More jiggery-pokery from Minister

Here are Ruth Dyson's answers to Russell Fairbrother's questions in Parliament yesterday. I will intersperse my own comments;

1. RUSSELL FAIRBROTHER (Labour) to the Minister for Social Development and Employment: What reports has she received regarding the number of New Zealanders receiving an unemployment benefit?

Hon RUTH DYSON (Minister for Social Development and Employment): I am delighted to report to the House that the number of New Zealanders receiving an unemployment benefit is at its lowest since 1979. Our Government has invested in New Zealanders. We have rebuilt the tax credit system to make work pay and we are providing active support to help people find jobs. More than 141,000 people have come off an unemployment benefit since 1999, which is a decrease of 88 percent.

This is not right. Her answer implies there is a static pool of people on the unemployment benefit. In reality there will have been over 1 million cancellations over that period with slightly fewer grants hence the total at any given time trends down. (For the critics, you might find an instance of my own sloppy description of the situation but I am not the Minister.)

Russell Fairbrother: What progress has been made in reducing the number of young people receiving the unemployment benefit for long periods of time?

Hon RUTH DYSON: Great progress. Five years ago our Government made a commitment with the Mayors Task Force for Jobs to ensure that all young New Zealanders are on a clear pathway to economic independence and well-being. That collaborative effort has resulted in a tremendous achievement. This week, fewer than 250 18 and 19-year-olds have been on an unemployment benefit for longer than 13 weeks. That is a drop of 97 percent since December 1999. This afternoon my colleagues and I will meet with the Mayors Task Force for Jobs to look at our next challenge.

No mention is made of the 2,000 18-19 year-olds who receive emergency benefit, independent youth benefit,unemployment benefit training and unemployment benefit training hardship and unemployment benefit student hardship.

Russell Fairbrother: Are people leaving the unemployment benefit only by simply transferring to sickness or invalids benefits?

Hon RUTH DYSON: The answer is no. The reason that most people leave the unemployment benefit is to enter paid employment.

Madam SPEAKER: It is impossible to hear the Minister’s reply. I ask the Hon Ruth Dyson to please start again.

Hon RUTH DYSON: The answer is no. Most people leave the unemployment benefit to enter paid work. Only 8.5 percent of all unemployment benefit cancellations between September 1999 and September of this year have been as a result of transfers to sickness benefit. Over the same period, 60,000 people went the other way. That makes a net transfer of 31,000. One-third of 1 percent of unemployment benefit cancellations over the same period were as a result of a transfer to an invalids benefit; and over the same period 450 went the other way. That makes a net transfer of just 2,850. The combination of those two factors is nothing like the 141,000 people who are no longer dependent on the unemployment benefit.

This is interesting. Now Dyson correctly utilises the inflow/outflow process (while continuing to wrongly describe what has happened to the unemployment benefit). That's because it suits her argument to talk about net transfer. However there is no proof that those people who went onto sickness from unemployment benefits are the same people who transferred the other way. In fact some will have progressed onto the invalid's benefit. Therefore the gain from a benefit may be much larger than the net transfer. Here is what MSD research has to say. It doesn't matter that they looked at an earlier period because under Labour the net transfers have increased.

We estimate that growth in transfers explains 60% of the growth in Invalid’s Benefit inflow rates at ages 15–59 between 1993 and 2002. This translates to a 31% contribution to the overall growth in inflows to that benefit (Table 2)19, a share of growth that is bigger than the independent contributions of either the demographic changes or the increase in inflow rates at ages 60–64 shown in Table 1.

In summary a great many people now on an invalid's benefit came from an unemployment benefit via the sickness benefit. Ruth Dyson had managed to make it look as though only 2,850 of the 78,000 came from the dole during Labour's administration.

Update - And this is how it turns it translates in a news item;

Benefit switching labelled a myth

12/12/2007 6:12:03

The Social Development Minister is debunking accusations beneficiaries are moving from the dole to sickness and invalid benefits.

Ruth Dyson says only 8.5 percent of all unemployment benefit cancellations between September 1999 and September of this year have been as a result of recipients going on the sickness benefit. She says over the same period less than one percent went from the dole to an invalid benefit.

Ms Dyson says the reason most people leave the unemployment benefit is to go into paid work.

Unemployment is at a record low of around 20,000 people,but more than 100,000 people are collecting sickness and invalid payments.