Council of Trade Unions economist wrong on many counts

Council of Trade Unions economist had this piece published in the DomPost, December 27 (not on-line):

Rosenberg claims that recent OECD research  "...affirmed that higher welfare benefits and more progressive taxation were part of the solution..."  to tackling poverty. He should search the term "higher welfare benefits" in the paper. It can't be found. That is because the paper specifically promoted better in-work benefits. The NZ example would be the In Work Tax Credit.

To reduce inequality the author, Federico Cingano, recommended, "...active labour market policies, childcare supports and in-work benefits".

Then Rosenberg writes, "According to the Ministry of Social Development's Household Incomes Report, half of the children in hardship are in working families."

What the report actually says:

Poverty rates for children in working families are on average much lower than for those in beneficiary families (11% and 75% respectively), but 2 out of 5 poor children come from families where at least one adult is in full-time work or is self-employed.

The percentage is 40, not half. But the important distinction is that children in poor families with work tend to be in temporary poverty whereas those in families on benefits tend to experience chronic poverty. The latter is more damaging.

Next he writes "Benefits have been adjusted only by inflation..." which ignores that add-ons or second tier benefits like the accommodation supplement and family tax credits have increased by more than the inflation rate.

The claim that, "A single parent with two children in New Zealand receives 54 percent of the average wage according to OECD data..." is also suspect. The OECD will be working with basic benefits rates which are only part of what a beneficiary receives. 

According to Paula Bennett last year,

An average sole parent with two children under thirteen, living in South Auckland would receive around $642 on benefit, including accommodation supplement and a minimal extra allowance for costs.

The average income from wages or salary in 2013 was $962 (June quarter). That makes the DPB income 67 percent of average wage. (The median earned income was $834 in 2013 but we must compare apples with apples.)

Rosenberg's over-arching view that, "Being born into a family reliant on a benefit is close to a guarantee of poverty" is correct based on the official poverty measure (at or below 60 percent of the median equivalised household income).

Unfortunately every year around one in five babies born will be benefit-dependent at birth or shortly after.

This is the behavioural pattern that is causing the poverty problem. It's the pattern that has to change. If Mr Rosenberg's solution of higher welfare benefits is adopted, those trend lines will go up.

Treasury reiterates support for welfare reform

 The Treasury's Briefing to the Minister of Finance post 2014 election contained the following:

While New Zealand's overall employment rates are high, some groups are still under-represented in employment. These include those with no or low qualifications, Māori, the disabled and solo parents. New Zealand is particularly unusual in terms of the high proportion of our children in sole parent households and our low employment rates for solo mothers. In many OECD countries solo mothers have similar or higher employment rates than partnered mothers. However, solo mothers have significantly lower employment rates than partnered mothers in New Zealand (see Figure 16). 

These employment patterns matter because paid work is an important route out of poverty and low incomes. Unsurprisingly, around two in three (63%) of the children in low income households are in households where the main source of income is a welfare payment (Perry, 2014). These families often face multiple barriers to moving into work, including low parental education, health and housing issues. However, overcoming these barriers can bring wider personal and social benefits to the parents, their children and the community. These include the long-term economic, social and fiscal costs from the related impacts of joblessness, like crime or anti-social behaviour, and poor housing, health, and educational achievement.

As the pace of economic change continues to intensify, there will be even more pressure on the state sector to support people to cope with change. This will be particularly the case as the combining forces of globalisation and technology continue to increase the pace of change in our economy. There is a debate about the degree to which employment protection, minimum wages and support for some industries and sectors are levers that should be used to try and insulate people from these changes. However, given that employment opportunities will continue to evolve in an increasingly dynamic economy, our focus is more on supporting people to be adaptable, flexible and resilient.

Therefore, the Treasury supports the increasing focus of the welfare system towards investing in those people who, without support, are most likely to be on benefits long-term. Policies that assist people to move out of long-term dependence on welfare and participate in the labour market are likely to improve outcomes for the most disadvantaged, including the most disadvantaged children, as well as enhance economic growth (The Treasury, 2013c and The Treasury, 2013e).

Benefit cap

A benefit cap was progressively introduced in the UK and now the Irish are trying to introduce it as part of a host of other welfare reform changes.

A benefit cap limits the amount one household can claim in welfare. If it was applied in NZ it would mean a household might not automatically receive extra money if more children are added to a benefit. Or extra accommodation supplement might not be available if the family had already reached the maximum or cap.

However the cap is fairly generous.

How much is the benefit cap?

The level of the cap is:

• £500 a week for couples (with or without children living with them)
• £500 a week for single parents whose children live with them
• £350 a week for single adults who don’t have children, or whose children don’t live with them

This may mean the amount you get for certain benefits will go down to make sure that the total amount you get isn’t more than the cap level.

The same amounts are proposed for Northern Ireland.

The cap doesn't apply to people who are working and receiving assistance though.

In November 2014 the Express reported:

MORE than 50,000 workless families have had their benefits cut because they were getting more from the state than the average worker brings home, official figures revealed yesterday.

