Saturday, March 27, 2010

Deja vu

Which government, and in which year, said the following?

"This government will not support unemployment as a lifestyle option. We are making the benefit system simpler and fairer, but for those who do not accept their responsibilities, there will be sanctions. Those who fail to take up suitable jobs that are offered to them will not receive taxpayer support."

The truth will out - eventually

It has been an ongoing bone of contention between myself and the Ministry of Social Development that they are unable to accurately describe how long people stay on the DPB for cumulatively. This dates back 8 years.

For two reasons yesterday the issue arose again. Firstly because a commentor at The Standard was quoting statistics relating to each continuous spell and I pointed out the these couldn't tell us anything about total dependence (to which I got the usual name calling response from the usual sources).

But more importantly I see that the economics lecturer, Susan St John, did some calculations about National's proposed savings if they could cut the number of people on the DPB.

Sole parents come off the benefit either because they go back to paid work, or they re-partner. It appears that Key is assuming, heroically, the new policy will save an average of 6.5 extra years of DPB for each of the 2150 sole parents it moves into work. This would produce a net saving of around $200 million.

The only time I have ever seen that number before was when I produced it way back in 2002.

Friday, March 26, 2010

Angry America

Here's someone not holding back. Too good not to paste in its entirety;

American Exceptionalism, RIP

By Monica Crowley

Man is born free, but everywhere he is in chains.

-Jean-Jacques Rousseau

After Sunday night's health care spectacle dressed up as a "vote" in the House of Representatives, the American people have been shackled by a new set of chains. The United States of America - once great, grand and free - is on the path to becoming just another country. We were once the beacon of liberty, a nation that didn't just represent individual freedom but celebrated and protected it. The improbable defeat of the British that led to our dazzling founding made us exceptional from the outset. Our Constitution was quickly recognized, admired and loathed as an exceptional document of freedom. We survived intact a brutal Civil War that would have destroyed another country. And then, during two world wars, we crushed tyrannical enemies that wanted to snuff out our special liberty. We emerged stronger and, in turn, strengthened our exceptional status.

We have been the "shining city on a hill" that achieved superpower pre-eminence in a very short period of time because we were unique: The American people had a fierce passion for liberty, and our political system - based on limited government and individual freedom - was great because it was good. It allowed us to thrive, prosper and set ourselves apart from every run-of-the-mill nation.

No longer.

What the Democrats did last weekend was not just pass a horrendously expensive, corrupt and destructive health care bill.

They took a big chunk out of our exceptionalism.

They are turning us rather quickly into France. Or Great Britain. Or any other Western European nation that was once great but no longer enjoys that status.

And that's the point. President Obama said last year that he believed in "American exceptionalism, the way the British believe in British exceptionalism and the way the Greeks believe in Greek exceptionalism." Meaning: he doesn't believe in American exceptionalism. He believes we're an arrogant nation, which is why he has been obsessed with apologizing for America and bowing before foreign potentates. He believes that the United States, with its big guns and its big money, has thrown its weight around too much, been too aggressive, pushy and demanding and too insensitive to how our actions affected others. We need to atone for that, he believes, by being taken down a notch or two. He intends to do the takedown.

According to Mr. Obama, exceptionalism is so yesterday, an uncool, antiquated and ultimately destructive notion. Rather than be first among many, we should simply be one of many. Just another country on the United Nations' roll call. Nothing special. Equal to, say, Myanmar.

He is accomplishing this by expanding government in unprecedented ways. It's unprecedented for us, although it's certainly not unprecedented in the kinds of countries into which he's trying to turn us. By expanding government into every nook and cranny of your life - through health care, cap-and-trade, and education policy - he will exponentially grow the base of people dependent on the federal government. By doing that, he will create a permanent Democratic majority. (This is why he will take up amnesty for illegal immigrants as soon as the ink is dry on the health care bill this week.)

The objective: a massive welfare state, a la France and Greece - both of which, by the way, are sinking fast under their monstrous debts. One of the keys to unexceptionalism is a crippled currency. By transferring millions more Americans to the public dole through health care entitlements, he is growing our debt to levels that will bring about the end of the dollar as the exceptional cornerstone of the world's monetary structure. We'll soon be going hat in hand to the Chinese (the way the Greeks are going hat in hand to the European Union), begging for economic salvation. America as uniquely free? Not anymore.

