Scoop Election 08: edited by Gordon Campbell

On the Government’s latest plans to Americanise the welfare system

August 15th, 2011

lyndon hood - john key, narnia, youth

What is it about National’s plans for welfare reform and natural disasters? On the same day in February that the Welfare Working Group released its loopy agenda of reform proposals – which included the option of sterilising welfare miscreants – the Christchurch earthquake blew that news off the front page. This weekend, immediately after Prime Minister John Key used his party conference speech to launch National’s populist attack on teenage beneficiaries, the country was engulfed by a polar blizzard.

As usual, the target audience for these proposals is not the miniscule number of feckless young people on benefits, but the wider population of voters who think the young have had it too easy for too long. ‘Ephebiphobia’ is the term for people who exhibit an irrational fear and loathing of teenagers, and National’s conference delegates seemed to have quite a bad case of it. Bad enough at least, to completely ignore the irrationality of the Key government choosing to focus on making the welfare system get tougher with teenagers on benefits – rather than say, helping create the jobs that will avoid them going on benefits in the first place. There seems to be absolutely no coordination between the government’s youth employment strategy, and its welfare policies.

The main reason for this disjunction being being that National doesn’t seem to have a youth employment strategy. It is quite happy to lambast young people about their responsibilities and obligations to the state, while blithely ignoring the state’s own responsibility to manage the economy in a way that offers work opportunities for them.

To the young unemployed, it must seem be a bit like getting lectures on sobriety from an alcoholic uncle. When have the boomer generation – well represented at the National party conference – ever deferred its own indulgences? It used free education, loads of job opportunity and class mobility to further its advancement in the 1970s and 1980s, and has given itself tax cuts at every stop along the way – but now preaches the virtues of slashing government spending and cracking down on the miserly amounts the state awards to the youngest and least advantaged in the society that the boomers have created? Spare me. Forget about the rednecks in New Zealand First. What was on show in the audience for Key’s conference speech on the weekend was the ugliest side of the New Zealand character.

At the core of Key’s speech were two proposals that amount to the Americanisation of welfare delivery in this country. Believe me, this is only the thin end of the wedge. The payment card for 16 and 17 year old beneficiaries (and for 18 year old mothers) is the American food stamp programme in digital drag. There is no reason for thinking it will not be extended to other beneficiaries, once the rest of the welfare reform package is unveiled.

The second element of Americanisation is the mandatory use of welfare bureaucrats from the private sector to manage the transition of teenage beneficiaries into work, education or training. As the US experience has shown, this privatisation of welfare delivery means that said ‘managers’ will have absolutely no interest or stake in the wellbeing of the clients whose money they control – no, because the managers get paid for purging as many people off welfare as fast as they can. And Key is willing to hand the family income and wellbeing of the babies of 18 year old mothers to a cash incentive scheme of this sort?

What happens if the teenage mother jibes for instance, at the inadequate or unsafe childcare that the manager demands she accept, so that the manager can pocket more money? Why, her case manager will be able to force her into submission on this or any other grounds, simply because the manager will be holding the purse strings. For a party that claims to abhor the nanny state, this is a major extension of state power, and with regard to something far more important than shower nozzles and light bulbs. Again, one can safely assume it will be extended beyond teenage beneficiaries to the wider beneficiary population, once the rest of the policy package gets unveiled in the months before the election.

The gaping hole in the government’s policy framework is, as mentioned, the lack of a youth employment policy. Further to the right, the Act Party are offering youth rates as a panacea. This ignores the fact that many workforce entry jobs – say in the fast food industry, cafes and supermarkets – do not require a level of skills training sufficient to justify any wage differential, And moreover, youth rates would themselves create an incentive to dispose of said workers once the threshold to adult rates was reached. We’ve been through that process of injustice before – why repeat it ? On balance, youth rates would only make the career prospects of young people worse, not better.

