NewstalkZB tomorrow

On NewstalkZB tomorrow after the 10am news with Justin du Fresne talking about welfare, social issues and the stuff I generally blog about.

Another good graphic from Statistics NZ

Another good graphic from Stats NZ showing how much we are spending on certain commodities when comparing 1974 with 2013:

Click here for enlarged view

Quote of the day

This moved me, particularly the second sentence.

The State never intentionally confronts a man’s sense, intellectual or moral, but only his body, his senses. It is not armed with superior wit or honesty, but with superior physical strength. I was not born to be forced. I will breathe after my own fashion. Let us see who is the strongest.

-- Henry David Thoreau, “Civil Disobedience” [1849]

Hat tip FFF

And as I check the link another excellent read appears:

Defenders of the welfare state argue that its purpose is implied in its name: providing for the welfare of its citizens. That is done by the judicious transfer of resources to ensure that even citizens on the lowest rung of the socio-economic ladder have access to the material resources necessary to lead minimally decent lives. The problem is, once you look at actual political outcomes a little more closely, they do not resemble the intentions of the welfare state’s defenders.

 In the United States, very little wealth is transferred from those fortunate enough to live in abundance to those unfortunate enough to have little. For example, some of the chief recipients of transfer payments in the United States are the elderly — those who are most likely to have amassed significant wealth and comfort over the course of their working careers; and the source of the transfer payments is largely the young — those who are just starting out on their careers and have little income or wealth to their names.

I'd take issue with that specific example but the point he makes is otherwise valid. There is a great deal of 'churn' from the haves to the have-nots whose degree of economic separation isn't great. Which only serves to create power and control for bureaucrats.

Tracking the life-cycle of the welfare state

Thanks to Steve Wrathall on Whale Oil who drew my attention to this illustration:

If you think this is only a contemporary observation, past welfare states (eg legislated parish-collected compulsory tithing) exhibit the same life cycle.

"Beyond Beveridge"

New work from Peter Saunders who provided advice to the Welfare Working Group:

A new Civitas book proposes a sweeping overhaul of the benefits system which would see National Insurance abolished and replaced with a system of personal welfare accounts that would put the contributory principle back at the heart of social security. The accounts could be used for saving, insurance and even loans - helping people spread the costs of unemployment, parental leave, higher education and old age across their lifetime.

Of course people would be compelled to contribute to these accounts which finds disfavour with libertarians.

My position has always been I'd rather be compelled to provide for myself than compelled to provide for someone else.

Beyond Beveridge can be found here. No, I haven't read it yet. And at 179 pages I probably won't.

But here's the plan for people interested in how we get there from here (given NZ's social security set up is similar). It sounds Roger Douglasish in the detail:

1. Wind up the National Insurance system:

The employee 12 per cent contribution should be added to

the basic income tax rate making a new basic rate of 32 per

cent (with appropriate adjustments for older workers, the

self-employed and people receiving income from savings

and pensions). The higher tax rate should rise to 42 per

cent to take account of the two per cent NIC levied on

earnings above the upper earnings limit. The 13.8 per cent

employers’ NICs should become a Payroll Tax.

 

2. Establish entitlement to the new state pension through

residency

Scrapping NICs means new eligibility rules are needed for

the state pension. Eligibility should depend on 10+ years

of residency in this country. Pension Credit should be

abolished.

3. Phase in a state pension means-test for new retirees

Over the next 40 years, if NICs are abolished now, the

contributory component of people’s state pensions will

gradually get smaller, and the taxpayer-funded component

will get larger, until eventually the whole of every state

pension claim will be funded out of tax revenues. The tax-

funded component of state pensions should be means-

tested. 

 

4. Freeze current National Insurance entitlements and recognise

them as government debt

Entitlements based on contributions up to the time National

Insurance is scrapped should be honoured by freezing

people’s NIC records, indexing their existing entitlement

to take account of inflation, and paying this amount as a

weekly or monthly pension from when they retire. The

future cost of these payments (currently estimated at £3.8

trillion) should be explicitly acknowledged as part of total

public sector borrowing. 

