Why the unemployment rate rose

John Key is very surprised that the unemployment rate jumped to 7.3 percent yesterday because he says other economic indicators are looking more positive.

Here's a possible explanation but I don't have time right now to thoroughly test it.

Well-publicised welfare reforms cause what I call an anticipatory effect. Many current beneficiaries know that they are going to be work-tested in the near future eg people on the DPB had their requirements tightened in October when those with a youngest child aged 5 were brought into the equation. Many know that next year they will be moved onto the new Jobseeker benefit.

People aren't helpless. They think about what having to take any job offered by WINZ might mean and they start looking for themselves. Hence, if they're part of the HLFS survey - the source for the official unemployment rate - they begin to describe themselves differently.

Two groups who have experienced significant increases are Maori and single parents, both disproportionately beneficiaries, so that supports my theory.

There were only 8,000 fewer jobs between the June and September quarters.

So the higher rate is not so much about people losing jobs but more about people becoming available for and seeking work.

Blacklisting 'nutters' and 'menaces' - me

According to Karl du Fresne writing in the Nelson Mail:
 

I recently had what might be termed a difference of professional opinion with some of my fellow journalists. It was touched off by a newspaper editorial that took a whack at "enthusiastic amateurs" sounding off on such issues as climate change and fluoridation.
Everyone was entitled to their opinion, the editorial writer loftily pronounced, but not all views should be accorded equal weight. The views of people with years of study and experience behind them were worth more than those of non-experts.
"Everyone is free to disagree but ignorance does not have an equal right to be heard," the editorial concluded.
A member of an internet journalism discussion group to which I belong applauded the editorial, saying she couldn't agree more. "These amateur know-it-alls are a menace," she declared.
I thought this a peculiar position for a journalist for take. I mean, aren't we supposed to believe in freedom of speech?
Another member chimed in that the Sensible Sentencing Trust's Garth McVicar should be added to the "list of nutters". Then someone else suggested a couple of other names for what was shaping up as a blacklist: David Round and Lindsay Mitchell.

It makes me cringe when people describe me as an expert. But it makes me cringe even more when they suggest I am a nutter. I cringe on their behalf. Because ostracising  is the lazy resort of the blinkered mind. There is nothing I like more than a debate over what a set of statistics might mean; the clear or cloudy distinction between cause and correlation. It's embarrassing and humbling when I get it wrong but error and correction is one pathway to understanding.

To get beyond "amateur" status would require, I suppose, an expensive university education in the social sciences, saturated  in doctrinaire leftist thinking. No thanks.

Kudos to Karl for defending the right to be heard of those who don't dance to the beat of the dominant drum.

Major defeat for Greens

Yesterday the Greens were desperately seeking Peter Dunne's support:

The Greens and United Future are at odds over moves to change in-work tax credit entitlements. Parliament will debate tonight the Member's Bill of Green co-leader Metiria Turei that would extend the credit to beneficiaries.
United Future MP Peter Dunne says the bill destroys the incentive of Working for Families to get beneficiary families into work.
"I don't really see there's much to be gained from having a discussion at a select committee, when there's such a fundamental difference of view."
But Metiria Turei says she's offered major compromises to Mr Dunne to get his support and he's turned them all down.
"Peter Dunne committed himself at the last election to a campaign to reduce inequality. Now is the chance for him to have the discussion on how we can do that and he's refusing to."

Dunne hung tough against this stupid idea to reverse what was originally a Labour- implemented policy to build a margin between benefits and earned income.

Looks like it died a death.

The first reading of the Income Tax (Universalisation of In-work Tax Credit) Amendment Bill was not agreed to.

Someone is knowingly lying here. Is it Red Alert?

This is from the last published NZ Yearbook - 2010. Not fully up-to-date but it'll suffice.

Between 2004 and 2009 there was an average of 8.5 construction-related deaths (investigated by OSH).

In a post about "unsafe building practices", Red Alert says:

The NZ Herald reported on November 2^nd that since July, more than 400 actions have been taken against 760 construction sites for not complying with guidelines on safe working at height. Inspectors shut down 215 of the sites, and issued more than 160 written warnings requiring immediate remedial action.
While Construction Minister Maurice Williamson finally admits there is a problem, this Government has had four years in office, and in the meantime, we’ve had an average of 100 deaths a year, with workplace injuries and fatalities reportedly costing New Zealand about $3.5 billion annually.

