ACT Conference 2016

I've agreed to speak at the next ACT Party conference three weeks today. I'll cover what's been happening in welfare - the good and the bad - and  what further reform could look like.

Here's a list of speakers, all of whom I am keen to hear.

Further details

Growth in psych conditions in the welfare system

Here's a tidy illustration of a phenomenon I occasionally blog about; the growing incidence of benefit dependence due to psychiatric or psychological conditions.

The blue line is the old sickness benefit; the green line, the invalid benefit.

The total number at June 2015 was 53,611.

At March 1999 the total was 24,194.

A 121% increase compared to a total population increase of around 21%.

More sickness? More diagnosis? Whatever the driver, it's actually a problem for the Ministry of Health to address yet its MSD that bears the budgetary implications.

The sky is falling ... not

Just reflecting on the back of yesterday's post, it must cause just a little bit of discomfit for politicians when they get it so wrong. No? I guess that if it did, they wouldn't be in the game.

November 2015

"New Zealand’s unemployment rate is now worse than Australia’s – an economy described as ‘fast becoming a basket case’, Labour Finance spokesperson Grant Robertson says.

“Last night Australia’s new figures put unemployment at 5.9 per cent. New Zealand’s is 6 per cent.

“Australia’s economy has been going through extremely difficult times of late. It has been a rapid downturn for a once-thriving economy.

“New Zealand has experienced a sustained period of economic growth that is now falling away. We should be doing much better than Australia. There is no way our unemployment rate should be higher than the across the Tasman.

“John Key and Bill English always blame overseas economic factors and turbulent times. But the GFC is over and other countries are doing much better. Britain, Australia and the US all have unemployment levels below 6 per cent and falling. New Zealand’s is forecast to top 7 per cent.share on twitter

“The stark truth is National hasn’t been able to turn growth into jobs. Now the economy is going downhill opportunities will be even harder to come by, even for those with jobs.

“This isn’t the Kiwi dream. It’s getting harder and harder to get into work or find a better job. Behind these figures are real people with families to support and ambitions to fulfil.

“National is failing them,” Grant Robertson said.

And just for good measure here he is talking to the Labour Party conference:


"151,000 New Zealanders are out of work, and the rate of unemployment is six per cent, with projections that it will head towards seven per cent next year. 151,000 people.  Think about that.  It is nearly twice the population of this city out of work.  It is nearly 50,000 more than when National took office.  In Gisborne one in every ten people is out of work. It is clear that John Key and Bill English see levels of unemployment like this as collateral damage in their blinkered economic vision."

Good fall in unemployment rate

Statistics NZ is reporting the unemployment rate has dropped to 5.3%.

It was 6 percent in the September 2015 quarter.

This is the lowest unemployment rate since March 2009.

A quick round-up from tables:


Female unemployment dropped more than male

Big fall for the 20-24 age group but small rise for 15-19

Drops for all ethnicities especially Pacific falling from 13.1 to 9.7%

Big fall in Northland from 8.2 to 6.2%

Only region showing an increase - 4.2 to 4.5% - is Otago

Ag, forestry and fishing recorded biggest employment increase in terms of numbers, followed very closely by construction

Internationally NZ moves from ranking 15th to 10th= in OECD


Bad news for Labour.

Unemployment has been considered one of National's few points of vulnerability.

Inter generational benefit receipt

These pie graphs show the percentage of beneficiaries aged 16-17 who had a parent(s) who were also on welfare.

For instance 56% of Maori beneficiaries aged 16-17 had been reliant on their parent's benefit for more than 80 percent of their teenage years.

For the large majority of all clients they had a parent  who had spent time receiving welfare.

Conversely only 7% had no match to parental receipt.

I suppose the left would call this the transmission of disadvantage.  It is also the transmission of values and expectations.

(Caution: I expect that in among this group will be young people with physical and intellectual disabilities whose parent has been receiving a benefit to provide care for them. These young people make up 23% of the total.)

Source

Ex Aussie prisoners emulate NZ criminals

Front page headline in DomPost reads,

Third of crims sent home now reoffending

30 percent to be precise. That's entirely predictable.

Pretty much on the rate for those released from NZ prisons. Australian prisons do no better at rehabilitation it would seem.