I’m not saying that it is easy to devise and promote full employment for the young. All around the world, governments are finding it difficult to cope with an entire generation of young people who seem to be largely surplus to requirements, at least within a global economy wedded to cheap labour costs and job-destroying technology. Yet not even trying to create work opportunities for them – and worse, using them as scapegoats to win votes from the reactionary talkback radio crowd – is pretty shameful stuff.

The gist of the new measures announced on the weekend? Well, once the necessary changes to the Privacy and Education legislation have been passed… by next year, almost all beneficiaries aged between 16 and 18 will have their benefit payments managed by welfare bureaucrats, with only those on invalids benefits being spared the new regime. The cost of rent and power bills will be automatically deducted, and a limited amount of discretionary income would be allowed on what’s left on the payment card, which will be unable to be used to buy alcohol or cigarettes. All 18 year old mothers would be expected to be in work or training, Key explained, by the time their child was one year old.

As mentioned, the best way of reducing the numbers of teenage beneficiaries – which is utterly miniscule compared to the 58,000 youth unemployed – is to manage the economy in a way that creates work opportunities for them. When work is available, the benefit numbers go down, right across the board. Between 2006 and 2008 for instance, the dole numbers plummeted from 40,000 to 18,000 – and then hit a peak of 62,000 during the global recession, before declining slightly this year. These variations are not due to any sudden fluctuations in irresponsibility or outbreaks of diligence. As even the Social Development Ministry website concedes, unemployment rates merely reflect the changes in economic conditions.

The current dole statistics do, however, contain a few noteworthy trends. At the end of June five years ago, 18-24 year olds comprised only 22.5% of those on the dole – but at the end of June 2011, they comprised just under 30%. Big increase. Over the same period, there has been an almost identical rise in the proportion of those on the dole aged 40-54. If the cause truly was one of motivation, it surely can’t be striking teenagers and mature workers alike, at the same time. The sobering reality is that for 18-24 year olds and older workers alike, work opportunities have been drying up.

As yet though, those conditions do not seem to be particularly long-lasting at an individual level. Currently, 98.3 % of those on the dole receive it for less than four years – though that period does include the tail end of the economic boom, and thus will probably deteriorate. Still, as of June 2011, nearly three quarters of those on the dole – some 72% – were on it for less than a year. Again, this suggests that the problem is not people choosing to languish on benefits, or lacking motivation to get off welfare.

For now, the government’s welfare reform package amounts to little more than micro-managing the deckchairs on the proverbial. It is avoiding the hard work that it should be doing – namely, of managing the economy in a way that fosters work opportunities for all those willing to work. For now though, voters seem happy enough to let the government play politics with their children’s future.


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    1. 34 Responses to “On the Government’s latest plans to Americanise the welfare system”

    2. By appalled NZ'er who wont be voting National on Aug 15, 2011 | Reply

      Hi Gordon, Great article as usual !
      One thing to note: the new beneficiary “foodstamps and utitlities’ card will create a new highly VISIBLE sight of the new underclass of YOUNG beneficiaries buying food in our supermarkets and other shopping queues up and down the country. These poor young people will be forced to publicly produce their WINZ CARDS at shopcounters across the country. Their PRIVACY shattered and self respect demolished…they will feel public shame at their plight often through no fault of their own ….is this what National wants?
      YES !
      WHY? Becasue it draws attention AWAY from the Nat’s LACK of a coherent and workable employment policy and encourages beneficiary bashing instead….

    3. By Rose on Aug 15, 2011 | Reply

      Great article!
      The US is said to have a “cult of youth and beauty”. In contrast, a part of NZ culture is a profound loathing of youth, beauty and fertility. Key is pandering to this loathing, as well as cynically targeting the demographic too young to vote. This policy will serve to humiliate and alienate young people, but will do nothing to help them into work, because the jobs just don’t exist.

      This policy is directed at the prejudice, for which there appears to be no evidence, that young beneficiaries squander their money. My bet is that the additional cost of paying all the welfare bureaucrats will not be offset by any great savings on benefit payments for youth.

