception to help limit the breeding habits of the poor. [Has Finance Minister Bill English signed off on easier access to abortion as well? That might save a few bucks.]

Making contraception available and affordable is a good idea, but for other reasons. Within the welfare debate, the reality is – forgive me for repeating this – only 3.1% of the DPB population was under 20 in December 2010, virtually the same ratio as in December 2005. Moreover, the recent Salvation Army report Stalled shows that teenage pregnancy rates are actually reducing significantly. Can’t we celebrate the integrity and morality of today’s young people for once? On the whole, they put their parents’ generation – all those hippie, free love types – to shame.

Even so, the WWG try to sustain the myth of teenagers getting pregnant to get on the DPB, and then having more children to stay on it. If true, that should mean that more teenagers would be flocking to jump on this alleged gravy train – but no, there’s no sign of that. It should also mean a rise in DPB numbers of recipients with two or more children. But no, that ratio is actually falling. Finally, if people are moving on and off the DPB and back again in significant numbers you’d think that would show up in the WWG’s own tables for the duration of time that beneficiaries have accessed the DPB for five years, over the course of the past ten years.

However, the relevant figure is actually quite low – only 28%, or significantly less than a third. (The equivalent figure for sickness beneficiaries is only 14%!) The average time spent on the DPB is far lower than five years, at little over three years. Given that parental care is a long run responsibility, and given that a (declining) number of solo parents on the DPB care for more than one child, that 28% level is hardly excessive, and it provides no circumstantial evidence that many young women are having babies to get on and stay on the DPB. It is certainly not a reason for demolishing the entire DPB system. In essence, the WWG is pandering to talkback radio fantasies to advance its project.

3. Giving Lip Service to the Needs of Children So what is expected to happen to children when the bureaucrats and the academics on the Welfare Working Group decide to kick their parents off welfare? With manic precision, the Welfare Working Group calibrates just how the inmates – sorry welfare recipients – who fail to comply precisely with their diktats are to be treated. They advocate penalty reductions in assistance:

– 25 per cent of their payment for a first failure;
– 50 per cent of their payment for a second failure;
– 100 per cent of their payment for their third failure; and

– a 13-week stand-down for a fourth or any subsequent failure;
b. a minimum stand-down period of two weeks for each failure, before payment be restored after re-compliance activity has been undertaken;
ii. obligations be effectively enforced, with transparent monitoring and reporting of the number and duration of stand-downs and reductions imposed;

But what, you may be wondering, happens to the children in such families, where there is a failure to comply? What happens to them during those stand-down periods of no payments, or when 100% of the family income is abolished? How can punishing children for the sins of their parents – by abolishing their source of food and shelter – be in any way compatible with our obligations as a signatory nation to the International Convention on the Rights of the Child? Back in the 1990s , the New Zealand courts established (in the Tavita case) that compliance with the UN Children’s Convention could not be ‘mere window dressing’ – and so, there may well be grounds for challenging the entire WWG welfare reform process on Convention grounds.

True, the WWG do make a token gesture in that direction. Having just outlined the punitive scheme above, they add: “for recipients with dependent children, additional monitoring be undertaken and there be requirements to ensure the interests of children are safeguarded;” Oh right. Because CYFS is currently doing such a GREAT job with its current resources that it could easily take on a whole new wave of ‘monitoring’ and ‘safeguarding’ of the interests of many more children, right? And after all, it is always so simple to ‘safeguard’ the interests of children when you’ve just deliberately cut off their family’s means of paying rent and buying food. Such recommendations are medieval – not only in their cruelty, but in the feudal arrogance with which the WWG has put forward such proposals.

4. Welfare Reform as political theatre. As I’ve mentioned before, the real targets of the welfare reform process are low income and middle income workers. By pandering to the resentment of beneficiaries by the working poor, the government diverts criticism from their own failure to provide job security and a better standard of living to the Kiwi battlers out there in suburban and provincial New Zealand.