This is why most Americans are not going to settle for anything less than the full monty: absolute and total repeal of Obamacare. Most if not all Republicans will run on repealing it. That's swell, but we have two conditions: (1) that they actually mean it and aren't just spewing "fiscal responsibility" rhetoric to get elected and then, once in office, backtrack from working for full repeal, and (2) there are to be no exceptions in any repeal. No exemptions for subsection this or that. No "well, that part isn't so bad" or "let's only throw out the bad parts." The entire thing is the bad part. The whole bill should be deemed an unconstitutional, criminal act. It must be repealed in toto.

Health care "reform" was never about health care. It was about expanding government into every part of your life as an excuse to confiscate more and more of your private property, strip you of your constitutionally guaranteed freedoms and remake America into a two-bit, second-rate, debt-laden European socialist backwater.

Sunday night, Mr. Obama said, "This is what change looks like." The change to which he refers is the change to unexceptionalism. Note to the president and congressional Democrats: We are exceptional Americans, and you are wholly unexceptional thieves of freedom. We want our liberty and exceptionalism back. We're throwing off the chains.

Monica Crowley is a nationally syndicated radio host, a panelist on "The McLaughlin Group" and a Fox News contributor.

(Hat tip The Freedom Foundation)

$4.8 billion?

The figure of $4.8 billion for welfare has taken hold over the last few days.

#New Zealand spends about $4.8 billion a year on welfare.

#The figures show 345,000 New Zealanders currently receive either independent youth, unemployment, sickness, invalid or domestic purposes benefit (DPB), and this costs taxpayers $4.8 billion a year.

#The changes, which include study loans for the DPB and additional funds for child care, will cost $88 million to implement in the first four years, but will save just $300m from the $4.8 billion benefit bill over the next decade.

#The Government says 345,000 New Zealanders currently receive a benefit, costing taxpayers $4.8 billion a year.

The total quoted of $4.8 billion covers only the basic benefit rate - not the supplementary assistance like family tax credits, accommodation allowance, disability allowance etc. The following shows that much more than $4.8 billion is spent on working age welfare.

Ball park figure - $6.2 billion

My estimates
$800 million accommodation supplement
$900 million family tax credit
$500 million incomer related rents

Add in student and disability allowances and the total climbs to over $7 billion.
That is the figure I would use for what working-age welfare costs.

(I expect that the lion share of 'other social assistance benefits' is WFF. If you want to label that welfare - and some do - then your'e looking of a welfare bill of approximately $9 billion. Considering the MSD vote is $20 billion that figure makes much more sense than $4.8 billion.)

Thursday, March 25, 2010


The NZ Herald's editorial is about the welfare reforms. It makes this observation;

Young women who regard the domestic purposes benefit as an open-ended career choice have long been a source of largely unwarranted anguish to the party.

Naturally my response is why "unwarranted"? Has the Herald some particular insight or information that the rest of us do not possess? As I have said before at least a third of single parents currently on welfare started there as teenagers. If record keeping extended beyond 1996 the percentage would be considerably higher. Perhaps the Herald looks at the point-in-time numbers and thinks, ah, only 3 percent of DPB beneficiaries are teenagers. That is not an uncommon mistake but leads to a complete misunderstanding of the size of problem of young women treating the DPB as "an open-ended career choice."

Children who are raised long-term on welfare are at much greater risk of experiencing poor health, transience, insecurity, poor educational achievement, abuse and neglect, getting into trouble with the law, developing substance abuse problems and becoming a beneficiary themselves. Anguish about this group can never be "unwarranted".

Wednesday, March 24, 2010

The Bill of Rights and senseless outcomes

The NZ Bill of Rights has its place but sometimes when the Attorney General reports on an abuse of it the practical ramifications are nonsensical.

Work testing sole parents on the domestic purposes benefit (DPB) is an unjustifiable breach of human rights, Attorney-General Chris Finlayson advised Parliament today.

It was against the Bill of Rights Act that a woman on the DPB with a child over six would face work testing, while women on the widow's benefit or the woman alone benefit would not, he said.

So go ahead and work test them all.

But most of the women on a widows benefit are nearing retirement age and it makes more sense to get younger women, who have years ahead of them to support themselves and their families, into the available work.

What work-testing the DPB will achieve

This is a direct quote from a letter I received from the Ministry of Social Development 13 May 2005;

Under the work test, 17.5 per 1,000 Domestic Purposes Benefit or Widows Benefit clients left benefit each month. This has risen to 18.8 per 1,000 clients in June 2004 following the introduction of enhanced case management and the personal development and employment planning process.

So the Ministry's own evidence shows that current policy is more successful than National's.

What a waste of time these reforms are going to be.

