Housing sudsidies thwart welfare reform

It was disappointing when Paula Bennett was moved from MSD to Housing. But below partially explains why. Housing reform is critical to the success of welfare reform. As critical as the availability of jobs.

The following information appears in an Aide Memoire: Meeting with Hon Bennett and Hon Heatley regarding financial support for Housing, 9 May, 2012

The relative generosity of HNZC housing can act as a disincentive for people to move into the private rental market – on average non-HNZC tenants receive around $100 less in housing subsidy than HNZC tenants. Around half of HNZC tenants have been in their house for more than 5 years.

It's much cheaper to live in a state house. A good part of the waiting list is probably made up of private renters who want to save money. Of course people stay in them.

But the problem doesn't end with state houses.

Financial assistance for housing may reduce geographic mobility and ability to take advantage of job opportunities - equivalent state housing in the high demand areas like Auckland may not be available and private rents may be unaffordable. In addition, housing affordability outcomes for non-HNZC tenants are better in remote rural areas, whilst those living in fast growing areas and cities are worse off.

Non-HNZC tenants are those receiving accommodation supplement to rent in the private sector (or board). MSD used to annually release data on who receive AS but ceased when the Statistical Report stopped. Here's the 2012 breakdown:

Most AS recipients also receive a benefit.

Getting a job often involves facing  extremely high EMTRS due to losing AS, and,
Affordable housing isn't where the jobs are.

While this reality remains many beneficiaries, particularly single parents, will continue to live in areas where there are few employment opportunities and their children grow up thinking living on a benefit is the norm. Exactly the mindset welfare reform seeks to break.

Elderly and the poverty line

This is a chart for the benefit of a commentor on the last post.

This shows that a majority of 65+ New Zealanders live below the median equivalised disposable household median income BHC (before housing costs) and a sizable chunk (29%) live below the 60% threshold or 'in poverty'( though their hardship is often alleviated by lower housing costs.)

Further from the Household Incomes Report:

Summary of findings regarding the sources of income for older New Zealanders

·         The great majority of older New Zealanders (aged 66+)  are very dependent on NZS and other government transfers for their income 

-     40% have virtually no other income source

-     the next 20% have on average around 80% of their income from NZS and other government transfers

-     this degree of dependence has not changed greatly in the last two decades

Only decile 5 households and above pay tax

Here's another useful graph (based on 2013 data)  from Treasury. While not news it's useful to see the numbers. The gross tax does not include excise on tobacco, alcohol and fuel but referring back to yesterday's table, that equates to an average of $788 in the lowest 4 deciles. Add it in and the statement remains true. The lowest 4 deciles (around 650,000 households) effectively pay no tax:

Interpretation Notes

Deciles are based on household equivalised disposable income minus  GST.

Income is equivalised using the Jensen 88 equivalisation scale

Disposable income is total income after (gross) tax and tax credits.

Gross income includes income from all sources including benefits and transfers but before taxes are removed.

Gross Tax includes personal income tax and GST (unless stated otherwise). It does not include excise or other taxes.

Net Tax is Gross Tax minus benefits (including NZ Super and Accommodation Supplement) and tax credits such as Working for Families

Decile 1 includes households with negative reported self-employment income and households living on savings 

GST is calculated based on household expenditure on goods and services that incur GST as reported in HES

Treasury releasing OIA request responses - all govt depts should follow suit

Announced yesterday:

The Treasury is trialling the publication of its responses to selected Official Information Act (OIA) requests.

Responses to selected OIA requests received by the Treasury are published here soon after the requestor has received their response from the Treasury. The reply letter from the Treasury to the requestor explains what information, if any, has been withheld under the OIA and under which grounds. The requestor's name and address have been removed.

This is a great idea. It is so good it should be compulsory for all departments.

Here is an example of a released request made in April 2015 for:

Any information or modelling regarding the burden of GST on households by income quintile; and • Any information or modelling regarding the burden of excise taxes on households by income quintile.

Interesting. The GST burden on the lowest decile is considerably higher (especially compared to the next two bands) than I'd have thought given their limited incomes. Their expenditure on tobacco must be a big factor. A breakdown between tobacco, alcohol and fuel duties would be even more interesting.

The richest decile pays 214% more in GST than the poorest, but only 55% more on tobacco, alcohol and fuel duties.

Many poverty scholars believe income is not the best way to measure it; that expenditure should also feature. David Green dedicated a lengthy section to this subject in "Poverty in New Zealand" writing

"It is widely known that the preferred measure of poverty throughout Europe is household expenditure not income. Initially it sounds odd that measures of expenditure and income would produce radically different results, but this has been the consistent finding of surveys conducted since the 1950s throughout Europe." Green finds that debt isn't the reason, but under-reporting of income is.

(My reflection) The lowest income decile may be significant players in the black market.

Green continues, "...in New Zealand, only 45.6% of households in the lowest income decile are also in the lowest expenditure decile, and that 10 percent of household's in NZ's lowest income decile are in the top three expenditure deciles," Quite believable based on the above table.

If poverty was measured by expenditure rather than income, the gaps would close up or even disappear. For instance the expenditure (before housing costs) of the third lowest income decile would make them the poorest.