Additionally, the police say they expect the re-offending rates to "soar".

That, unfortunately, is what recidivism rates do.

It's not until the last sentence of the report that we learn,

"[Amy] Adams said the latest police figures were in line with New Zealand prisoner's general offending rates."

I guess it is easier to get people outraged about the ex-Aussies than our homegrown variety.

(If you wonder why I not infrequently blog about the prison population it's because of the strong correlation with welfare. As described in the latest Taylor Fry report:

"Offenders who have been convicted of a crime and served some type of criminal sentence are heavily over-represented in the welfare population.
· About a quarter of the 2014/15 beneficiary population have had a criminal conviction in their past; for males it is 4 in 10.
One in ten welfare clients has been to prison and one in ten has been convicted of a violence-related crime.
· There is a strong statistical relationship between clients who have been convicted and served a
sentence and long-term benefit receipt.")

Stark example of forced minimum wage hikes

The closure of many Wal-mart stores (with the re-establishment of new ones simultaneously) seems to provide very practical evidence of what happens when minimum wages are legislated too high.

Where the minimum wage was raised to $12.55 in Oakland, California the store closed. In the nearby city of San Leandro the minimum wage is $10 and the stores stayed open.

The difference between these three locations is the Oakland Wal-Mart has over a 25 percent difference in labor costs for entry-level employees than the San Leandro locations, says Mark Perry, an American Enterprise Institute scholar and professor of economics and finance at the University of Michigan’s Flint campus.
“Given the reality that Wal-Mart operates on razor-thin profit margins (only 2.8 percent last quarter), a 25 percent difference in labor costs for entry-level workers can be the difference between a store that turns a profit and a store that barely breaks even, or loses money,” Perry wrote.

A research fellow from the Heritage Foundation observes:

 “The true minimum wage is $0.00 an hour, Companies do not have to hire workers, and they will not pay them more than the value they create.”

That's the reality of the private sector.

Hence the movement for higher minimum or  living wages has now focused on the public sector where  economic facts take a back seat to forced wealth redistribution ideology.

Why is NZ more corrupt?

Radio NZ is reporting:

New Zealand has slipped again, to fourth, in the latest anti-corruption global rankings.

NZ was 1st in 2012 and 2013; 2nd 2014 and now fourth. But no explanation of why is provided.

Maybe NZ stayed the same and Denmark, Sweden and Finland improved?

Here's the site that rates the countries for corruption.

NZ's conglomerate score suffers from a lower ranking in "Rule of Law" measured by another organisation. Here NZ is only 6th of 68 countries.

Additionally, a poorer score from "Sustainable Government Indicators", arising largely from a low ranking on environmental policy it would appear, has added to NZ's drop.

Water management and use and greenhouse-gas emissions have been a focus of policies in recent years. Deforestation has been addressed with an effective permit system. Critics say the government has failed to resist agricultural-industry pressure, but all recent governments have been active in protecting biodiversity.
While New Zealand withdrew from its original commitments under the Kyoto protocol, it is working toward its own independent emissions-reduction goal.

There you go. That's what has contributed to us becoming more corrupt.

Work vs Benefit - Time for a reality check

The NZ Herald asked for a brief op-ed (200 words) responding to the suggestion that going off welfare isn't providing better incomes. I abridged and added to yesterday's post:

A Blenheim single mother of three finds she is only $34 better off working. She says, "When you weigh it up, is it worth going to work? The Government is trying to get everyone off the benefit but there is no incentive to work."

The incentive lies in being self-supporting, in joining the workforce that creates the productivity and taxes to pay for, among other things, benefits for those who genuinely can't support themselves.

"There is that stigma attached to being on the benefit and many believe that you are just a bludger," she adds. Only if you can work and refuse to.

In any case, she goes on to answer her own question: "I love my job. It makes me feel rewarded."

Time for a reality check. Because of the accommodation supplement and family tax credits, the gap between benefit income and income from work is very small (and will get smaller from April this year when parents with dependent children get a $25 benefit rise).

Moving into work may provide little financial gain initially. But the individual's sense of well-being and future prospects are improved.

In this instance the ex-beneficiary has already identified that. Good for her.