Tuesday, March 23, 2010

Welfare reforms a re-hash

Tuesday, 23 March, 2010

The National Government's welfare reforms aimed at reducing the cycle of welfare dependency and branded as Future Focus, have either been tried before or are a continuation of current practice dressed up as a new approach, according to welfare commentator Lindsay Mitchell.

"For instance, the Minister is promising a redesigned medical certificate for sickness and invalid beneficiaries but the current certificate was only redesigned in September 2007 as part of the Working New Zealand: Work-Focused Support Programme. Additionally we are told that applicants for the invalid's benefit who are expected to be able to work part-time in the next two years will instead receive a sickness benefit. That is the existing criteria for eligibility."

"Work-testing the DPB when the youngest child turns 6 has been tried before and resulted in a mere 2.7 percent drop in numbers on the DPB over the period it was in force. According to the Ministry a single parent with two children living in Auckland receives 14 percent more per week than someone on the minimum wage working full-time. That provides a significant incentive to avoid work-testing by ensuring the youngest child is never older than 5. So if the birth rate of welfare dependent mothers increases this policy is more likely to increase the cycle of welfare dependence. That is because children raised on a benefit are more likely to become beneficiaries themselves."

"Finally making people reapply for the dole after 1 year is not a bad idea by any means. But 84 percent of unemployment beneficiaries don't even reach a year. The unemployment benefit is not the problem when it comes to intergenerational welfare dependence."

"Where people are capable of working - and a majority are - the government should be making welfare strictly temporary assistance. That was what the original architects of welfare intended."

Benefit reforms - arguably worse than the status quo

Paula Bennett has just announced Future Focus, National's much vaunted welfare reforms designed to "break the cycle of welfare dependency".


Unemployment benefit

Continues to be work-tested but instead of 100 percent loss of benefit for non-compliance with work requirements, only 50 percent of the benefit will be lost at first failure.

All UB beneficiaries will have to re-apply after one year and undergo a comprehensive work assessment.

Invalid's benefit

The medical certificate is being re-designed to provide case managers with more information about the beneficiary's capacity to work.

Anyone deemed able to work in the next two years will be sent to the sickness benefit instead.

Sickness benefit

Again, redesigned medical certificate and a new requirement that a second certificate is issued at 8 instead of 13 weeks.

Like UB, a compulsory review after 1 year.

From May next year, where assessed capable of working part-time, will be work-tested like unemployed beneficiaries. Sanctions for non- compliance same as UB.


From September beneficiaries with youngest child aged 6 will be part-time work-tested. Some exemptions for parents of special needs children or those studying at level 4 or above. Same sanctions as unemployment benefit.


Staggered instead of 100 percent at first failure. Single beneficiaries more likely to be sanctioned than couples with children.

Hardship payments

Easier to get a small number over a year - harder to get large number


The $80 threshold (how much a beneficiary can earn before their benefit income is reduced by 30 cents in the dollar) is raised to $100.

My response;

The Unemployment benefit.

Why reduce the sanction for failure to comply with a work-test? This weakens the effectiveness of sanctions. It seems that National wants one sanction regime so eased it in advance of extending the scheme to the sickness and domestic purpose's benefit. I note they explicitly state, "single beneficiaries with no children are more likely to be sanctioned than couples with children." There is a incentive here to make sure you have a child dependent on you.

Invalid's and sickness benefits.

MSD had already introduced a redesigned medical certificate in 2007 and the effectiveness was called into question in a recent Auditor General's report. In any event, numbers on IB and SB continued to grow.

The reforms to sickness benefits will emulate what Australia did with their disability support pensions in 2006 by introducing part-time work obligations on those assessed as able to work.

The result there?

The Sydney Morning Herald reports earlier this month;

The reforms introduced a much tougher social security regime that aimed to end long-term welfare dependency and cut the growth in welfare rolls.

But the evaluation shows the changes failed to put a brake on the high numbers joining disability pension rolls, made little progress in moving people with disabilities off benefits and into work, and made only ''modest'' gains in the work participation of the very long-term unemployed and mature-age job-seekers...

The evaluation shows that in the year after the reforms the same numbers were added to the disability pension rolls as in previous years. These rose from 712,000 in July 2006 to 757,118 three years later.

However, there was also progress with 10 per cent of new disability pension applicants on Newstart leaving income support after six months. In previous years, only 4 per cent of a similar group moved off the pension.

Clare Martin, the chief executive of the Australian Council of Social Service, said: ''Although the figures show there was a small rise in people with disabilities moving into work, the policy actually left thousands of people worse off because they were diverted onto lower levels of payments. It was simply problem-shifting.''


