NewstalkZB tomorrow

On NewstalkZB tomorrow after the 10am news with Justin du Fresne talking about welfare, social issues and the stuff I generally blog about.

Another good graphic from Statistics NZ

Another good graphic from Stats NZ showing how much we are spending on certain commodities when comparing 1974 with 2013:

Click here for enlarged view

Quote of the day

This moved me, particularly the second sentence.

The State never intentionally confronts a man’s sense, intellectual or moral, but only his body, his senses. It is not armed with superior wit or honesty, but with superior physical strength. I was not born to be forced. I will breathe after my own fashion. Let us see who is the strongest.

-- Henry David Thoreau, “Civil Disobedience” [1849]

Hat tip FFF

And as I check the link another excellent read appears:

Defenders of the welfare state argue that its purpose is implied in its name: providing for the welfare of its citizens. That is done by the judicious transfer of resources to ensure that even citizens on the lowest rung of the socio-economic ladder have access to the material resources necessary to lead minimally decent lives. The problem is, once you look at actual political outcomes a little more closely, they do not resemble the intentions of the welfare state’s defenders.

 In the United States, very little wealth is transferred from those fortunate enough to live in abundance to those unfortunate enough to have little. For example, some of the chief recipients of transfer payments in the United States are the elderly — those who are most likely to have amassed significant wealth and comfort over the course of their working careers; and the source of the transfer payments is largely the young — those who are just starting out on their careers and have little income or wealth to their names.

I'd take issue with that specific example but the point he makes is otherwise valid. There is a great deal of 'churn' from the haves to the have-nots whose degree of economic separation isn't great. Which only serves to create power and control for bureaucrats.

Tracking the life-cycle of the welfare state

Thanks to Steve Wrathall on Whale Oil who drew my attention to this illustration:

If you think this is only a contemporary observation, past welfare states (eg legislated parish-collected compulsory tithing) exhibit the same life cycle.

"Beyond Beveridge"

New work from Peter Saunders who provided advice to the Welfare Working Group:

A new Civitas book proposes a sweeping overhaul of the benefits system which would see National Insurance abolished and replaced with a system of personal welfare accounts that would put the contributory principle back at the heart of social security. The accounts could be used for saving, insurance and even loans - helping people spread the costs of unemployment, parental leave, higher education and old age across their lifetime.

Of course people would be compelled to contribute to these accounts which finds disfavour with libertarians.

My position has always been I'd rather be compelled to provide for myself than compelled to provide for someone else.

Beyond Beveridge can be found here. No, I haven't read it yet. And at 179 pages I probably won't.

But here's the plan for people interested in how we get there from here (given NZ's social security set up is similar). It sounds Roger Douglasish in the detail:

1. Wind up the National Insurance system:

The employee 12 per cent contribution should be added to

the basic income tax rate making a new basic rate of 32 per

cent (with appropriate adjustments for older workers, the

self-employed and people receiving income from savings

and pensions). The higher tax rate should rise to 42 per

cent to take account of the two per cent NIC levied on

earnings above the upper earnings limit. The 13.8 per cent

employers’ NICs should become a Payroll Tax.

 

2. Establish entitlement to the new state pension through

residency

Scrapping NICs means new eligibility rules are needed for

the state pension. Eligibility should depend on 10+ years

of residency in this country. Pension Credit should be

abolished.

3. Phase in a state pension means-test for new retirees

Over the next 40 years, if NICs are abolished now, the

contributory component of people’s state pensions will

gradually get smaller, and the taxpayer-funded component

will get larger, until eventually the whole of every state

pension claim will be funded out of tax revenues. The tax-

funded component of state pensions should be means-

tested. 

 

4. Freeze current National Insurance entitlements and recognise

them as government debt

Entitlements based on contributions up to the time National

Insurance is scrapped should be honoured by freezing

people’s NIC records, indexing their existing entitlement

to take account of inflation, and paying this amount as a

weekly or monthly pension from when they retire. The

future cost of these payments (currently estimated at £3.8

trillion) should be explicitly acknowledged as part of total

public sector borrowing. 

 

5: Make membership of workplace pension schemes compulsory

The right of workers to opt out of workplace pensions

should be ended. With a means-tested state pension, saving

in private retirement accounts has to be made compulsory

to minimise moral hazard. 

