Saturday, December 21, 2013

Children continue to be added to benefits

As mentioned previously, it gets increasingly difficult to get timely information out of MSD.  I only now have the complete answer to a question asked on September 12.

Proceeding on the basis that policies often provoke an anticipatory effect, I was interested in any data that might show one resulting from the government's well-publicised, controversial intention to deter people from adding a child to their benefit by work-testing them when the child turns one.

First, from a cabinet paper, we know that the annual average of 'subsequent children' born to parents on a benefit 2006 - 2010 was 4,800 annually.*

I have data from October 15, 2012 (when the subsequent child policy came into force) to June 30, 2013 - 8.5 months which shows 3,646 working age clients in receipt of a main benefit added a child.

If the data is simply extrapolated out over a full year, the rate at which people are adding children has actually increased slightly. Of course that might not prove to be the case if over the remaining period up to October 15, 2013 the number drops significantly.

There is one noticeable difference.

Of the annual 4,800 added in the period  2006 - 2010, 88 percent were added to the DPB.

Of the 3,646 added between October 15, 2012 and June 30, 2013, 81 percent were added to the DPB.

The primary difference lies in more people adding a child to the unemployment benefit, reflecting higher unemployment.

Of the most recent group, 54 percent were Maori, 24 percent were NZ European, a third were aged 24 or younger, and 13 percent were male. Again the difference between Maori and Pacific behaviour shows up with only 12 percent of the beneficiaries being Pacific Island - only a slight over-representation given their very young population.

Anyway, I guess the answer to my question is, no.

(*In a small number of cases the child could be adopted or put into the care of a non-parent or grand-parent.)

Opportunity cost of living wage

The living wage wage was calculated by the Lower Hutt Family Centre Social Policy Research Unit, based on a two parent, two children family. One parent works full time, the second works part-time. A correspondent,  Brian Scott, sent me his analysis of their faulty research which he'd submitted to the Wellington City Council. When they asked him “what would you do then” he sent the following:

 1 | P a g e
Brian Scott
Living Wage: Interesting Calculations for Cost / Benefit
Assuming objective is to make sure that 2 adult, 2 dependent households have a reasonable living wage.
Example 1
Two people (and 2 dependents). Each earn $14.10. One is Council employee.
Council pays employee $18.40. Partner stays on $14.10
Council will pay extra $8944
Household will gain by $3119 (pay more tax, get less in accommodation and working for families)
Central Government claims back $5825.
Cost to Ratepayers per dollar of employee benefit is $8944 / 3119 = $2.87
Or RETURN ON INVESTMENT TO ACHIEVE OBJECTIVE is 0.348 ($1 cost produces 34cents benefit)

Example 2
Only 6% of households are 2 adults, 2 dependents. Council has 450 employees likely to be affected
by Living Wage policy.
Therefore, only 27 Council employees actually would need, according to LW assumptions, a pay rise
to $18.40.
Using Council papers, cost is $750,000 for 450 employees, average cost is $1667.
Cost to bring 27 employees up to $18.40 is 27 * $1667 = 44982 per year.
Cost to Ratepayers per dollar that achieves objective is $750,000 / $44,982 = $16.66
Or RETURN ON INVESTMENT TO ACHIEVE OBJECTIVE is 0.06 ($1 cost produces 6 cents benefit)

Example 3
20 year old living at home, pays $100 board.
Net income after tax at $14.10 ph is $474 per week.
Net income after tax at $18.40 ph is $613 per week.
I would challenge the idea that this person needs a pay rise to get out of living in poverty.

Example 4
A cleaner who works for a private company may get paid about $4 less for the same job, (about $129
per week after tax), and may pay more in rates for the privilege.

Alternatives to address inequality in the community. (For $750,000) Opportunity Costs
Subsidise health services (37,500 visits at $20)
Subsidise food banks (helps non-Council employees without affecting benefits)
Subsidise travel costs (1875 children in low income families at $2 for 400 trips each)
Subsidise low income students’ school fees. (Perhaps scholarships of $300 for 2500 children)
Providing food at schools, of which I am particularly in favour.

The above suggestions could be targeted at ALL low income households in the community, at value
of close to dollar for dollar. Point is there are plenty of other ways, if it is deemed responsibility of
Council, to help low income families.