And to prove that the Government’s radical reforms are working some 12,000 of them have been spurred into finding jobs.
Work and Pensions Secretary Iain Duncan Smith said it showed the “staggering” positive impact of the decision to cap benefits for most unemployed households.

The cap applies even in the most expensive-to-live areas like London.

Meanwhile the pressure is on here to lift benefit incomes to accommodate high rents.

A Xmas poem from Roald Dahl

Making peace with the feminists ... seen as it's Xmas...


"Where art thou, Mother Christmas?
I only wish I knew
Why Father should get all the praise
And no one mentions you.

I'll bet you buy the presents
And wrap them large and small
While all the time that rotten swine
Pretends he's done it all.

So Hail To Mother Christmas
Who shoulders all the work!
And down with Father Christmas,
That unmitigated jerk!"
[c. RDNL]

Jack

Just updating my artist blog - two people will be unwrapping commissioned paintings/pastels of their dogs this morning. This is Jack who apparently characteristically had his ears back,

"Kind Regards" etc

Last week I received a missive from the Ombudsman informing me that a complaint I'd lodged is in delay. It has yet to be allocated to an 'investigator'. Oh well. Par for the course. Ironically my previous complaint to them concerned the ever increasing time it takes MSD to respond to OIA requests.

But I am musing about the sign-off at the end of the letter. KIND REGARDS.

Polite and warm.

But I don't use KIND REGARDS unless I specifically feel kindly towards the recipient of my correspondence.

REGARDS on its own is respectful and sufficient,  don't you think?

I'm certain readers of this blog will wrestle with correspondence etiquette regularly; not only as forms of communication change rapidly, but standards of language relax.

Probably the way I address people in emails and letters is now a product of my mood and my attitude to the recipient far more than teachings and protocol.

But when I was in high school we were taught conventional ways of writing letters and the use of terms REGARDS, SINCERELY and FAITHFULLY.

Is there a modern day equivalent?

Surely in the highly PC public service such guidelines exist. Some bright-eyed wallet-conscious consultant would have put up their hand to write them.

(BTW Ombudsman, I do not object to your KIND REGARDS. As I said, warm and polite. Just reflecting...)

On Joe Cocker

Another of my teenage favourites has gone. Though I expect the occurrence of such will only increase from here on in as the artists I loved when I was 13+ hit their seventies.
Before I was old enough to afford albums (though my pocket money would stretch to singles at $1.15 a pop) I'd be listening to what the older kids were playing. Cocker Happy was a brilliant album. Highly original and so musical. Only on December 13 I was arguing with the kids about Cocker. I remember the exact day because we were driving up to my nephews 21st. They called him a "cover artist". He was not, I said. I was positive he wrote some of his own material. In any case even when he recorded songs by other artists his version was the definitive one eg She came in through the bathroom window.
The sad news of his death this morning had me diving through my albums and cds. As we head off to the dreaded mall this morning it'll be made a bit more bearable with "Feeling alright" playing in the car. His early stuff was in my opinion his best.
I saw him play in Palmerston North around 1983-84. It wasn't terribly memorable. I don't think he hugely enjoyed performing. Later when I watched Mads Dogs and Englishmen on DVD I got the sense he was a quite retiring individual who didn't crave the limelight.
But his lifetime's work was nevertheless extensive and he was still recording in 2013.
He has a place in my heart as one of those singers who developed in me a lifelong love of music.
Here's Hitchcock Railway. Still so good.

The more things change....December 22, 2014

Here's a topical piece except it's from 80 years ago.

Source:  Evening Post, Volume CXVIII, Issue 150, 22 December 1934, Page 11

LIVING STANDARDS

IS RUSSIA'S LOW?


A VISITOR REPORTS

Mr. John Brown, of South Shields, ex-tramp, author, boxer, and novelist has returned from Russia. For the past month (says the London "Daily Express") he has .been travelling alone in the land of the Soviet at the expense of Lord Nuffield (formerly Sir William Morris). Now he is back to submit a report on his impressions to the famoug motor-car manufacturer.

This story began last May. John Brown stood outside the Morris motor works selling Communist literature to Lord Nuffield's workers. A motor-car drove up and Lord Nuffield accosted Brown. A heated discussion followed. As result, Mr. Brown last month sailed for Russia to study conditions as they really are, free of all cost to himself.

Mr. Brown gave his impressions to a "Daily Express" representative. "I learned enough Russian" he said, "to get about on my own. I avoided all guides. I wanted to find out things for myself. I covered 4000 miles altogether and got into certain factories in spite of official refusals. I worked on a Moscow subway and met commissars, generals, and directors. My general impression ia that the facts do not fit the theory. In theory Communism should have increased enormously the standard of living of the worker  since 1917. I expected the standard to be at least comparable with the  Western European countries. But it will take at least five five year plans before that has been accomplished.There is no unemployment, but it's is not quite so pleasant as it sounds. If you want a ration card you have got to nave a job of some sort. It is easy to get divorce, but if you have more than one you cannot get promotion. You just say you want a divorce and get it on the spot. Even the highest paid workers in Russia are on a lower standard of living than men on the dole in England."

