Responding to welfare apologists

This appeared in the NZ Herald on Monday. My response is below.

Louise Humpage and Susan St John: A bill the poor will pay for
Monday June 11, 2007

Work, work and more work: what ever happened to social security? Most people don't know it, but social security is undergoing significant changes.

These could affect any of us, if we were suddenly to become sick or disabled, a sole parent, or if the economy was to force employers to shed large numbers of employees.

The Social Security Amendment Bill 2006 has just passed its second reading and, if not stopped, will legislate fundamental changes to the Social Security Act 1964, which was intended to "consolidate and amend" the 1938 Social Security Act introduced by the first Labour Government.

The 1938 act became the foundation stone for the modern welfare state. "Welfare" has a bad name now but then it was about safeguarding New Zealanders from hardship arising from age, sickness, widowhood, orphanhood and unemployment to allow all to participate and belong in society.

The Royal Commission on Social Security in 1972 and the Royal Commission on Social Policy in 1988 demonstrated New Zealanders still endorsed these goals. In the 1990s many policy changes undermined the purpose of social security (user-pays in health and education, "work-for-the-dole" for the unemployed, "dob in" campaigns targeting sole mothers) but the principles were never formally challenged.

That is all about to change: the Social Security Amendment Bill wipes away any notion that our social security system is about ensuring everyone can participate as citizens. Instead, it makes getting people into a job, any job, the fundamental duty of citizenship. This principle is baldly stated "Work in paid employment offers the best opportunity for people to achieve social and economic well-being."

The bill fails to acknowledge that many undertake unpaid work looking after children, the sick and elderly or doing other community activities. This work is crucial to the running of our society but receives no value in the bill. Nor does the proposed legislation do anything to ensure that meaningful, adequately paid, secure employment is available.

Instead it punishes those who can't find work. It allows for a new pre-benefit activity to be completed before anyone is even allowed to apply for the unemployment benefit. Under a new government, this activity could include work-for-the-dole.

Being sick or disabled is no longer an excuse not to work. Sickness and invalid beneficiaries will be subject to new "planning and activity" requirements which means that if they don't start for planning for work, they could risk having their benefit suspended or reduced. Spouses are also expected to get paid work even though they may be caring for their sick spouse and/or have young children.

The rationale for these new requirements is that sickness and invalid benefit numbers are increasing at a time of low unemployment.

But rather than an epidemic of "dole-bludgers" shifting to these benefits, we are largely seeing the effects of an ageing population who, due to improvements in technology are living longer than ever but nonetheless may suffer from ill health that stops them working the last few years before retirement.

As if in hindsight, the bill does provide some social security "to help alleviate hardship". But this phrase is far more limiting than the goals of eliminating poverty and ensuring participation and belonging for all citizens that we have long embraced.

Furthermore, paid work, which is enshrined in the new act as the only source of well-being, is increasingly becoming the basis for state-provided welfare. Those outside the workforce are in grave danger of being regarded as second-class citizens. While we don't yet have health insurance tied to employment as in the US, access to a major part of Working for Families tax credits and KiwiSaver subsidies to ensure a secure old age are already conditional on being in paid work. Caregivers, who are predominantly women, should be alarmed at this trend.

That a Labour Government is undermining the original notion of "well-fare" would have Michael Joseph Savage turning in his grave.

* Dr Louise Humpage lectures in the Department of Sociology, and Dr Susan St John lectures in the Department of Economics, University of Auckland.

A Bill For the Times

Louise Humpage and Susan St John say Michael Joseph Savage would be turning over in his grave if he knew what today's Labour government is planning for social security. I very much doubt that.

What would shock Savage, were he alive today, are the effects of the then necessary and well-meaning Social Security Act of 1938.

It's all about context. The array of benefits created in 1938 - sickness, emergency, and family to name three - came on the back of very hard times, a depression and a war. But even then there wasn't a consensus for widespread social security measures. The first benefits office was apparently burnt down in a politically motivated act of arson. People have always worried about the state crowding out the private sector and costs to the public purse. Labour did have, however, majority support.

For many years the numbers of people relying on benefits remained low and steady. There was little misuse of the sytem. Changing social mores and rising unemployment saw an end to that during the sixties and seventies. The last major benefit, the domestic purposes benefit was added in 1973 and marked the beginning of a welfare explosion.

Twenty years after the introduction of social security there were 25,000 working age people on welfare (most were widows). Today there are 266,000. A ten-fold increase with less than a doubling of the population?

With 266,000 people on benefits after a long period of reasonable economic growth and sustained low unemployment, clearly welfare is longer just about genuine need - it's also about choice. Hence politicians want to restate the aims of social security, making work come first for those who can.

St John and Humpage argue that the blow out on sickness and invalid benefits is "largely" due to an "ageing" poulation but the Ministry of Development's own research showed that less than half of the dramatic rise (12,000 in 1960 to 125,000 today) is due to ageing. Much of the growth is down to huge increases in numbers experiencing psychiatric illness, transfers from other benefits, longer stays on welfare, less reliance on families (which have broken down as an effect of the father- replacing domestic purposes benefit) and changes to eligibility. Before the sixties people who had caused the incapacity which rendered them unable to work were not entitled to a benefit. This gatekeeping clause was effective. It no longer exists.

Before the DPB there was assistance for single parents, albeit limited. There had long been a deserted wives benefit and young unmarried women who became pregnant qualified for emergency assistance. Yes, adoption was far more common but in the period before the DPB, 1971/72, 60 percent of ex- nuptial babies stayed with their mothers or relatives.

Today Michael Joseph Savage would be aghast at the thousands of teenagers who pile onto welfare each year (including 3600 single parents) and, due to low or no skills, stay there, sometimes for decades. He would be especially dismayed at the damage welfare has proliferated among Maori and the intergenerational poverty of values now so entrenched.

Much is made of unpaid work that welfare provides for, especially caring for children. Most of that used to be paid for by a family's breadwinner - not the unrelated taxpayer.

But it is also surprising that St John and Humpage have become quite so upset about the bill soon to be passed. Wellington People's Centre beneficiary advocates say the "punitive" changes are largely superficial - just Labour trying to look "tough" for the benefit of voters. Many of the changes were welcomed.

What really needs to happen is a return to what the 1938 Labour government envisaged. Temporary assistance for temporary need and long term help for only those genuinely incapacitated through no fault of their own. That's all.

There is no place for lifestyle welfare at any time but especially not when we are a small country competing globally, struggling with low productivity and high taxation. Labour is absolutely right to state the principle,"Work in paid employment offers the best opportunity for people to achieve social and economic and wellbeing." Now they just need to mean it.