If the objective of the Council is to reduce inequality in the community, then Councillors are required
by Statute to consider alternatives that are efficient and effective. It is not acceptable to say “we
must do something, this is something, let’s do this”.

Note: Calculations may be slightly out due to rounding and there are not exactly 52 weeks in a year.

Thursday, December 19, 2013

Blog's 8th birthday

Jeepers. 8 years ago today I wrote my first blog post. Thinking back, the 2005 election had just been fought and lost. ACT dropped to 2 MPs and despite National going close, three more years of Labour and the Greens was on the cards.

Seems a strange time to start a blog but I didn't feel defeated. Just frustrated. Labour seemed lost for welfare reform ideas but hellbent on greater wealth redistribution to the middle voters. After Maharey there was a succession of lacklustre Social Development ministers. Sue Bradford got a lot of air wave time. I was still nagging away about the paucity of robust statistical data and the futility of continuing to throw money at the problems caused by ...throwing money at problems.

Under National there has been more transparency. A good deal more data is reported, although MSD's performance in responding to OIAs is abysmal. I must write a separate post about that.

Generally, the public now knows more about what is driving child poverty and are able to voice their opposition to welfare misuse without getting shouted down as beneficiary bashers. The good thing about the left making this issue, alongside inequality, their platform for 2014, is plenty of opportunities arise to disagree with their analysis and solutions.

And continue to disagree, counter and dispute I will.

Census result - no change in ratio of one parent to two parent families

The graphic below shows one parent families as a percentage of all families dropping from 18.1 to 17.8 percent. Notice that percentage of two parent families has also dropped but by a bigger margin. A simple calculation shows that as a percentage of all families with children the proportions have stayed the same. 30.1 percent are single parent families. Same percentage as in 2006. Since single parent families make up the biggest percentage of poor families, this Census result isn't good news.

Graph, Family type, 2001, 2006, and 2013 Censuses.

DomPost slates WCC's living wage

The DomPost has produced a great editorial pointing out the folly of a council-led living wage:

The stated aim of Wellington City Council's living wage policy is to reduce poverty and lift workplace morale and productivity. If only life were that simple.
It is not. Poverty can no more be eliminated at the stroke of a pen than world peace can be delivered by a beauty contestant wishing for it.

(On the same page my letter appears which is a distillation of this post.)

Quote of the Day

Tax evasion does not, of course, whatever Ritchie says, cost the world anything. We are still a closed system. That less money goes to governments does not mean that that money ceases to exist. It still gets spent or invested somewhere or other. Indeed, dependent upon what happens to that money, and how badly the government that didn’t get it would have spent it, tax evasion could, conceivably, result in an improvement in the human condition. But even leaving aside such an extreme (for example, someone takes the loot from tax evasion and invests it in a malaria vaccine, as opposed to the British Government which would have used £10 billion to build an NHS computer system that does nothing at all) it’s still true that tax evasion does not mean a loss for the world. Only a different distribution of the cash.
- Tim Worstall
Hat-tip Samizdata

Wednesday, December 18, 2013

What is the Brown phenomenon?

The national conversation that is Mayor Len Brown just keeps on keeping on. I like to listen to talkback while I paint and haven't been able to avoid it. But why haven't people lost interest yet? Surely that's what Brown was counting on?

That answer interests me more than the fiasco. When morals get involved, and those morals apply to both personal and public actions, to infidelity and financial accountability, the conversation intensifies. It's no longer just Brown we are angry at. It's the last idiot caller who thinks it's OK for men to cheat on their wives. Or the last moron who said Len's corruption extends to aiding and abetting money laundering at Sky City.

The conversation has actually become a self-stocktake about what we will tolerate in our own families. Where we draw the line between what we expect from ourselves and what we expect from leaders. Something that's surprised me is the number of older women in their 70s and 80s who indicate tacit approval for the Mayor's indiscretion. Everybody gets up to it apparently. Which tells me something about my mother's generation that I perhaps didn't want to know. Not the bit-on-the-side habit. That goes on. But the turn-a-blind-eye habit.

So our reactions to the Brown Affair become something else. They divide us.That's why the whole country has become involved. It's not just Aucklanders who want an outcome.

There's also a discernible mood shift going on this country. And it's bad timing for Len. It's a backlash against the liberality of my generation. But it's also coming from my generation. Plenty of us behaved immorally. I did. But I grew out of it. We want our contemporaries to do the same. For a man in the position that Len Brown has achieved, the mana, the power, the pay, the great uniting leader, his judgement has been found badly wanting. He's behaved like a fool. Not just on the spur of the moment, not in a one-off uncharacteristic succumbing to temptation.