      If the govt really wanted to save money they would means-test superannuation, and stop forking over money to wealthy people over 65, but John Key would never have the cojones to do that.

    4. By Carolyn McKenzie on Aug 15, 2011 | Reply

      The Prime Minister’s targetting of the young fits well with his answer in 2008 to a uni student, when asked why the global economy was tanking he slyly answered that it was “because your mum & dad wanted a flasher car”…..this has to be the most cynical comment I have heard in some time. John Key was at the coal face of deregulation, excesses, dishonesty and fraud in the international finance industry that ruptured the global economies. He is either deluded or dishonest…either way I wouldn’t count on him to manage either the economy or a pissup in a brewery!

    5. By TeeJay on Aug 15, 2011 | Reply

      Gordon, pensioners are the largest group on welfare (and growing). However, as they vote, you will never see food stamps for them.

      16 an 17 year olds are not allowed to buy alcohol anyway, whether on welfare or not!

    6. By Joe Blow on Aug 15, 2011 | Reply

      Yeah, right on the money Gordon!

      It’s not that the policy, which you say yourself is very “nanny state”, is actually that bad in itself, it’s the fact that it does nothing to sort out the problem of youth unemployment and appears to be intended to mask the fact that in reality National is doing nothing about this problem at all. Not to mention the blaming way in which this policy has been rolled out. The insinuation is that these young people are wasting YOUR money on booze and tobacco… Hell these are the kids that have likely been removed from their families by CYFS in the first place! It’s sickening!

      Looking at the numbers from the Herald apparently this policy will only affect the 1600 16 and 17 year olds who are unlucky enough to already be on the special benefit. This is a very small proportion of the estimated 8500 to 13,500 16 and 17-year-olds who are not in education, training, or work at any one time; and of which 90 per cent will apparently go onto a benefit once they turn 18.

      The vast majority obviously do not even qualify for the dole and must be being supported by their families.

      What we need is an incentive for these young people to go and study skilled occupations which are in shortage. The only way to do this would be to make the student allowance available to school leavers that wish to study the skills that we lack. I guess it wouldn’t sort out the whole problem of job creation but it may get some of those 16 and 17 year old school leavers into skilled occupations we need.

    7. By Will de Cleene on Aug 15, 2011 | Reply

      Nice one, Gordon. The whole Youth Rates argument only works if there are Youth Rate rents or Youth Rate bread and butter. Alas, the Real World costs full price.

    8. By Bernard Downey on Aug 15, 2011 | Reply

      The number of New Zealanders emigrating to Australia
      makes the unemployment numbers look palatable

    9. By Margaret on Aug 15, 2011 | Reply

      Lets face it the National Government does not care about people who have no work through no fault of their own.

      John Key says these people make ‘Bad choices’
      What about the ‘Bad choices the money markets made, why were we expected to bail out these institutions with millions but people who cannot find work are not worth a pittance to live on. It just shows what values John Key lives by.

    10. By Ben Wilson on Aug 16, 2011 | Reply

      Good stuff, Gordon. This shit is whack. You can’t solve unemployment with food stamps. It’s obvious. All it does is stigmatizes a group, sets up a bureaucracy and a black market, and makes it look like the Government is trying to do something, when in fact they have no ideas at all. They certainly don’t have any compassion.

    11. By Leon Henderson on Aug 17, 2011 | Reply

      The almost completely incoherent mess (above) was banged up whilst drunk. Any chance of it being removed Gordon? PLEEEZ!!!

    12. By Leon Henderson on Aug 17, 2011 | Reply

      Gordon, what gives with the picture at the head of this page? It looks like a couple of actors in a Hobbit movie in some kind of department-store “Santa Grotto” thing. Uh????

    13. By Harry C on Aug 17, 2011 | Reply

      @Leon Henderson It’s John Key’s face photoshopped onto the ice queen from The Lion the Witch and the Wardrobe (who hands out turkish delight).

