For three decades following the 1938 introduction of most social
security benefits (including Invalid, Sickness and Unemployment),
dependence never exceeded more than 2 percent of the working-age
population. Today the percentage is 12.7 and the average future
time expected to stay on a benefit (which does not include time already
spent) is 13.6 years. For those who start on a Young Parent
Payment or Youth Payment the figure rises to a staggering 24 years
and for Sole Parents, 18 years.*
This growth in recipients and duration of stay, plus the now
well-established inter-generational dependence, indicate a strong
element of choice operating. Benefit incomes for sole and two
parent families with children, compete with the median annual
wage. The welfare system has evolved from providing a safety net
for those genuinely unable to provide for themselves, to offering
an alternative lifestyle to paid employment.
Readers frequently ask me to propose a solution to the welfare
problems I write about. Primarily, I write to expose the damage
done by allowing long-term dependency to fester. I don't have a
personal beef with beneficiaries, but I do with a demotivating
system that hurts them and especially their children. And those
advocating for ever more welfare really draw my ire.
But do I have any answers? With the proviso of political viability ...
In 2016 I presented to an ACT conference outlining what an
effective welfare system might look like:
1/ Two benefits only
Jobseeker with time limits (for example 36
months over a lifetime)
Supported Living Payment (formerly known as Invalid benefit) without
time limits
2/ Two forms of assistance only
Cash
Income Management (IM)
Cash is self-explanatory and what most beneficiaries currently
receive.
The IM technology (which MSD calls 'Money management') is already
being used but sparingly. Rent and utilities are paid direct. Food
and other necessities are purchased via an electronic card. What
IM doesn’t provide are the choices and freedoms that come with a
cash benefit or income from work. It doesn’t incentivise work
avoidance, irresponsible child-bearing or benefit fraud. IM
ensures beneficiary and children have a roof over their heads,
power and adequate food.
3/ IM should apply to those who
- have exceeded time limits on Jobseeker benefit
- add children to an existing benefit
- are aged under twenty five
- have received an imprisonable criminal conviction
- have a benefit fraud conviction
- have a primary incapacity cause of substance or alcohol abuse
4/ Gains
- time limits on Jobseeker would encourage wiser use of the
safety net
- loss of autonomy through lack of cash incentivises
employment. The attitude of "It's not worth working" would
disappear
- children live in homes where power and food are guaranteed
- children are not treated as meal-tickets
- sole mothers aren't financially abused by deadbeats
- household over-crowding is disincentivised as IM
beneficiaries no longer able to pool resources
5/ Why people would vote for this policy
- there is justifiable and substantial concern about
disadvantaged children
- people who work want it to be worth their while
- many view 'free money' as a fundamentally bad idea
- National's approach to welfare is seen as ineffective
- catering to genuine long-term incapacitation experienced by
Supported Living Payment recipients remains unchanged
6/ The proposal in summary
- A two-tier safety net comprising
- 2 benefits only
- 2 forms of assistance only
It's simple. The benefits are easy to explain – in both senses.
That is where my presentation ended.
But in lieu of an ensuing discussion, I will address here some
anticipated objections. (Reasonable objections - not extreme Left
complaints like 'the government has no right to interfere with a
woman's fertility choices.')
Sole parents should have their own benefit. Most women
return to work after becoming mothers. That's now a societal norm
with Paid Parental Leave allowing for newborn care-giving.
Expectations for sole parents shouldn't differ. In need of
employment, Jobseeker is the appropriate benefit.
These reforms will lead to more crime. As the welfare
state has expanded, so has crime. Violent crime, homicides, child
murders, sexual violence and theft have all increased markedly.
Welfare does not prevent crime. If it did, we wouldn't have any.
Neither should a society be held hostage to providing ineffective
and counterproductive assistance under the threat of violence.
Having their income managed robs people of dignity. Only
those people capable of being self-supporting, but who have abused
or over-used the system, are subject to IM. They have knowingly
incurred that status. Those using some part of their welfare
entitlement as a temporary backstop, or who are genuinely
long-term incapacitated due to disability or illness, will
continue to receive their full benefit in cash.
People will put pressure on GPs to certify them for a
Supported Living Payment. That is apparently already the
case because SLP is not work-tested and pays slightly more. So
while it is a problem, it isn't the addition of a new problem.
Perhaps the gate-keeping function should be removed from health
professionals, some who have already refused to undertake this
type of work due to harassment.
Won't IM make some people even more dependent? Possibly.
But most people want some amount of money in their lives. What
people want is often a more powerful motivator than what
people need. Deprived of weekly cash, people will search
out jobs.
More people will get into the black economy. Again this is
also an existing problem, one that might be aggravated, but won't
be new. I am not dismissing existing problems but they shouldn't
stop us from trying a new approach.
'Details' people will raise many more issues, but the above plan
serves the two major aims: to look after the genuinely needy while
disincentivising unnecessary dependence.
(Note: The above was suggested in 2016, prior to Labour's reforms
under the Ardern government. The introduction of Best Start,
removal of the requirement to name fathers, child-support pass-on
and softening work-testing for those who add children to an
existing benefit should all be reversed.)
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You can read more about MSD's existing money management regime here.
*https://www.msd.govt.nz/about-msd-and-our-work/newsroom/media-releases/2024/future-years-on-benefit.html
Stop press. MSD's just-released Annual Report shows that the average expected future reliance time has risen from 13.6 to 14.3 years. The report does not provide a breakdown across all benefits.