Here is the opposing view from a beneficiary advocate :

There is a large percentage of my clients who approach our service and ask us to look at the viability of returning to work -- single parents who are committed to getting off benefit and excited about the prospect of returning to work.

When we break down the in-work tax credit, the childcare subsidy, accommodation supplement and temporary additional support, it is not uncommon that the working single parent ends up with under $50 a week more in their hand.

We then look at transport, parking, appropriate clothing etc. for work. Work and Income will assist with a percentage of this cost, however, not the total cost, which then gets taken off the $50.

Then, school holiday programmes need to be paid for along with childcare, which is subsidised, and the $50 in hand is reduced further.

Given this, most of our clients still opt to return to paid work because we can see the benefits of work experience which may lead to better work opportunities. However, this does not provide a living wage and the extra expense of working does not often make this a sound financial choice.

What can be done? The in-work tax credit for low-income earners needs to be increased, childcare needs to be free for low-income earners, including after-school care and holiday programmes, the living wage needs to be adopted by employers and the Government.

The benefit is not a lifestyle choice, but when the income paid to working families is equivalent, we need to have a close look at incomes, rather than increasing subsidies.

I notice the second op-ed well exceeds 200 words.There is something symbolic about that but I can't quite put my finger on what it is.

"...no incentive to work"

A Blenheim single mother of three has found she is only $34 better off working.

"When you weigh it up, is it worth going to work? The Government is trying to get everyone off the benefit but there is no incentive to work."

This line bugs me. The incentive to work lies in being self-supporting, in joining the community that provides the productivity and taxes to run the benefit system. In being a giver instead of a taker - especially after having been a taker for an unspecified time.

But then she hits on the real incentive to work herself:

"I love my job. It makes me feel rewarded."

So what is the point of this piece?

It's headed up "Blenheim mother of three struggling to survive after coming off the benefit."

Her main problem is that 57% of her income is going on a mortgage. Lucky her. She 'owns' her own home. Most people are moaning because they can't get on the first rung of the property ladder. But perhaps she could reduce the repayments?

"We struggle but we survive.
In Marlborough the gap between the low income and the high income is horrendous.
The rich get richer and the poor get poorer."

The journalist tries to give this some supporting data.

 According to the 2013 census data the median income in Marlborough was $27,900, compared with $28,500 for all of New Zealand.
Nearly 23 per cent of Marlburians aged 15 years and over had an annual income of more than $50,000, while 36 per cent earned $20,000 or less.

Proving what? In among the 36 percent are dependent children, students and a disproportionate number of elderly. It's Marlborough. But a comparison to earlier census would be needed to prove a growing gap.

And the struggling mother of three is actually earning over the median income. (It's a possibility she is intentionally limiting her hours to keep her student loan under the threshold for repayment.)

Ministry of Social Development figures showed those on main benefits in Marlborough had gone up slightly from 2237 in December 2014 to 2265 in December 2015.

But down 14% from 2,638 in December 2011. That's inconvenient.

I am not without sympathy for the family. It is tough on kids having very little disposable income. But they live in a great part of the country, they eat well, have housing security and most importantly, prospects. That doesn't happen when you stay on a benefit.

"There is that stigma attached to being on the benefit and many believe that you are just a bludger," she said

Only if you can work and won't.

As I said I don't get why this is newsworthy. It's just more resentment fuel for the inequality insurgents.

What has National done for Maori?

With Ratana celebrations looming some are saying the church's loyalty to Labour is still strong and National needs to show what it has done for Maori.

All govt should be 'doing' for people is creating economic conditions and freedoms that allow them to 'do' for themselves. Nevertheless, that doesn't preclude looking at social indicators under National. I'll aim for 2002 to 2014. The first half under Labour - the second under National.

Benefit  Dependency

Bad start

Prison Population

Better

Smoking rate

Continuing to decline

Teenage birthrate

Astonishing improvement

Abortion rate

Also positive

Life expectancy

No cessation of steady rise between 2006 and 2013.

Suicide



Very mixed.

Maori aged 15-24 Not in Employment, Education or Training

This data is is only available from 2008 but the trend is at least positive. In fact a lot of the Infoshare data now appears to only date back 7 or 8 years. Frustrating.

