Dr Muriel Newman
nzcpr.com
There’s been a lot of debate over recent weeks about the fact that the number of people receiving welfare is rising at a time when there’s a chronic shortage of workers in many industries. It raises questions about whether a serious mismatch now exists between the Government’s welfare policy and the expectations of society.
While New Zealanders generally support the concept of a safety net for those in genuine need, most believe that for the able-bodied, assistance should be temporary. In other words, anyone who can work should work.
Renowned US economist Thomas Sowell warns that socialist governments all too often use welfare to incentivise failure: “What the welfare system and other kinds of governmental programs are doing is paying people to fail. In so far as they fail, they receive the money; in so far as they succeed, even to a moderate extent, the money is taken away.”
He believes welfare is a core part of the left’s narrative. It’s used to promote envy and a sense of grievance that leads to demands for higher taxes so benefits can be raised. But increasing welfare payments creates a poverty trap that locks beneficiaries into a dangerous dependency culture.
The point is that benefit increases can never alleviate poverty nor the difficult circumstances that many on welfare find themselves in. The left’s agenda nevertheless gives politicians power and control over the lives of beneficiaries. While the consequences for those entrenched in long term benefit dependency can be dire – especially for children – politicians are able to loftily claim they are ‘helping the poor’.
As George Orwell so aptly put it, “A government that robs Peter to pay Paul can always depend on the support of Paul.”
The truth is that more generous welfare is socially counterproductive. The perverse incentives that operate discourage many of those receiving welfare assistance from even trying to find employment and independence from the State.
Under Jacinda Ardern’s government, the problem is getting worse, as benefit incomes have risen substantially. This means that for many beneficiaries, entering the workforce will result in a significant loss of income.
This week’s NZCPR Guest Commentator, welfare analyst Lindsay Mitchell, has quantified the support that someone on welfare can receive, in her article countering the recommendations of the Child Poverty Action Group for greater wealth redistribution:
“Sole Parent Support basic weekly rate is $340 net. The rate is the same for a sole parent on Jobseeker support. A couple on Jobseeker support with children receive $195.50 each.”
Lindsay then explains that it is impossible to consider basic rates without taking into account supplementary supports. These include accommodation subsidies, which provide up to $305 a week for a family with two or more children in a high rent area.
There are also tax credits for the children of beneficiaries of over $150 a week, according to the age of the child.
All of this means that a sole parent with two children, living in a high-cost housing area, could be receiving over $900 a week on welfare.
Compared to the minimum wage, which pays $708 gross a week, it is little wonder that many people on welfare do not want to leave a system that rewards them so well.
The Ministry of Social Development’s Annual Report, which was released last week, shows that the number of working-age people receiving a benefit as at 30 June 2019 was 292,000 – an increase of 5.2 percent over last year.
At a time when the country desperately needs workers the number of people receiving Job Seeker Support has risen to 136,233, almost 14,000 more than last year, and 22,000 more than when National was in office.
Sole parent support has risen too, by over 700 to 59,000. That reverses, for the first time, the steady downward trend since National’s welfare reforms were introduced in 2012.
With fewer sanctions being issued for non-compliance with benefit rules and a dramatic increase in the number of grants and special needs assistance being issued, the emerging picture is one of a government that’s gone soft on welfare
The Annual Report confirms this.
A great deal of MSD’s time and effort is now focussed on making the agency more user-friendly: “The front-of-house area of a service centre is often where clients form their first impressions of MSD. The full front-of-house package includes soft seating and rearrangement of waiting areas, community art, the introduction of colour, planters, children’s areas, signage and water coolers.”
They outline new priorities to improve clients’ experience and access to support: “The Government is committed to overhauling the welfare system in order to make it fairer and more inclusive and to ensure that everyone is treated with dignity. This is also a priority for us at MSD…
“In November and December 2018 we contacted more than 2,900 people who were not receiving, but seemed likely to be eligible for, Temporary Additional Support (TAS). The campaign increased uptake of TAS by around 10 percent. From July 2019 we will be getting in touch with around 3,000 people each month to encourage them to see whether they qualify…
“We have improved how we communicate… A welcome message appears in 11 languages on digital signage screens in all service centres… Our Better Letters project won two awards at the 2018 Plain English Awards: Best Plain English Sentence Transformation, and the overall award – Best Plain English Champion.”
The fact that MSD includes such information in their Annual Report shows how important it is for them to be seen to be responding to the Minister’s demands for improved client experiences. But this “experience” comes at a cost.
MSD explains, “The increase in demand for financial assistance this year has impacted on the time our case managers can spend with clients on proactive employment-focused case management: only 20 percent of engagements with clients in June 2019 had an employment focus, the lowest proportion since 2014.”
This explains why benefit numbers are rising. The agency in charge of helping beneficiaries move from welfare to work is so busy carrying out the administrative demands of the Government that they have little time left for their core task of ensuring that able-bodied beneficiaries transition into work.
To be continued.