    14. By peterlepaysan on Aug 17, 2011 | Reply


      It appears that we have exchanged “nanny state” for “big brother”.

    15. By Leon Henderson on Aug 20, 2011 | Reply

      Thanks for removing that hideous post, Lyndon and Billy.

      Harry C: Ahhhh so that is what the picture is, but I don’t think John Key looks any better with that wig. The Hobbit theme is a very apt one for Key to be in though viz-a-viz all the arse-kissing of Warner Brothers that he has been doing.

    16. By Joe Blow on Aug 20, 2011 | Reply

      @ Leon

      Ooooo you’re being very good Leon! A reformed character I must say!

      The similie intended by the picture above is the insinuation that John Key is like the White Witch who conned Edmund with turkish delight and smooth talk. Edmund could represent the hapless unemployed youth unlucky enough to be in CYFS care and on the independent youth benefit; or the general public itself – mesmerised by his saintly new policy. And Lucy may represent the sane public who are unsure about the White Witch’s real intentions…

      In either case it made me chuckle… Key looks real funny dressed up in drag, which incidentally, along with dancing in drag and mincing the catwalk, seems to also get him votes.

      What’s with the voters in this country? Does anyone care about policy in this country anymore?

    17. By Leon Henderson on Aug 20, 2011 | Reply

      Joe Blow, I was wondering who the creep in the long-hair wig was!

    18. By Leon Henderson on Aug 20, 2011 | Reply

      Being what could be described as a massively technologically primitive humanoid (have seldom had access to any “modern facilities” and now only have an ancient computer that is more than six years old and also on a Dial-Up connection) am unable Joe Blow to understand this “Hobbit” stuff.

      Have never seen those videos, and so am unable to “grasp” such meanings as “white witches”, etc.

      But Joe Blow, really actually am attempting to behave better (truly!). There is a very nice Tech on Scoop who is named Billy who wrote to me who tried to explain that railing against the capitalists is not going to change the minds of that vast horde of scumbags known as the “Swing Voters”.

      Billy is right, all it actually will do is induce those vermin even more to vote for John Key in November due to the mosquito-piss-puddle “depth” of their alleged “minds”.

    19. By Joe Blow on Aug 20, 2011 | Reply

      @ Leon

      Yip, Billy is right. Polarising opposites is never really the best way forward… it scares the swingers. Still I’d like to see certain aspects of the capitalist system brought back under control, particularly within the financial sector. I watched half of a movie called the Inside Job last night which puts it in perspective. It’s a new release on DVD. I recommend it.

      Still there was a great radio show on This American Life that came out in 2008 soon after the financial crisis called the Giant Pool of Money, which really nailed it way before this new flash DVD came out! You may be able to listen to the radio show on dial up – not sure. In any case, you could download the transcript and read it anyway. Try clicking “play”. Here’s the link:

    20. By Leon Henderson on Aug 20, 2011 | Reply

      Joe Blow: I would like to see capitalism strangled totally dead by the throat!

    21. By Joe Blow on Aug 21, 2011 | Reply

      @ Leon

      Leon New Zealand has always been a capitalist country. Hell before 1984 when we were one of “the most egalitarian countries in the world, and was rated fifth highest in the world on the OECD Standard Of Living List after the Scandanavian Social Democracies and the Finnish Social Democracy” we were still a capitalist state.

      And our standard of living at that time was largely due to our “Free Trade Agreement” with the motherland.

      Just like socialism, capitalism has never truely existed in its pure form as envisaged by the monetarists. In New Zealand we’ve just got less socialism in the mix than we used to have. And that socialism was largely born out of a reaction to the Great Depression. We’ll likely have a swing back to socialist ideals, especially if the shit properly hits the fan due to the consequences of enlarged public debt. The reason there hasn’t properly been a swing in that direction yet is because they’ve managed to stave off economic collapse so far by flicking the bill on to the taxpayer. And ironically this is “them” still zealously following Friedman’s ghost.