 

6. Boost personal retirement savings accounts

Minimum contributions into the new workplace pensions

schemes add up to 11 per cent of salary (combining the

employee’s and employer’s contribution, and adding the

value of government tax relief). This is too low to guarantee

self-reliance in retirement. Contributions should be boosted

by reducing the government’s tax-take from employees and

employers. In particular, savings accruing from means-

testing the state pension should be used to reduce the employer Payroll Tax from 13.8 per cent to 12 per cent (switching the 1.8 per cent reduction into an enhanced

employer contribution to workplace pensions), and the basic

rate of income tax for employees from 32 per cent to 30 per

cent (switching the 2 per cent reduction into an enhanced

employee contribution to the workplace pension). This

would take the minimum total contribution into workplace

pensions to almost 15 per cent. Proceeds from privatisation

of Royal Mail and the state-owned bank assets should also

be used to boost workers’ pension accounts. 

 

7. Gradually extend the permitted uses of workplace pension

funds to develop them into personal welfare accounts

Contributory unemployment and sickness benefits should

be scrapped two years after NICs are ended (all claimants

would then get the non-contributory Universal Credit).

At the same time, people should be allowed to use their

personal welfare accounts (or borrow against them) to

provide a benefits-level income for the first 6 months out

of work, during which time there should be no conditions

applied to them. Existing and future student loans should

be integrated into personal welfare accounts and, over

time, accounts should be further extended to cover periods

of parental leave to care for children and basic insurance

against old-age care costs. 

 

8. Apply activity conditions to receipt of working-age benefits

Unconditional support for people who cannot be expected

to work (severely disabled people and single parents with

infant children under one year) should continue, but for

those who are capable of working full- or part-time, and

who cannot support themselves from their own personal

welfare accounts, fairness requires that appropriate work-

based activity conditions should be attached to receipt of

state benefits. No activity conditions should be attached

to jobless people drawing on their own personal welfare

accounts

CPAG make me choke

I am "stunned" by the audacity of the Child Poverty Action Group in their comments about the error in CYF data collection and reporting.

Child Poverty Action Group researcher Donna Wynd said she was "stunned" to learn of the massive under-reporting.

Wynd has recently  (inadvertently?) been involved in her own case of massive under-reporting.

In their latest analysis of CYF abuse data, the percentage of children with a substantiated finding of abuse living in each site office area was under calculated by 10 times.

Originally their report stated, '...the proportion of 0-17 year olds who were victims of abuse in Papakura was not 4.0% but 0.40 of 1%.' "

In fact the proportion was 4 percent (608 distinct cases in an estimated 0-17 population of 14,413). The flawed methodology was repeated for every CYF site office recorded.

Then they calculated the rate of benefit dependence using the total population rather than the relevant 18-64 population resulting in another "massive under-report".

Ministry chief executive Brendan Boyle said data from 2011 onwards was affected. "The initial review of data shows a margin of error mainly around 2 to 3 per cent, up to 8 per cent."
Donna Wynd of Child Poverty Action said: "All they're doing is keeping a tally. How you can make such a simple error?"

Goodness Donna. So much charity.

Finally, even the Herald on Sunday account is ironically a "massive under-report",

Child, Youth and Family is to reveal this week the true extent of abuse, after finding it has been under-reporting notifications by as much as 8 per cent. The number in the past year is believed to be between 1,000 and 4,000 more than the 49,398 reported.

From memory (the data is currently off-line) there were 121,000 notifications in the last year available. 49,398 will refer to those requiring follow-up I imagine. The actual number of substantiated findings in 2011/12 was 21,526.

Three 'yes' votes

Three 'yes' votes just about to go in the post.

As I emailed Leighton Smith yesterday, in response to people unsure whether they should participate in this fiasco,

If there is the remotest chance of wiping the smirk off Russel Norman's face, I'm taking it.