In reality, the welfare reform process will significantly worsen the lot of the Kiwi battler as well. If the denizens of talkback radio think that things are bad now, wait until the welfare reforms unleash onto the job market a wave of job searchers who will undercut their current wages and conditions. Employers will be able to use the welfare reform process to reduce existing wages and conditions – and beneficiaries, remember, will be required on pain of losing their benefit to accept any’ reasonable’ job offer made to them by any employer. The current problems of New Zealand being a low wage economy will be vastly intensified. As envisaged by the WWG, welfare reform will offer employers a licence for exploitation.

In passing, I should mention that the Welfare Working Group recommendations will also substantially raise the risk of child abuse. That’s because the WWG advocates abolishing the Independent Youth Benefit that currently enables 16 and 17 year olds at risk to escape from abusive situations. In future, the WWG says, “Young people under 18 years of age who are eligible for assistance [will] be required to live with a responsible adult or in an adult supervised setting” – and the payments will need be made to those adults, or community groups and not to the young person concerned. This recommendation blithely ignores the fact that it is the adults in the lives of such 16 and 17 year olds that are the problem.
Finally, given the WWG’s ideological bias, it is probably not surprising to see it trying to sneak other extremist recommendations into its proposals, through the back door. In its proposals to tailor the education system to serve the needs of employers for instance, it trots out the tatty old right wing dream of voucher education in the guise of :

innovative approaches [such as] allowing the funding to follow the student to enable more choice over opportunities for study and diversity in the type of school available

In sum, welfare reform on this scale will not only punish and marginalise the poor – with all the health/law and order costs that will create in its wake. It will also present employers with a golden opportunity to permanently undercut the wages and conditions of all but the elite and skilled members of the New Zealand work force. Obviously, New Zealanders can vote for this package or reject it – but we need to very clear what sort of society we would be endorsing in November by supporting it. IMO, the welfare gulag envisaged by the WWG and (apparently) endorsed in large part by the Key government, is foreign to the country that most of us have known.


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    1. 13 Responses to “On the Welfare Working Group final report”

    2. By Danyl Mclauchlan on Feb 24, 2011 | Reply

      Having read through the report I don’t think it’s motivated by neoliberal/right-wing philosophy in the same way that, say, Brash’s 2025 reports are. There’s a desire to use private contractors, obviously motivated by the many representatives of commercial welfare organisations on the committee, but in general the WWG just seems designed to cause as much misery and suffering to as many poor and vulnerable people as possible, without any real ideological justifications behind it.

    3. By Tara on Feb 24, 2011 | Reply

      Its a ruthless witchhunt with no benefits or improvements in delivering a social service, its just another bland and rancid economic trick.
      Cutting and transfering public service while the increasing costs.Bureaucracy is blushing.

      Showing their level of fear in the determined demonstration of their power against the weakest before elections.

    4. By william on Feb 24, 2011 | Reply

      I am not a beneficiary, yet i implore you to do a full and complete article on the restructured abatement principles the WWG report calls for. For too long this most vital tenant in the MSD tower has been deliberately ignored. It is a very big elephant and the room is getting smaller every day. The current secondary tax system and the ludicrous abatement policies are the biggest hinderence to those trying to change their position.

      also the information on abatements in the WWG report is incorrect and deliberately misrepresents the subject of benefit penalties

    5. By donna on Feb 24, 2011 | Reply

      First couple of thoughts:
      The WWG’s recommendations are a disgrace and should be tossed in the bin where they belong. They have nothing to do with ensuring income security for the disadvantaged or reducing the hardship that already exists in our communities, and everything to do creating a climate of blame to justify withdrawing support from those reliant on benefit income.
      And intriguing that a group stacked with hands-off-business neoliberals is so keen to establish a mega-bureaucracy to measure and monitor beneficiaries. Happily this means there may be job opportunities for sole parents and sick and disabled persons…measuring and monitoring other sole parents and sick and disabled persons. And of course jobs will become available as we expand the criminal justice system to process and incarcerate all those who fall through the remnants of the social safety net.
      Gordon is right: these recommendations will create a welfare gulag which will further split New Zealand into the deserving haves and the undeserving have-nots. Is this what John Key meant by helping the underclass?

    6. By Bronwen on Feb 25, 2011 | Reply

      The Christchurch Methodist Mission have put together a very stunning short paper on the plans of the WWG, it gives the lie to many of the figures touted about by the WWG.