      Friedman argued that the Great Depression was created by the Fed allowing the money supply to shrink by one third between 1929-33 and idly sitting by while the banking system collapsed. He claimed that, if the Fed had provided emergency lending to the key banks, or simply bought government bonds on the open market to provide liquidity and increase the money supply after the key banks fell, the rest of the banks would not have gone down like they did. Sound familiar? Like something straight out of Bernanke’s mouth… So far Friedman’s been right. But what if the governments start to default under the burden of extra public debt as a result of the bailouts? Then Friedman’s ghost may truely have nothing left to say and we might just see some old ideas being resurrected… we’ll see…

    22. By Joe Blow on Aug 21, 2011 | Reply

      @ Leon

      Oh, I nearly forgot. I just wanted to point out that Marx was a Jew. Nothing more to say about that really…

    23. By Leon Henderson on Aug 21, 2011 | Reply

      Know that Karl Marx was a Jew and so are unable to hate all the Jews.This always has been a horrible problem of mine. I could not be an SS Nazi but even the SS could not be proper Nazi”s!!! When I was nine years old there was an incredibly good-looking and by nature lovely guy in my class at school. I would rather shoot myself than shoot him! (met him way down the track when we were both “adults”: he was a worker in a shop and even though I looked like a “Tramp” (which I was) he treated me with astounding courtesy and respect.

      So I do not hate the Jews Joe Blow.

    24. By Leon Henderson on Aug 21, 2011 | Reply

      Joe Blow: The dude at school and in the shop was Jewish.

      Am pissed again and ballsing up all over the place yet again attempting to “write” and rapidly hurtling into incomprehensibility!

    25. By Leon Henderson on Aug 21, 2011 | Reply

      How could anyone trust a capitalist? Joe Blow, provide just one reason.

    26. By Joe Blow on Aug 21, 2011 | Reply

      @ Leon

      Well that’s just the point. You can’t trust anyone when there’s the chance of making a cool 10 million plus dollars from bonuses in the form of shares from the very company you’re a CEO of. It breeds high risks for short term gain. Check out Raghuram G. Rajan (way ahead of his time):

      That’s human greed. But the last thing it needs is unbridled encouragement. The only way to get that under control is to regulate… this includes putting in place a system that holds people accountable for the consequences of taking risks for short-term gain or, for example, hedging credit default swaps against the very CDOs you are telling investors are as safe as government bonds when you know they are “crap”. I mean human greed will always find new loopholes but monetarism has gone even further by turning the financial system into one big loophole…

      I don’t think capitalism is the problem per se – unregulated greed is the problem. We’re all only human after all Leon… and that same humanity is the glitch in socialism too – not to mention the democratic system itself.

      Good to hear you do not hate the Jews.

    27. By Leon Henderson on Aug 22, 2011 | Reply

      Do not hate the Jews entirely Joe Blow, only the overwhelming majority of them! Why is not USA and NATO bombing them for their murder of the Egyptian soldiers and the latest Zionist mass-murder onslaught in Gaza?

      Trying to find some kind of compromise “middle ground” between capitalism and Socialism is never going to do anything other than give the capitalists a “foot in the door” to barge in and take the whole house over.

      Latest examples: Iraq, Libya.Somalia.

    28. By Joe Blow on Aug 22, 2011 | Reply

      @ Leon


      I guess you are talking about Israelis this time. It’s an old war over the Holy Land that’s been going on for at least 1000 years. They don’t bomb them because the Christain Zionists would prefer Jerusalem to be in the hands of the Israelis as opposed to the Arab muslims much like the muslims want to see Israel extinguished into the sea… It’s about religion.