Persuading people to work

The Minister of social Development has taken the unusual step of spelling out how much benefits pay versus income from work. She's probably chosen South Auckland because that's where the numbers of welfare-dependent sole parents are highest :

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.
“If that sole parent works just 15 hours while receiving benefit, they would be $107 better off, taking home $750 a week.”
“If they are able to go off benefit and by working just 20 hours a week on a minimum wage, they would be $171 better off each week at $814.”
Going off benefit and working 40 hours a week on a minimum wage, that same sole parent would be $190 better off at $833 a week with the Family Tax Credit, Accommodation Supplement and In-Work tax credit.
“I get how hard it can be to make the move from welfare to work, but it makes such a difference to your state of mind, not to mention financially.”
Lisa, a sole parent in West Auckland wanted to work and earn her own money and found a part time job with 20 hours work a week.
Her work focused case manager did a Better Off Assessment and Lisa was able to see how much better off she’d be doing 30 hours a week, without a benefit but picking up the In-Work tax Credit.

The act of issuing the release tells me that the financial incentive to work is still not enough. People do their own sums and figure out it's easier not to work. But the release also angers me. People should be getting off benefits because they should be supporting themselves. If they are capable, it's wrong to live off someone else.They shouldn't need to be plied with incentives.

While the politician in me accepts beneficiaries need to be financially incentivised to work, the philosophical me finds the idea quite repugnant.

(And it's somewhat ironic to read the Minister pushing what was Labour policy in 2005. It highlights how National has moved to the left in the area of economic redistribution policy. This pushes Labour/Green further left. Which means that if we get a change of government next year, in the welfare area anyway, the new one will be worse then the Clark/Cullen administration.)

Bribery for breastfeeding?

This story was sent to me by a reader:

New mothers are to be offered up to £200 in shopping vouchers to encourage them to breastfeed their babies.

The pilot scheme is being targeted at deprived areas of South Yorkshire and Derbyshire and funded through a collaboration between government and the medical research sector.

If successful, a nationwide pilot could be rolled out in England next year...The team behind the project said breastfeeding was a cause of health inequalities, pointing to research that showed it helped prevent health problems such as upset stomachs and chest infections as well as leading to better educational attainment.

Hold on a minute. Why aren't leftists creating a hue and cry about  bottle fed babies being further deprived by this 'discrimination'?

Can righting health inequalities justify creating financial inequalities?

And really, what (able to) mother needs vouchers to persuade her to breastfeed her child?

Is  bribery the new cultural currency? It started far more subtly (and happily not widely recognised as such) with social security decades ago. Today welfare has morphed into 'show me the money' for no more than fulfilling natural functions.

Teenage birth statistics - misleading description from govt

According to Paula Bennett,

We have seen teen birth numbers fall for the last three years – despite rising previously. And the birth rate for teens is at its lowest since 1962.

This says to me that in 1962 the teenage birth rate was pretty much the same as it is today. That's incorrect. In 1962 it was 54 (per 1,000 15-19 year-olds). Today it is 25.

What the PR should have said was that the rate is the lowest in the period for which data is available ie since 1962.

Otherwise it's timely for Bennett to point out all of the practical stuff she has implemented. And when she says she "is passionate"  about helping teenage parents, I believe her.

"A snowflakes chance"

Always interested in phraseology and idiom I was unfamiliar with David Cunliffe's choice to describe the likelihood of John Tamihere becoming a Labour candidate,

"I wouldn't be in a hurry to sign him up and I'd say he's got a snowflake's chance of becoming a Labour candidate."

A snowflake's chance? Where?

It's a snowflake's chance in hell. I wonder why he didn't use the whole phrase? It might conjure up images of just how hellish a place the Labour Party caucus might be. For Tamihere anyway.

But wait. There's another better known phrase which compares the likelihood of something happening to the likelihood of hell freezing over.  Yet the Eagles famously said this about their bitter breakup in 1980 and the chances of reforming. Of course they eventually did, leading to the sublime "Hell Freezes Over" album and tour.

So perhaps the better expression regarding the possibility of John Tamihere rejoining Labour as a candidate is 'never say never'.

(Another saying that caught my attention recently was 'busted fish' used by Rodney Hide on a Radio Live panel to describe Len Brown. It later appeared in print as 'busted flush'. Both are accurate but I like the first much more.The imagery is much stronger.)

Compulsory pregnancy checks?

The NZ Herald reports:

Up to 90 per cent of pregnant women will have to get an antenatal check within 10 weeks if the Government proceeds with bold recommendations made in a major inquiry into children's health and child abuse.

And how does that requirement get enforced? What happens if they don't? Some women actively avoid confirming a pregnancy in order to stave off lifestyle changes.