Ends

Perhaps Bob Jones might like to sponsor a few Greens in a similar manner.

Remaining rat

In September last year I blogged briefly about the addition to our menagerie - two rats who became known as Malcolm and Reese. Sadly Malcolm developed pneumonia a couple of months back and failed to respond to anti-biotics. In hindsight we realised he had never had good respiratory health.

However Reese remains and we decided that as a bereaved rat he needed more human companionship. Each night he spends a few hours down in our main living area. He has just turned up at my feet and is climbing up to sit just under my nose on top of a tall narrow bookcase but under the kitchen bench - his safe place. He'd come across the floor from a descent down the Xmas tree - his first encounter with real trees and a great adventure. Now he's perched on my History of Petone grooming himself.

The dogs give him a wide berth due to both being bitten on the nose, attack being the best form of defence. The cats are relegated to other living spaces.

Here's a short film of him being handled by Sam. Never thought I'd like a rat this much.

CPAG exaggerate benefit cuts

Innes Asher is as spokesperson for the Child Poverty Action Group. She wrote a piece that was published in the NZ Herald on Friday. Not unusually it was misleading. This is my response by way of a letter to the editor. (Yes, I seem to have written it many times before but if they can keep repeating themselves, so can I.)

Dear Editor

According to Innes Asher (NZ Herald, December 19), "In the 1991 Budget, the universal child benefit was abolished, and income support benefits were cut by about 21 per cent, resulting in a doubling of children in poverty."

In fact, although the universal child benefit was abolished, nearly half of the saved funds were re-allocated to the means-tested Family Support. As for the DPB, the benefit most welfare-dependent children rely on, the cuts were 10.7 percent for those with one child, and 8.9 percent for those with two children (Social Developments, Tim Garlick).

If benefits are raised to relieve child poverty there are two distinct risks.

Numerous studies have shown the rate of unmarried births increases with lifts in welfare income. Already around half the children in poverty are in single parent homes.

Secondly, OECD research found that when the state reduces child poverty through greater income redistribution, the number of work-less homes also rises.

The lasting solution to child poverty lies in employment and committed parental relationships. Trying to solve it via more welfare will only exacerbate the problem in the long term.

Blog's 9th birthday

My first post was on December 19, 2005. Wouldn't have put money on it lasting nine years.

The stats are steady but not growing. I usually occupy some position in the 30s when it comes to blog rankings in NZ and average around 200 visits a day.

So you'd wonder why I bother.

I continue to believe the welfare stuff is hugely important and pester MSD, read all their publications, monitor party policies, keep a watching brief on welfare reforms abroad and if I have something particularly interesting the goodwill of other bigger blogs (particular Whale Oil - thanks Cam)  usually means I can get them to pick it up.

And thanks to my regular readers who often send me tidbits and comments off-blog. You in particular keep me going.

An American down-under sees what too many NZers can't

Today Sean Plunket interviewed an amazing man called Terrance Wallace on Radio Live .

He is a black American raised by a single mother in Chicago, who has sent up a home for disadvantaged Maori and Pasifika young men  that provides them with opportunities they would not have in their own communities.

His initiative is called The In Zone project.

Under his scheme these young guys are achieving great results.

It's a reasonably long though deeply interesting interview (Plunket at his best).

But have a listen to what he says about state welfare at 25:15

Reducing welfare dependence would reduce inequality

Letter to the Hutt News:

Dear Editor

According to Gordon Campbell  a recent  OECD report showed New Zealand's "...economic policies have caused a significant rise in income inequality" (Hutt News, December 16).

Income inequality grew during the late 1980s and early 1990s then levelled off during the 2000s.

Over that period the structure of families, and gender participation in the work force changed significantly. Single parent families headed by females with no or low educational qualifications and/or  work experience increased significantly through to the turn of the century before levelling off over the past few years. Many depend on welfare and consequently form a large share of poor families.

At the same time,  partnered woman increasingly either remained working or returned to work earlier after childbirth.

In a nutshell, there are now more households with one work-less parent, and more households with two working parents. The difference between the the incomes of the  two households is pronounced.

What the OECD report  Campbell refers to said was that, "...active labour market policies, childcare supports and in-work benefits" are needed if increased economic growth is desired. This recognises that children coming out of disadvantaged homes eg unemployed households, need a working parent and better engagement with education from an early age.

The welfare reforms instituted by the National government (and Labour prior with the creation of the In Work Tax Credit) have gone some way to fulfilling this goal but need to go much further. Reducing welfare dependence would contribute enormously to reducing inequality.

Lindsay Mitchell

Figure J.5   Inequality in New Zealand and the OECD trend: the Gini coefficient

Source: http://www.msd.govt.nz/documents/about-msd-and-our-work/publications-resources/monitoring/household-income-report/2014/main-report.doc