      Well pushing for regulation has far more likelihood of improving things than just glibly criticising capitalism while waiting for the revolution which has never come or setting up a Vanguard Party to tell everyone what they should think. I guess you’d love that Leon. I can see it now. Toiling in King Leon’s agrarian paradise while his Holiness gets all the best birds and all the best hootch much like the capitalists do now…

      I mean, to truely challenge capitalism and affect change you have to be able to come up with something a bit smarter than just emphatically stating that “capitalism stinks”. I bet you don’t even think that socialism has a chance anyway. It’s all about criticising the system rather than coming up with any realistic ideas for incrementally improving things now. Nothing constructive… it simply achieves nothing… just the same old whining on blog sites…

      You ever heard of the Fabian Society Leon? If not, you should check it out. It might do you some good…

    29. By Spoff on Aug 23, 2011 | Reply

      Its about religion?

      Not the 7-800,000 Palestinians driven from their homes and property – 391,000 of them before the 1948 War began:

      ….who have never been compensated despite Israel’s pledge to do so – one of the conditions set for their acceptance into the U.N.

      Good article Gordon. First thing I thought of when I heard the news item was U.S. food stamps.
      Food items are readily tradeable – a reality that Key and his obese minister seem to be unaware of.

      Still, looks good to the right wing punters I guess.

    30. By Joe Blow on Aug 24, 2011 | Reply

      @ Spoff

      I believe a major reason for the decision of the Christain Zionists in the West to back the creation of a state of Israel goes as far back as the Crusades. Over the centuries many “Arabs” have been driven out by crusaders and many European crusaders have been driven back out by the “Arabs”. What’s happened after 1918 and the fall of the Ottoman Empire is just another extension of the same old tug of war. Except now the West’s got Jewish settlers armed with nuclear weapons! Way less painful than doing the dirty work themselves like in the old days…

    31. By Leon Henderson on Aug 25, 2011 | Reply

      You are an utter capitalist Joe Blow and relentlessly are attempting to justify them, as always.

      “king Leon”

    32. By Joe Blow on Aug 26, 2011 | Reply

      @ Leon

      Heil King Leon! Heil, mein Führer!

    33. By Leon Henderson on Sep 1, 2011 | Reply

      appalled NZ’er who wont be voting National: Roger Kerr of the Business RoundTable many years ago was going around saying that Social Welfare is a “Disgusting Concept”, and that instead the Business RoundTable should be GIVEN the annual Social Welfare Budget to administer in “charitable form”!!! (“One-For-You, Ten-Thousand-For-ME!!!”). Kerr stated that nobody (meaning Working-Class people and Kerr’s venal gang of slimy Ratbags) should be “given” anything, and instead, when the poor want money they should be made to BEG for it, and be forced to PUBLICLY EXHIBIT THEIR GRATITUDE to whoever tosses a few shekels into their rusty, dented, tin cups.

    34. By Leon Henderson on Sep 1, 2011 | Reply

      Hi Werewolf Moderators: am very sorry to do this, but can you please alter my post because I missed out an important word: the bit “Kerr stated that nobody (meaning Working-Class people and Kerr’s venal gang of slimy Ratbags)…” should have said:

      “Kerr stated that nobody (meaning Working-Class people and NOT Kerr’s venal gang of slimy Ratbags)…”

      Do not like hassling you Werewolf Dudes like this, but if the alteration is not made it almost looks like an endorsement for Kerr and his Thugs!

    35. By Leon Henderson on Sep 1, 2011 | Reply

      I know you Werewolf Dudes are heck of a busy and very little “spare” time from Werewolf, but have got a suggestion that might actually save you from unnecessary hassle if it was implemented: on NZ PC World (a fabulous “Tech” Website – Geoff Palmer for King!!!) you are allowed to “edit” any “post” you place there once.

      Werewolf, this is a very good idea because the Web being the Web it is only all to easy to whang up a “post” and “place it” “on the fly”.

      This is the Web, where we all are “jumping around” all over the place (but “Dial-Up’s” like me do the “jumping” pretty damn slowly!!!).

      Thank you Werewolf.

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