Brown is less than mere mortal. He can't command respect,can't honestly earn his salary, and can't expect Auckland ratepayers to accept that.

Auckland outsmarts Wellington

Auckland may have a widely acknowledged  lame duck Mayor, but it still has some smart councillors. Wallace Chapman, on RadioLive yesterday, was running a weak defence line that there's no-one better to take over from Len Brown. What about Sir John Walker?:

The Living Wage policy should be shelved, southern councillors say.
Wellington City Council decided last week to pay all its staff a minimum wage of $18.40 per hour, prompting Auckland councillor Sir John Walker to raise the issue at last week's meeting of the Papakura Local Board.
The living wage is defined as the amount for workers to be able to live while also participating in society, calculated at $18.40 per hour.
Paying a living wage to Auckland Council staff would cost an estimated $3.5 million each year, Sir John says. That doesn't sound like much but it is a lot of money, the Manurewa-Papakura ward councillor says.
The "contentious" issue is "Len Brown's little baby", Sir John says.
"I totally disagree with it. If you're going to earn money, you earn it. You're given it by your productivity."
The change would also be "unfair" to other people who already earn $18.40 per hour.
He believes investment should be aimed at getting people to learn skills and achieve higher qualifications so they can earn more.
Sir John's co-councillor Calum Penrose also opposes introducing a living wage at Auckland Council.
The issue is not one local government should be focusing on as "it is a central government issue", he says.
"Our core services are roads, rates, rubbish, footpaths, berms, parks, reserves . . . they're the stuff that affects people."
Franklin ward councillor Bill Cashmore, who also attended the meeting, says Finance Minister Bill English will be the only winner if the living wage is introduced.
Any gains would likely be offset by increased taxes and the loss of government support and benefits, making the move "pointless", he says.

Tuesday, December 17, 2013

Another candidate for Upper Harbour

Michael Kidd says he will seek the Labour Party nomination to stand against Paula Bennett and Christine Rankin in the Upper Harbour electorate. Apparently,

He will stand on a policy of restoring the cuts in welfare by the National Government which have negatively impacted on the most vulnerable.
What cuts?

Sanctions - not often - have been imposed on people who fail to do things like keep a WINZ appointment. If sanctions are applied to parents they are limited to 50 percent. Unlike the 100 percent possible under Labour.

Is Kidd going to argue for a return to that regime?

The 'cuts' to the Training Incentive Allowance meant that mature students studying at a higher level couldn't continue to access unconditional welfare. But the savings were targeted at supporting younger, tertiary students. That's in keeping with National's focus on keeping young people out of the benefit system or limiting their reliance.

Is Kidd going to argue for perennial students to be supported by the taxpayer?

Sole parents can't stay indefinitely on welfare by adding children to an existing benefit. Their entitlement to do so has been 'cut'.

Is Kidd going to argue the taxpayer should fund unlimited children born onto a benefit?

While I thought Colin Craig describing the Bennett/ Rankin clash as a cat fight was injudicious, Kidd will most certainly be walking into a big cat's den.

Sentencing inconsistency - same day, same Judge

Are these two women sharing a sentence?

They each received 8 years and 8 months for beating a man to death.

It seems incredibly light especially when another man sentenced  for murder received  life with minimum parole period of 15 years.

And they were both sentenced by the same Justice on the same day.

Monday, December 16, 2013

NZCCSS report - bullshit

My impatience is precluding politeness.

The leftist New Zealand Council of Christian Social Services Vulnerability  Report, released today, is a regular update comprising publicly available data.

Some of the statistics they report are thoroughly misunderstood.

But I begin with this patently false statement:
Home ownership remains elusive for the vast majority of New Zealanders.
(Page 4)

Census 2013 data shows,

In 2013, 64.8 percent of households owned their home or held it in a family trust, down from 66.9 percent in 2006.

Any reader of the report unfamiliar with NZ would believe "the vast majority of New Zealanders" rented.

Next I'm confronted with their inability to grasp benefit data.

The June 2013 DPB data reflects typical child rearing patterns - Recipients are mostly mature women (aged 25-39 years) at home caring for their child (or children) until they attend school at 5 years.