 In parts of Auckland, the proportion of women seeing a doctor early in their pregnancy was as low as 16 per cent - a trend described as "Third World" by the inquiry's authors.

Which parts of Auckland would they be? Funny how that's not detailed.

Bold changes were also proposed to reduce the high rate of foetal alcohol spectrum disorder, including warning labels on all alcohol products and consideration of higher tax excises.

Oh surprise, surprise. Whack up the price of alcohol for responsible drinkers because morons wilfully ignore their pregnancy and continue to binge.

I've said it before and I'll say it again. You can't make people more responsible by removing their responsibilities.

More evidence of police intransigence

Notice that the victim of violence in this case, run over repeatedly by his partner, is a man.

 Waikato police district on-call manager Acting Detective Inspector Ross McKay confirmed the man, who is in Waikato Hospital with serious injuries, and the woman were in a relationship. ''Sadly, just seven days out from White Ribbon Week, today's incident also highlights the dangers associated with domestic violence and police urge anyone who feels unsafe in their home situation to seek help,'' he said.

Doesn't the Inspector understand that the White Ribbon campaign is specifically about domestic violence perpetrated by men?

 White Ribbon is an international movement that condemns men’s violence towards women.

Dear me. Is this another indicator that the police have the 'wrong' attitude? That by dragging White Ribbon Week into this they have disrespected the holy grail of female victimhood?

10 DPB facts for Kerre McIvor

The Herald on Sunday features a sappy column from Kerre McIvor about how glad she is we have the DPB/Sole Parent Support.

Over time, the DPB has evolved - it's now the sole parent benefit - and critics of the benefit may feel their concerns were justified. There has been an increase in the number of single mothers; it is easier for men to walk away from their obligations; some people take the benefit rather than find work. But I believe that to be a very small minority.

In response, here are ten DPB facts:

1/ One in five children will be on it by the end of their birth year

2/ At April 2012 there were 179,204 children dependent on the DPB

3/ Sole parents spend an average 15.8 years on benefit

4/ Going back just ten years, researchers found at least a third of sole parents had started on welfare as teenagers

5/ 46 percent of sole parent support recipients are Maori (4 out of 5 Maori children are born outside of marriage.)

6/ 83 percent of all children with a substantiated finding of abuse had appeared in the benefit system before age two

7/ 48 percent of sole parents on the benefit had no educational qualifications; 44% had school qualifications only (2005)

8/ 6 out of 10 were in debt to MSD

9/ Sole parents and their children are more likely to have mental health problems

10/ Of all children turning 15 in 2008, one in five had spent seven or more of their first 14 years on a benefit - usually the DPB



McIvor finishes her column with this:

 I'm grateful to live in a country where there's a safety net for vulnerable children - because after all, that's who the DPB really benefits.

Recent painting

Updating my artist blog so cross-posting.

Just used this painting in an ad going into the new Petone Chronicle being produced out of Eastbourne. It's an oil painted on canvas primed with burnt sienna to create a warm glow feeling which is how I feel about dogs.

DPB birthday?

Stuff reports today on the 40th anniversary of the DPB coming into being.

The DPB turns 40 today, but beneficiary advocates say it's no cause for celebration.

Except the DPB can't turn forty today because it no longer exists. This is like celebrating the birthday of someone who is dead.

 Before the domestic purposes benefit was introduced by Norman Kirk's Labour Government on November 14, 1973, only widowed solo mothers received income support.

Wrong again. A National government introduced the DPB emergency benefit in 1968 and prior to that single mothers could access emergency benefits but there was no legislated entitlement.

Wellington City Mission chief executive Michelle Branney (said) it was increasingly hard to get off the DPB, with the financial slowdown meaning fewer available jobs, and employers being less willing to give solo parents the flexibility needed to work around childcare commitments, she said.

Yet the employment rate for sole mothers has steadily increased.

 The cost of living had since "gone ballistic", he said. He remembered paying $10-$20 a week in rent, which the Reserve Bank's inflation calculator puts at $43-$86 in today's money.

Yes, I can remember paying $22 a week for a one bedroom flat in Wellington in the late seventies. But accommodation supplements and income related rents are far more generous now.

