There are risks, as in general, the more generous benefits become relative to wages the harder it is to move people off welfare. But the government knows that. They also know the extra benefit money will not only help families in need, but it will provide a stimulus for small businesses in their communities, leading to new employment opportunities.The writer and I agree on many things but this isn't a view I would advance. Taken to its natural extension benefits should continue to rise to keep creating jobs! Economics In One Lesson, The Broken Window (Henry Hazlitt) explains how, in the matter of superficially creating employment, the unseen party is overlooked. The baker's window is broken, the glazier profits. He has extra employment. But the baker had intended buying a new suit from the tailor. Now he cannot and the tailor's employment decreases. There is no "new" employment.
Here, the business owner coughing up the tax for benefits is unseen. He's prevented from creating "new employment opportunities" so the business in a heavily benefit-dependent community can. It's the redistribution of jobs by compulsion.
If the goal was for small business owners to create more jobs the correct approach would be to simultaneously cut their tax and cut benefits. But that's not the goal. The goal is to keep voters satisfied enough to vote National back in.
Or perhaps the government has bought into the Michael Cullen approach. They believe they can do a little of what they know is theoretically unsound. Cullen knew the evidence about raising the minimum wage was incontrovertible but insisted it could be done in small steps without creating unemployment.
Is there an equivalent rule in economics to healthy living - everything in moderation?
Then again, NZ is way beyond a healthy serving of welfare already. My gut tells me more is not the answer.