The introduction of a work-test when the youngest child turns 6 will encourage the beneficiary to make sure their youngest child is never older than six. National says that when they previously introduced a work test on the DPB (1997-2003) the full-time employment rates of sole mothers climbed rapidly. But the number on the DPB dropped by only 3,000 or 2.7% percent. This policy could be significantly strengthened by adding a cap on the number of children allowed while on a benefit. Currently about 5,000 children are added to an existing benefit every year.

The figure the Ministry has provided for a typical DPB parent renting in Auckland is $580 per week or $30,160 per annum after tax. A full-time job on the minimum wage would pay $26,520 before tax.

That's another big incentive to keep growing a family and stay on the benefit.

Lifting earning capacity for people who are part employed and part benefit dependent seems like a good idea but may simply lead to more people staying in that position than moving into full-time work.

The reforms will enhance the motivation of those people who want to work. But are they the problem?

The Minister says they are aimed at reducing the cycle of dependency but they may well do the very opposite by increasing the benefit-dependent birthrate. Children born onto a benefit are far more likely to become adult beneficiaries.

The most pressing problem inherent in the welfare system - making children guarantors of a no-obligation benefit income - just got worse.

Monday, March 22, 2010

Forced wealth redistribution losing popularity

A new instalment of the Social Inequality Survey conducted by Massey University has just been published with some interesting shifts in respect of welfare and wealth redistribution;

The Government’s Responsibility

Forty percent of respondents agreed that it is the government’s responsibility to reduce the differences in income between people with higher incomes and those with lower incomes. However, 34% disagreed and 26% neither agreed nor disagreed.

Responses to the question of whether the government should provide a decent standard of living for the unemployed showed a similar pattern: 43% agreed, 30% disagreed and 27% were neutral.

Only 22% of those surveyed agreed that the government should spend less on beneļ¬ts for the poor; 48% disagreed and 30% neither agreed nor disagreed. This is consistent with the notion that the government has a responsibility for reducing income differences.

However, while there is support for the government to play an active role in protecting those on low incomes and reducing income disparity, this support is by no means universal. Furthermore, the proportion of New Zealanders who believe that the government should reduce income differences has fallen by 10% since 1992. This mirrors a similar decline in the proportion who believe income differences in New Zealand are too large. In both cases, most of this decline has occurred in the last decade.

Following the current trend those who do not think it's the government's job to reduce income differences will be in a majority within 15-20 years. Whether that will translate into government action is quite another matter.

An appalling miscarriage of justice

False accusations of rape. How common are they? This question runs through my mind whenever I read a story like this one, a particularly shocking case given the accused spent 17 weeks in Waikeria Prison prior to a trial at which the jury then found him 'not guilty' after 7 minutes deliberation.

Perhaps if the police kept statistics on the incidence of false rape complaints they might take a more cautious approach to investigating and prosecuting. But they don't.

They keep statistics on "False statement/Declaration Etc" but do not distinguish the nature of the false complaint. And they keep statistics on sexual offences.

I know I have blogged about this subject before but it keeps resurfacing. 1990s US data shows that 1 in 4 men suspected of rape can be excluded through DNA testing. That is not to say the other 3 were guilty. In 20 percent of cases the DNA evidence was inconclusive. A match was established in the remainder but then the matter of whether or not an assault or consensual sex took place has to be determined.

On a reading of just the media coverage, this man has suffered a gross miscarriage of justice. It doesn't do much for my faith in police procedures. Note his barrister's comment;

"What happens in these cases is everyone is risk-averse. No-one wants to exercise any discretion as to whether the case will proceed or not."

Sunday, March 21, 2010

MSD misrepresenting statistics and misleading the public

A report just published by the Ministry of Social Development examines efforts in Counties Manukau to reduce youth offending.

Under key findings the following appears;

Homicides in Counties Manukau reduced from an unprecedented peak of 34 in 2005 to 7 in 2008.

The figure of 34 looks too high. For further verification I went to the actual report;

The number of homicides tends to vary considerably from year to year. However, the 2005 figure (34) in Counties Manukau for young offenders was the highest recorded in the last decade. The numbers of homicides in 2007 and 2008 were considerably lower at 6 and 7 respectively. Nationally, excluding Counties Manukau, homicides by young offenders remained fairly stable between 2004 and 2008 at approximately 20 a year.

Here are the police statistics for Counties Manukau;

There were 19 homicides in 2005. How can there have been 34 homicides by youth offenders in the same year?

Of course there may have been more youth apprehended for homicide but that isn't what the report says.

The media would simply cut and paste the statement under key findings which is an error of significant magnitude.