      I am tired of hearing that people have kids to stay on a benefit, if they do the number will be miniscule as the CMM report says.

      Everybody needs to read the Spirit Level and understand that the wider the gap the bigger the problems and this means problems for everyone including those at the top.

      Shame we live in such a punitive, punishing society, the fear engender in the middle class is just was Key wants, lets bash the poor some more, we need more for out lattes etc.

      I like that cardboard boxes in Queen street, be good for the World cup.

    7. By Rose on Feb 26, 2011 | Reply

      Why is it so acceptable in New Zealand to loathe women and small children? Why can’t people see that giving young children a good start in life is the best investment we can make in the country’s future?
      The two people I know who are on a disability benefit are absolutely unable to work and are not going to get better. One has severe motor and memory impairments as the result of a brain tumour (the tumour itself is fortunately in remission) and the other has Down’s Syndrome. Although some Down’s people can and do work, the severity of mental impairment in this syndrome is very variable and this individual is not employable. What is the point of harassing people like this to get a job? They will just get fired, with all the hurt that causes.

    8. By Robert Miles on Feb 27, 2011 | Reply

      Surely a GMI for those over 28 would be a better idea, which providing the balance of payements through the IRD for anyone working more than 20 hours is a move in the right direction. In the US, Nixon would have legislated a GMI considerably more generous than welfare benefits in the South around l970, but it was destroyed by Eugene McCarthy in his last act in the senate and other ultra liberals who were determined NIxon never be allowed to take credit for such an advanced act.A GMI seems more sensible, because it could be argued that NZ suffers from considerable over employment and low productivity from employing many inefficient workers, inefficient due to temperament, IQ, lack of speed or unacceptable presentation or loooks. I would say essentially abandon welfare for those under 28 except for severally physically injured or disabled and give everybody a chance in the workfore and be prepared to pension of the inefficient, unancceptable and too difficult.
      In Britain I have read in the Blair era a million unemployed particularly in the former industrial heartland of the North were moved onto incapacity benefit. Often assesssments of incapacity,invalidcy are based on psychiatric assessment or the consequence of psychiatric medication ( sideeffects, excessive doses, etc).
      I have some doubt of whether psychiatrists are any longer appropriate people to determine peoples future and whether they have the right to work or not or enjoy a higher income. Drugs have improved enormously if they were used intelligently in lower doses remarkable progress might ensure. Unforunately the aim of psychiatrists seems more on the lines of social and eugenics control thru medication and I have considerable questions whether the immense power of psychiatrists to determine peoples future is appropriate to determine peoples place in society and right or not to work.
      Certainly Rebstock and Key are engaged in political theatre but in my view the real anger against beneficiaries comes from stressed low grade workers who are forced to work and are not really up to it – which is more reason for a GMI. On the previous blog I don’t think JK Galbraith is quoted out of context his views simply changed from l958 and l983 as did the nature of harvards intake and the views a Harvard professor might be expected to have.

    9. By Sean Kerrigan on Apr 11, 2011 | Reply

      Well, the powers that be seem intent on doing what they do best and that has always been using a resource to create money for themselves regardless of the mess it makes of that resource in the long term. Fighting them on their own ground has always been pointless as it always swings to their favour as it just increases bureaucratic and legalistic uptake of resources.

      Sorry folks but a system run on reward through capitalisation will only ever return an ever decreasing power to define direction on the majority. Anyways, aren’t we yet over the empty benefits wide screen TV’s and stainless steel fridges give us when the stories no longer feed our souls and the wholesome foods from our earth are beyond our ability to buy?
      A system that feeds greedy Egos and malnourishes ethics and morals will never yield to our better natures.

    10. By Susan on Sep 21, 2011 | Reply

      So I’m thinking what they are aiming for is a barbaric country full of homeless people and a hugely increased crime rate by 1) Giving people no choice but to commit crime just to survive. 2) Creating more and more messed up kids who are being brought up in day care rather than having their mothers be able to give them the care they need that only a mother/father can give. Thus leading to more messed up kids turning into messed up adults who make bad decisions in life that will only further screw society up more than it already is…

    11. By R on Sep 21, 2011 | Reply

      Susan, that’s where privatised prisons come in. Set up a society which grows your product then profit from it.

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