There are far more social indicators but the data isn't particularly easy to access and graph quickly.

Based on the above snapshot there isn't a lot that Ratana followers could gripe about that they wouldn't have griped about under Labour.

Carmel Sepuloni is woefully weak in opposition

National is publicising a drop in benefit numbers over 2015.

But Labour MP, Carmel Sepuloni is bitching about National not knowing where people who leave a benefit go:

 Carmel Sepuloni said the government was only telling part of the story by ignoring how many people had actually gone onto work.
"The Minister is not being transparent about the numbers of people coming off he benefit, particularly the number of people going into jobs because they're not keeping proper track of how many people are going into work," she said...
"There's some information to show a few of them go off because of study, marital status or death. But there's a much higher proportion where the government has no information about where they're going on to."

Here's the most recent publicly available data under National:

Shall we see what it looked like under Labour?

Under National, proportionately more people are leaving an unemployment benefit for work. And more is known, or shown or made public - take your pick -  about the other reasons for leaving welfare.

Note: The National numbers are quarterly; the Labour numbers are annual.

News more important than truth

The quote I referred to earlier this week sounded like something Margaret Thatcher would say but was actually contained in a response from MSD to media regarding a news item that claimed there were no benefits for 16-17 year-olds and that was why teenagers were living in the bush.

That's an utter nonsense and the media shouldn't just repeat assertions without establishing their veracity. But news is now more important than truth.

Any youth or young parent can walk into Work and Income and begin a process of assistance if they can't live at home and have no other means of support. No, they won't simply get cash thrown at them as per the old Independent Youth Benefit. They will be assigned to a Youth Service Provider who will work out what they need to do in terms of training towards their future, parenting courses perhaps, enrolling any child with a GP, etc. The money they receive from Work and Income will be managed to ensure rent, board, power and other debts get paid. It's not a cushy number any more. But to say they have no option but live in the bush is wrong.

Hence the response from MSD which contained the quote I alluded to:


Assistance for Young People
14 January 2016.
Following enquiries regarding the assistance available to young people living rough in Auckland, MSD wants to assure the public that there is support for young people who find themselves in vulnerable situations.

Any young people with serious housing or other social services needs should get in touch with us as soon as possible. We would also encourage people in the community to alert us to groups that might need our help.

We’ll then get a good understanding of their individual needs so we can talk about the various types of support available, determine what will make a difference for them, and put plans in place to help.

There are benefits available to young people aged 16 or 17 who are unable to live at home. For this group the Youth Service provides wrap-around support. This includes mentoring, budget assistance, and help to continue school and training, so they can gain the skills to find a job and have an independent future.

In addition, if there is a care and protection concern, we’ll assess the young person’s needs and determine, along with other agencies, what needs to happen to support them.

Young people often want to make their own decisions about where they live and we work with them to make sure they’re in a safe and appropriate living situation. We don’t do this alone - a range of agencies and community organisations work together to support vulnerable young people. But at all times we must remember that State support cannot and does not replace the love and care of a supportive family. (My emphasis).

$1b is a big number

The Dompost has the biggest, boldest $1b on their front page I have ever seen. You couldn't cover it with a mobile phone. Not mine anyway.

The price of a free school education will soar to record heights this year.
Official figures show "voluntary donations" from parents and others will this year have collectively provided more than $1 billion to bankroll schools since 2000.
Commentators have described that as a watershed figure with some arguing New Zealand's "free education" system is broken. 

I just did some back-of-a-matchbox calculations.

Would it be reasonable to ask parents to pay say $96 a year towards their child's schooling? That's on average so obviously some would pay a lot less, possibly even nothing because the fee is voluntary.

There are 13 years across a child's education.(Year one to Year Thirteen).

So there are roughly 780,000 children in the school system (13 years x 60,000 in each age-band). Let's drop of the 4% that attend private schools which leaves 748,800.

That would amount to $72 million annually.

Over 14 years that would be just over $1b

Shock, horror.

$96 is $24 a term or $2.40 a school week.  It's just downright outrageous.

"... State support cannot and does not replace the love and care of a supportive family."

Who said this?

