Wednesday, November 11, 2020

Unfashionable truths

Bernard Hickey has joined the chorus calling for benefit increases. That's because beneficiaries will spend the money. But he fails to address the unintended consequnces of benefit rises.

1/ There is risk of landlord 'capture'

2/ All second tier assistance will be subject to reductions negating the benefit rise. If the assistance is redesigned so as to not reduce, then the margin between working and not working gets smaller and more people rationally choose not to work or to reduce their hours

3/ That will lead to even less productivity ...

4/ ... and more intergenerational dependence on benefits

5/ Finally there is no guarantee that the extra money will be spent on children (Hickey's implication with his final comment).

Which goes like this:

It’s worth leaving the last word to the Growing Up in New Zealand longitudinal study of 6000 children born in the Auckland, Counties Manukau and Waikato DHB regions in 2008/09. There’s now eight and the latest report was published this week. Nearly 40 per cent are living in cold, mouldy and damp homes. About a third are obese. About 20 per cent of the families surveyed did not have enough money to eat properly.

Of 4,828 respondents 6% had a major problem with damp and mould; 31% had a minor problem. My expectation would be that minor problems are fixable problems. My own home falls into this category (though perhaps into the former category after this week's deluge.)

And what is "eating properly"? If its chicken and veges ... cheap as chips - literally. It has been demonstrated repeatedly that a family can eat well and inexpensively with some application and planning.

But truths are very unfashionable in 2020.

Raising benefits is a quick-fix; a deceptively appealing but ultimately damaging policy.

1 comment:

Hilary Taylor said...

Bang on.This drum gets beaten ad nauseum...Hickey knows this but can't resist beating it too. Thank you for drilling down into the meat & potatoes, ha, of this. Beneficiaries had a rise at the start of many workers got a payrise?