For starters, given 43 percent of DPB recipients at June 2013 were Maori, it'd be highly surprising if the DPB reflects "typical child rearing patterns".

At least a third of DPB recipients have been on benefit since becoming teenage mothers. That hardly reflects "typical child rearing patterns" when the average age of first time mothers in NZ is 30.

Back to the report:
Only a small percentage [10%] of recipients receive a DPB for ten years or more.
Square that with Paula Bennett's statement earlier this year:
 ...sole parents spend an average 15.8 years on benefit ...

When the NZ Council of Christian Social Services puts in the time to really get to grips with the issues I'll start respecting them.

Update.Further credentials proving economic illiteracy, a 2011 press release reported on this blog:

Celebrate Beneficiaries - The Heroes of the Recession

It is the government who is making bad life choices, not beneficiaries! In fact, Trevor McGlinchey from the NZ Council of Christian Social Services (NZCCSS) says beneficiaries are the heroes who are carrying the country through the recession.

NZCCSS Executive officer McGlinchey was speaking in response to today’s release of the third and final report from the government Welfare Working Group Report.

...“Last year’s Budget offered millions in tax assistance to those on mid to high incomes, many of whom pay relatively minimal tax because they know how to work the system. That leaves low income earners and beneficiaries to pay off the nation’s debts!”

Prue Hyman on the living wage

Regarding the living wage, there is one very persuasive argument for it. The employer pays more of the cost of labour instead of the taxpayer via subsidies like the accommodation supplement, family tax credit, partial welfare benefits etc.

Prue Hyman, who has heavily promoted a universal basic income  in the past, has a piece in the DomPost today which employs the argument:

The Treasury calculates that for a two-child family with two parents (one working 40 hours at $16 an hour and one 20 hours at $13.75), a living wage would increase take-home pay by $63 a week.
The government would be a bigger winner, with an additional $126 per week in increased tax and reduced benefits. But any increase in annual pay for such families is positive and $3276 is significant. Also, putting more responsibility on employers to pay a living wage allows the government to refocus spending, targeting the neediest and largest low-income families more effectively.
Further, with lower income families spending almost all their income, there will be a boost to the local Wellington economy which will itself create more jobs.
The Treasury's report argues that "adopting a living wage would rebalance the role of the employer and the welfare system towards work being the primary mechanism for people to support themselves." Isn't this a positive?
Well, yes. If the employer can absorb the increased wage bill without shedding jobs and if the employer is a private profit maker.

But if the employer is the council, and the increased wages are funded from increased rates, then the result is simply more transfer of wealth from Peter to Paul (and probably back again if, for instance, landlords raise rents as a result.) The pie hasn't grown. The size of the pieces may change slightly or even stay the same.

And while Hyman says the government would be the biggest winner from increased tax take, does anybody expect to see a corresponding tax cut?

Sunday, December 15, 2013

Craig relishes "catfight"

For a conservative, Colin Craig often surprises - and not in a good way. He describes pitting Christine Rankin against Paula Bennett in the newly created Upper Harbour seat as setting up a "catfight".

Catfight (also Girl fight) is a term for an altercation between two women, often characterized as involving scratching, slapping, hair-pulling, and shirt-shredding.

Not an overly sensitive petal myself, I nevertheless think the use of the term was injudicious.  It's makes the pair sound like a couple of slappers. Which neither are.

For arguments sake, if ACT leader Rodney Hide has said in 2008, my standing against Sue Bradford wherever would set up a real catfight I'd have been mortified. Ah but that's why I am so unsuited to politics.Not enough mongrel - or feral - in me. (And before I cause offence it's not the sort of thing Rodney would do).

I'd love to see Christine Rankin take on Paula Bennett. In the welfare area, Bennett's portfolio and Rankin's passion, much that National has done would meet with Conservative approval. So Rankin will have to find strong points of detraction, ie the reforms have not gone nearly far enough.

Then again if the Conservatives take the line that a mother's place is in the home they might say that the reforms have gone too far. Whatever the angle, the contest would put welfare in the spotlight.

It's rather an odd strategy though to pit your best known candidate against a National Party favourite. But I forget the party vote. Voters may favour both of these candidates if they put up a spirited debate, and split their vote accordingly.

Anyway, back to the unfortunate turn of phrase. Don't be surprised if the feminists get their hooks into Craig over this faux pas.