Better check out what the NZ Herald said:

Workplace injuries and fatalities cost New Zealand about $3.5 billion annually and 100 people on average die each year.

100 workplace fatalities. That means 'construction' and every and any other industry. This is a classic case of conflation.

Each of these deaths  represents untold grief and it's unpleasant to discuss them in the context of controversial statistics. But I cannot believe that in 2010 and 2011 deaths due to building accidents increased twelve-fold.

I heard a caller to talkback pushing this so-called building fatality rate. His position was that if they all happened at once it would be a national disaster but because they happened in a staggered fashion they went under the radar. He said he was a building safety officer so no excuse for getting it so wrong. Perhaps he was a  Labour propagandist.

Seven years for encouraging a pitbull-puppy attack

A seven year prison sentence for setting a pitbull on another person seems steep. Not because it's a trivial crime. I'm not uncomfortable with the sentence per se but how other sentences for arguably worse crimes compare. The judge is certainly making a statement.

Contrast:

A man who rammed an ambulance, used a car as a weapon, drove recklessly, and assaulted people was jailed for three years with a non-parole term of 18 months, in the Christchurch District Court today.

And:

A teen, described in court as "a law unto himself", who used his car to ram a man sitting in a car in Greymouth has been jailed.Nineteen-year-old Jed Wilson-Calver was appearing in Christchurch District Court for sentence after pleading guilty to the charge of assault using a car as a weapon. Judge Erber said he could not consider home detention because of Wilson-Calver's attitude to community sentences.He jailed him for a total of eight months.

And just for good measure:

Attacks using dogs on Asian people walking in the streets of Christchurch have brought eight month jail terms for the owners and death for the dogs.Those jailed were 18-year-old Phillipa Ann Parker and her ex-boyfriend Steven Brian Donaldson, 25, who both admitted the attacks had racial overtones. Donaldson had admitted two charges of assault, and Parker admitted one charge of assault, and two charges of assault using dogs as weapons.

For animals needing homes

We got our gorgeous Beagle Lexie from HUHA earlier this year. They do fantastic work pledging to keep any animal needing a sanctuary until it can be re-homed. One of the integral people Lisa Rawlins has set a goal to fund raise $1,500 through running the Taupo Half Ironman. Have a look at the site and pitch in if you can. I can't praise the work they do enough.

Dead babies

Nothing new to say about the latest casualty except this was better:

The Deloitte Report

Deloitte's report into the Work and Income Kiosk breach is available on-line here

I've scanned through it and my overriding reflection is that MSD staff (or contractors) were aware of the potential for security breaches via the kiosks but for whatever reason, didn't take action.

It's short on content but my post is mainly to alert interested parties that the report is publicly available.

Meerkats in my back garden

I've been clearing scrub and landscaping the steep hill behind our house. Love my meerkats! So tacky but so at home. The second view is how we see them from inside the house through the windows surrounding the back stairwell. Great to be greeted by them each morning.

DomPost: Whale now editor at Truth

Commenting yesterday at The Standard Bomber Bradbury said he and Ross Meurant had both resigned. I didn't.

The cost of benefit fraud

According to the NZ Herald:

"Benefit fraud cost taxpayers a record $22.6 million last year, tripling from $7.5 million five years ago."

The source for the first part of the quote is here.

The second is here

 However, according to MSD:

Fraud prosecutions

The numbers of prosecutions decreased in 2010/2011

This reduction followed a slight increase between 2008/2009 and 2009/2010.
Patterns in the numbers of prosecutions may reflect patterns in the volume of cases investigated. Prosecution numbers are expected to stabilise in 2011/2012.

It's odd that prosecutions have decreased but the "cost to the taxpayer" is escalating.

2007/08 1,028
2008/09  735
2009/10 789
2010/11 690

So the assumption must be that the value of the debt per case has risen significantly. And there have been some biggies.

Anyway, my point is, telling us benefit fraud is costing the taxpayer $22.6 million is an understatement. In 2010/11 the established value of overpayments due to fraud and abuse investigations was nearly $40 million; a further (if I am interpreting the data correctly) $34 million in overpayments was established through data matching programmes and it costs around $37 million to fund integrity services.