Conservative Party chief executive Christine Rankin, a former families commissioner and Work and Income boss, was briefly on the DPB in 1978 in Auckland, while caring for her two preschool-aged sons.
"It was really tough. You have to be very skilled in terms of how you manage your money."
After about two months, she got a job that paid only slightly more than her benefit, but it set her up for a career, she said.
She did not believe it was any harder now than then to survive on the DPB or its successors. "We didn't have very much, and life was a real challenge then."

There's a surprise. I didn't know that Christine Rankin was Conservative Party CE. That makes them a good fit for National in the welfare reform arena.

On welfare due to drug or alcohol addiction - the good news

Stuff has reported on the number of people on benefits for drug or alcohol addiction

 More than 5000 people are collecting benefits because drug and alcohol addiction is preventing them from working.

5,349 to be specific.

Last time I asked the question, June 2011, there were 5,855.

That's an 8.6% decrease.

However,

In 2009, 1181 people had spent four to 10 years collecting the benefit, and 291 people had been doing so for more than 10 years.
This year, 1394 people had spent four to 10 years on the benefit, and 485 had been on it for 10 years or more.

This would indicate that the hardcore remain but fewer people are being admitted onto a benefit for addiction reasons.

Labour's social development spokeswoman Sue Moroney said the figures showed the Government's reforms were not working.
"In fact, they've made things worse," she said.
"The number of Kiwis consigned to long-term unemployment has increased by more than 4000 people since the so-called reforms were introduced in July."

I'm not sure how overall long-term unemployment relates to this specific story or where these figures are sourced from.

In fact, the number of long term Jobseekers (dependent one year or more) reduced by 8 percent in the year to September 2013.

Labour has no grounds to complain anyway.

Here's a quote from a press release from 2009,

  Welfare commentator Lindsay Mitchell said that in June 2002 3,202 people relied on one of these benefits because of substance abuse. "Information just released to me from the Ministry of Social Development shows that number has risen to 5,838."

Jackson and Tamihere gone for now

The show is over for the rest of the year.

I guess that's the market. Their detractors spoke and, in turn, the advertisers spoke. But it's still a disturbing example of the repercussions of thinking the 'wrong stuff' out loud.

Living wage promises little to the poorest

A reader has kindly sent me a copy of the Treasury report which analyses the proposed living wage.

Below is a table from it showing how much more the living wage will provide to various earners. The red section however will benefit the government, not the earner.

Take the first row. It is well known that sole parents are proportionately the poorest families in NZ. If a sole parent with two children (in a 3 bedroom home paying $380 in rent)  moves from $15 an hour to $18.40 he or she will only be better off by around $24 because of losses in accommodation supplement and other tax credits.

The report goes on to comment on the research that developed the $18.40 living wage:

    Treasury questions whether the methodology used to arrive at $18.40 is robust, for the following reasons (A more detailed explanation is provided in Appendix 3):

·                The research is based on a family composition of two adults and two children.  The research acknowledges that while it is possible in principle to identify different wage levels for different numbers of dependants, this is not done because it would make the Living Wage estimate unhelpful as a communication tool.

·                Families comprising two adults and two children represent only 6% of families earning below the Living Wage. Those who have the highest deprivation level (i.e. absolute, not relative) are sole parents and this analysis generally does not apply to them.

Treasury can't call the Family Centre Social Policy Unit research nonsense, but I can. Why base a calculation on an atypical low-income earner?

The report goes on:

" The research is inconsistent with Household Economic Survey which finds that at least 70% of people in even the lowest income band say that their current income is either just enough or better."

And here are two more noteworthy tables showing that 1/ internationally NZ has a relatively high minimum wage, and 2/ NZ has a low proportion of its population earning low incomes. 

Going back to the first graph, there is a question nagging at me. Could a strictly voluntary living wage be a good thing if it reduces the burden on the unrelated party (taxpayers) and shifts it to the party who gains the benefit of the labour paid for? If an employer can pay more (acknowledging all the 'ifs' that entails) isn't that preferable to taxpayer subsidies?




The answer is yes. Problem is though, most of the people who would benefit from the living wage aren't currently subsidised (my inference from other data provided). So the living wage does not provide an efficient solution to reducing working welfare.

On Guy Fawke's night explosions

Last night's thunderous Wellington display,  combined with a neurotic, extremely anxious dog with an existing tummy upset manifesting in diarrhoea,  does not make for a fun night...