 

5: Make membership of workplace pension schemes compulsory

The right of workers to opt out of workplace pensions

should be ended. With a means-tested state pension, saving

in private retirement accounts has to be made compulsory

to minimise moral hazard. 

 

6. Boost personal retirement savings accounts

Minimum contributions into the new workplace pensions

schemes add up to 11 per cent of salary (combining the

employee’s and employer’s contribution, and adding the

value of government tax relief). This is too low to guarantee

self-reliance in retirement. Contributions should be boosted

by reducing the government’s tax-take from employees and

employers. In particular, savings accruing from means-

testing the state pension should be used to reduce the employer Payroll Tax from 13.8 per cent to 12 per cent (switching the 1.8 per cent reduction into an enhanced

employer contribution to workplace pensions), and the basic

rate of income tax for employees from 32 per cent to 30 per

cent (switching the 2 per cent reduction into an enhanced

employee contribution to the workplace pension). This

would take the minimum total contribution into workplace

pensions to almost 15 per cent. Proceeds from privatisation

of Royal Mail and the state-owned bank assets should also

be used to boost workers’ pension accounts. 

 

7. Gradually extend the permitted uses of workplace pension

funds to develop them into personal welfare accounts

Contributory unemployment and sickness benefits should

be scrapped two years after NICs are ended (all claimants

would then get the non-contributory Universal Credit).

At the same time, people should be allowed to use their

personal welfare accounts (or borrow against them) to

provide a benefits-level income for the first 6 months out

of work, during which time there should be no conditions

applied to them. Existing and future student loans should

be integrated into personal welfare accounts and, over

time, accounts should be further extended to cover periods

of parental leave to care for children and basic insurance

against old-age care costs. 

 

8. Apply activity conditions to receipt of working-age benefits

Unconditional support for people who cannot be expected

to work (severely disabled people and single parents with

infant children under one year) should continue, but for

those who are capable of working full- or part-time, and

who cannot support themselves from their own personal

welfare accounts, fairness requires that appropriate work-

based activity conditions should be attached to receipt of

state benefits. No activity conditions should be attached

to jobless people drawing on their own personal welfare

accounts

CPAG make me choke

I am "stunned" by the audacity of the Child Poverty Action Group in their comments about the error in CYF data collection and reporting.

Child Poverty Action Group researcher Donna Wynd said she was "stunned" to learn of the massive under-reporting.

Wynd has recently  (inadvertently?) been involved in her own case of massive under-reporting.

In their latest analysis of CYF abuse data, the percentage of children with a substantiated finding of abuse living in each site office area was under calculated by 10 times.

Originally their report stated, '...the proportion of 0-17 year olds who were victims of abuse in Papakura was not 4.0% but 0.40 of 1%.' "

In fact the proportion was 4 percent (608 distinct cases in an estimated 0-17 population of 14,413). The flawed methodology was repeated for every CYF site office recorded.

Then they calculated the rate of benefit dependence using the total population rather than the relevant 18-64 population resulting in another "massive under-report".

Ministry chief executive Brendan Boyle said data from 2011 onwards was affected. "The initial review of data shows a margin of error mainly around 2 to 3 per cent, up to 8 per cent."
Donna Wynd of Child Poverty Action said: "All they're doing is keeping a tally. How you can make such a simple error?"

Goodness Donna. So much charity.

Finally, even the Herald on Sunday account is ironically a "massive under-report",

Child, Youth and Family is to reveal this week the true extent of abuse, after finding it has been under-reporting notifications by as much as 8 per cent. The number in the past year is believed to be between 1,000 and 4,000 more than the 49,398 reported.

From memory (the data is currently off-line) there were 121,000 notifications in the last year available. 49,398 will refer to those requiring follow-up I imagine. The actual number of substantiated findings in 2011/12 was 21,526.