"... State support cannot and does not replace the love and care of a supportive family."

No doubt you will google it.

Surprised?

Doubling the unemployment benefit rate?

Grant Robertson is talking up the Danish 'Flexicurity' model intimating Labour policy in 2017 might look like something similar:

The Danish system has three parts. It has flexible rules for hiring and firing workers, to make it easier to cut staff in downturns and easier to hire new staff when an economy rebounds. It has a generous unemployment benefit of up to 90 per cent for low-paid workers. And it has an "active labour market" policy, which means unemployed are helped into work, given guidance or re-trained.
Mr Robertson said New Zealand already had a flexible labour market, but it needed to be balanced with greater security and income support.
"Obviously you can't take a model and replicate it from one country to another. It's the principles of it that we are looking at and how something similar could be put in place in New Zealand."

 The following graph is apparently based on data extracted from the OECD database. I am assuming it is accurate:

NZ has the most "flexible labour market" already.

But what would "a generous unemployment benefit of up to 90 per cent for low-paid workers" entail?

40 hours at minimum wage taxed at 20% = $472.  90% of that is $425.

The current Job Seeker benefit for a single person aged 25+ is $210.13. Of course that ignores any accommodation supplement but on the face of it Robertson is talking about doubling unemployment benefits.

That would mean other benefits would have to rise relative to the Job Seeker benefit. You couldn't have a single person getting a basic benefit higher than a sole parent with dependent children.

I'm actually for an unemployment benefit that pays more on the proviso that:

It is funded via employee/employer contributions and is time-limited.

I wonder if Labour would go for that?

I got breathalyzed at 1pm on Friday

I got breathalyzed at 1pm on Friday, January 15. The result was "no alcohol".

But a couple of things gave me pause for thought.

In the Lower Hutt  area, a very busy bridge has been temporarily closed for maintenance, and a major diversion is in place. This afforded the perfect place to launch a drink/drive operation. I said to my daughter after we passed, "There are 20 cops there, yes?" She agreed. Some are placed pre- and post testing area (presumably to prevent people u-turning last minute). There are 3 directly testing, with others milling behind, and others around the place any 'positives' are taken to. There were probably 4 police cars stationed alongside  other support vehicles in a large grassy roadside area.

Firstly, the traffic diversion was not working well. One intersection, unused to so much traffic, was backing up badly and begging for a set of lights or a points-man. I thought that would have been  useful job for the traffic police. But no.

Second, I've been thinking about Article 21 and 22 of the NZ Bill of Rights. Why am I and others being subjected to arbitrary detention by the agents of the state that we pay to keep us safe from crime? To monitor and deal with people who would actively abuse personal or property rights? Who would maim and kill and leave innocent people scarred for life?

Third, I am not convinced that the new lower alcohol limit is making any difference at the sharp end. But it has allowed for more tax extortion  and more criminalization.

Crime isn't low enough for me to be happy for  law and order resources to be used this way. I doubt it ever would be. The exercise smacks of picking low-hanging fruit to squeeze revenue from, and general persecution of other road users who aren't fully compliant with state requisites.

Safety appears somewhere  on the list of objectives but not at the top.

Returning the compliment

Today's DomPost reports that Australia is watching New Zealand's welfare reforms (p2). Their government is apparently looking to NZ "for inspiration."

We should return the compliment and look to Australia for inspiration also.

(It seems there are moves afoot to push it even higher.)

Quote of the Day

As relevant as ever:

It is the highest impertinence and presumption, therefore, in kings and ministers to pretend to watch over the economy of private people, and to restrain their expense.…They are themselves always, and without any exception, the greatest spendthrifts in society. Let them look well after their own expense, and they may safely trust private people with theirs.

– Adam Smith,
An Inquiry into the Nature and Causes of the Wealth of Nations [1776]

Hat tip FFF

Misery index low in US

This is a new concept to me. I suspect a NZ version may be quite similar. While our current unemployment rate is higher than the US (Sept - 6% vs 5.2%) our labour force participation rate is quite a bit higher. And both countries have low inflation which, according to Brookings, voters don't worry about like they used to.

Maybe people aren't that miserable. Not as miserable as New Zealand's opposition politicians would like them to be anyway.