Baby 4,444,444

Tomorrow New Zealand's 4,444,444th citizen is likely to be a new born baby according to Statistics NZ.

According to population estimates, on 1 November, somebody will become New Zealand’s 4,444,444th resident.
“While the new resident could be a New Zealander flying home after living overseas, or a new migrant, they’re most likely to be a new baby, as that’s where most of our population growth is coming from,” population statistics manager Andrea Blackburn said.
“And who knows? That new boy or girl might even be born at 4.44 in the morning.”
The symmetrical milestone matches one the Australian state of Queensland reached three years ago, and puts our population very close to that of Ireland or Croatia, Mrs Blackburn said.
“These types of landmarks are quite rare. Our population hit 3,333,333 in the mid-1980s and based on our projections, we probably won’t get to 5,555,555 for another 30 years.

On the balance of probabilities I won't see it. Seems to me the country could benefit greatly from faster and smarter population growth.

The psychological health of working mothers

This graph relates to Swedish women.

The accompanying commentary, from Mercator.com reads:

Swedish working mothers not so happy afterall

Why is the mental health of working Swedish women among the worst in the developed world? Isn’t Sweden the Mecca of work-life balance, where heavily subsidised childcare and other family friendly policies make it a model state for women’s equality?
Maybe, but something seems to have gone wrong. Over the last two decades in many OECD countries younger workers increasingly have been exiting the workforce on disability pensions (mainly related to mental illness and back problems) but the psychiatric trend has been more pronounced among younger women, and most pronounced of all among Swedish women workers.

First, there is a trend across developed nations for people to resort to disability benefits for mental illness . I blogged about the trend in NZ just recently.

Second, as women have made up an increasing proportion of the workforce it follows more claims for work-related disability will occur. The graph cannot tell us whether the workplace or the home, or a combination of both lead to these claims.

Third, the medical profession plays a large part in the trend. GPs have been more prone to diagnosing and treating mental illness.

Fourth, where is the associated graph for men? It is quite probably similar.

Fifth, the commentary goes on to point out those most at risk are lone mothers. It isn't news that single mothers experience worse mental and physical health but it's not clear whether this predisposes them to being single parents or is a result of being a single parent.

Sixth, the rises look dramatic when depicted in this way. The sharpest increase has gone from 10 per 10,000 to 45 per 10,000 but expressed another way, the rate has  gone from 0.1 to 0.45 percent.

Seventh, the charts go to 2005 and at the latest point show drops so it'd be interesting to know if those decreases were the beginning of a reversal trend.

Eighth, for single parents, the alternative to work is welfare. As the researchers seem to be using disability pension claims as proxy for the incidence of mental illness they should also look at other indicators that would be measurable among lone non-working mothers.

The Family in America comments:

Summarizing their findings, the researchers conclude, “A considerable part of the social expenses due to DP should be attributed to lone working women with children. Their illness and decreased work capacity have implications not only for the mothers but probably also for the children.” American policymakers should recognize this study’s cautionary implications: policies that promote maternal employment while inhibiting marriage will cost the country dearly.

This is the bind we have come to.

Welfare for single parents has had an undoubted detrimental effect on relationship formation and stability. The only way to turn the tide  is to take it away. That can only be done if parents go to work, and new entrants are turned away. I wouldn't accept these findings as good reason to promote welfare over work. In fact it might be argued that those women not coping with being a parent and working are self-selecting out of the workforce by moving onto disability benefits. While the thousands of other mothers who are doing better working than on welfare remain in the workforce.

(Hat-tip Bob McCoskrie)

Violence causes poverty

 Yes. An inversion of the hackneyed NZ mantra.

"Violence is a serious cause of poverty" is a headline about  Guatemala, (or any developing world country for that matter). In the first world we generally hear, "...poverty is a cause of violence".

But thinking about it a moment, first,  second, third whatever-world status, violence will cause poverty.

In our world, violence will break relationships incurring the costs of supporting two households, family court proceedings, being on welfare or reimbursing the state for benefits.

If resulting in a criminal conviction, violence will  reduce chances of good or any employment, and travel (for employment). It may incur a fine which grows as repayments are not met.

Violence will alienate people who might otherwise be sources of support, including children in the perpetrator's old age.

It may result in a prison sentence which impedes future earning  prospects significantly. It may draw people into a circle of might-is-right and might-is-money - not easily held onto with no recourse to legal protections.

In fact any action or behaviour detrimental to harmonious, co-operative human relations is ultimately going to make people generally poorer.

Truth Column October 18

My October 18 Truth column is now on-line:

As the politicking over Kim Dotcom continues unabated other arguably more important news has gone almost unnoticed. For instance, an Otago University study into hospital admissions due to serious assaults showed that, contrary to political assurances, violent crime is probably increasing.

More

Other Truth columns here

Never been to Wellington?

To be honest I am surprised that so many children from the lowest income deciles have never been outside them.

Naenae College principal John Russell said that of 26 pupils in a recent year 9 class, 16 had never been to Wellington.

My surprise is due to the number of school outings that children go on. Visits to Te Papa, the Carter Observation Centre, the Zoo,  Capital E, for instance. I've got a Year 9 student and was forever being invited to do parent accompaniment on trips right from kindergarten. Yes these children come from poorer families but their schools get more funding. So I'm taking this assertion with a pinch of salt.

If education is about broadening horizons perhaps the schools should be doing more about this shortfall.

"...fiscally conservative and socially liberal-libertarian"

A new book by David Boaz published by Cato claims, "...The Libertarian Vote: Swing Voters, Tea Parties, and the Fiscally Conservative, Socially Liberal Center reveals that 10 to 20 percent of Americans are fiscally conservative and socially liberal-libertarian."

It's quite probably matched in this country.  The voting homeless.

MSD's inconsistent application of work-test rationale

In an analysis of the options discussed by MSD over work-testing sole parents, the following table illustrates part-time work expectations for sole parents internationally. New Zealand has chosen the soft option of 5 years along with a soft definition of part-time work (10-20 hours).

I'm with the one year of age option because it deters people from producing children they can't support. But the Ministry argues against the one year of age option saying

"Earlier work availability expectations could reduce the amount of time that parents have available for the care of their children, which could impact on their child’s health and developmental wellbeing."

Yet later in the same Regulatory Impact Statement MSD puts forward this argument to support work-testing the sole parent (who has added a child to her benefit) when that child turns one:

"One year of age is a reasonable period for parental attachment with the child to be established, and is reflected in current parental leave provisions and child development findings."

What can I say? Obviously the Ministry agrees to disagree with the Ministry. However this sort of inconsistency leaves the policy open to challenge from the any number of aggrieved groups or individuals.  The new rules came in on October 15. There are probably people working on a complaint to the Human Rights Commission as I write.

Unintended consequences of drug-testing beneficiaries

I've previously expressed concern that when a drug-testing regime is applied to Jobseekers but addicts are exempted, more beneficiaries will seek to be diagnosed as 'addicts'.

Expressing a similar concern is the Ministry of Health. In a Regulatory Impact Statement the following is contained:

 "The Ministry of Health (MOH) raised concerns with the drug testing proposals in Paper D. Their major concern is beneficiaries that fail drug tests will overstate their drug use to claim that they are drug dependent thereby avoiding financial sanctions. This in turn will lead to unnecessary referrals to drug addiction services, putting pressure on scarce resources."

Further MOH commented that:

"...the policy may result in a 'substitution effect' where some people substitute detectable drugs like cannabis, for drugs that are not detectable for as long such as alcohol or amphetamine-type substances, which may be more harmful."

Parker on unemployment rate

Our official unemployment rate is artificially low but not for the reasons David Parker suggests - the high number of New Zealanders leaving for Australia. Any opposition in any country could claim its unemployment rate was "masked" by people leaving. Where to is irrelevant. Just as governments can claim their unemployment rates are boosted by people arriving. I don't know what point Parker is trying to make or for what gain. Has he forgotten that Labour kept the unemployment rate down by overseeing rises on the sickness and invalid benefits and sustaining high DPB dependence?

He needn't worry anyway. The unemployment rate is about to become higher. The new benefit categories which come into play next year...

...will result in a significantly larger number of people on Jobseeker Support (135,000) than the Unemployment Benefit (50,000).

Although the official unemployment rate is not devised from unemployment benefit numbers, when more people are work-tested they will have to be available and looking for work. That is what constitutes being unemployed.