Back to the point of the post. I wonder what the thinking is by Treasury. That by making request responses public they will generate fewer or more? Perhaps I should request any information relating to this decision:-)

Update: Eric Crampton has made further comments about the lowest decile incomes at his blog Offsetting Behaviour

Bob Jones makes my fantasy come half-true

When he had his notorious fracas with Air NZ I commented somewhere, might have been Whale Oil, that Sir Bob should buy his own private jet, and to rub salt into the wound, offer flights to other Air NZ passengers who'd prefer to fly hassle free. Well, he's done the first part.

Not much in the newspaper makes me feel happy these days but the photo of Bob's newly arrived Cessna Citation Mustang put a huge smile on my dial.

Imagine how lovely it would be to vent one's frustration in such a manner

Sir Bob Jones has taken delivery of his own jet, less than three months after being ejected from an Air New Zealand flight.

Jones' new Cessna Citation Mustang, which has an estimated price tag of between $2 million and $2.5million,  touched down in the capital last week, after a long-haul flight from the United States.

And it seems its arrival has come not a moment too soon.

ROBERT KITCHIN/ FAIRFAX NZ

Sir Bob Jones has bought himself a multimillion-dollar private jet, after being ejected from an Air NZ flight in May.

"I should have done this years ago," he wrote in his latest National Business Review column.

My suggestion for the first high profile passenger to poach - Sean Plunket, who regularly rants about queues and airport security on his radio show. And regularly flys between Wellington and Auckland.

Unfortunately the bureaucracy involved in operating his own 'airline' might just be too much for Bob. But he loves a scrap.

"The mindlessness of Donald Trump"

From Reason.com, an entertaining read this morning,

The Mindlessness of Donald Trump—and What It Reveals About the GOP

The candidate's lack of a traditional political agenda is key to his anti-political appeal.

"...the Trump crowd has thoroughly tired of conventional politics and conventional politicians. The draw of Trump’s candidacy is that he is so very obviously not bound by these conventions—that he is not a conventional politician, nor even really a politician at all. He doesn’t have policy ideas or governing plans to speak of? So what? Those are for politicians. Trump’s politics are a kind of anti-politics, and his lack of a traditional political agenda only adds to his anti-political appeal.... most of Trump’s supporters, rather like Trump himself, have put very little effort into imagining a Trump presidency, except to idly fantasize about all the ways that it would be different and awesome and better. He would be an exciting, deal-making, ass-kicker who would strike fear into the hearts of America’s enemies, and he would do this simply by virtue of being Donald Trump, in all his glorious, exciting Trumpiness.

What Trump offers is a fantasy of governance without negotiation, of economic success without policy detail, of a president who does not particularly feel the need to act presidential. It’s a fantasy of politics without politics, for people who just don’t want to think about it too much."

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Minister's suggestion "inflammatory and misleading"

Thank God for that. Somebody with credentials has set the record straight over Anne Tolley's labeling of a proposed study treating children as if they were "lab rats".

He is professor Tim Dare who produced some earlier ethical analysis on predictive modelling for MSD.

His column, published today in the DomPost is totally scathing of the minister and the political process.

A minister sees a briefing paper with a proposal to test a computer model designed to identify children at risk of maltreatment.  She reacts strongly.

"Not on my watch!" she writes in the margin, "these children are not lab-rats". The study is shelved.

The media obtain the briefing paper, complete with the marginalia, and publicise it.

The Opposition seize on the lab-rats cry and use it in the House against the Minister of Social Development and the ministry.

Should we feel relieved? Have we averted another unfortunate experiment? No.

The minister's reaction, and the media and Opposition response to it should make us feel uneasy.

The problem is not the shelving of the study – though that was a mistake too – rather it is the chilling effect of the knee-jerk and political response to an attempt to produce evidence for important social policy.

Science collided with politics, and politics won.

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My letter on the subject was also published on the opposite page. I had asked the DomPost to amend Cabinet paper to briefing paper shortly after submitting but it didn't happen.

"3 (wrong) attitudes towards ageing"

Here's an editorial from the Australian think tank, the Centre for Independent Studies. Not all of it fits into the NZ paradigm but it's useful in some respects:

3 (wrong) attitudes towards ageing

Our population is ageing. This will bring profound economic and fiscal challenges that will require significant changes in government spending. But it will also require us to change our attitudes towards ageing and the aged.

There are three specific attitudes that, if changed, would go far in combating the coming challenge.

Older workers are less valuable

A recent report found more than 50,000 people involuntarily retired in 2011 for job-related reasons. A 2015 survey showed a quarter of Australians over 50 reported experiencing age related discrimination, and one third of managers factored age into their decision making.

The government has responded by introducing incentive payments for hiring older Australians but government incentives aren't always effective in changing people's attitudes, only their behaviour.

It is in everyone's interest for older Australians to stay in the workforce longer. Someone aged 50 today could work for 20 more years, much longer than someone aged 25 is likely to stay in one job.

Retirees are poor, vulnerable and need protecting by government

The stereotypical image of a pensioner is someone struggling to get by in public housing who may occasionally have to eat pet food. However retirees are a very diverse cohort. Some are indeed struggling to get by, marginalised by high costs of living (especially rent) or health concerns.

But this is not all (or even most) pensioners. 75%-80% of pensioners own their home without a mortgage, while around 30% of single pensioners and 50% of couple pensioners have more than $900,000 in net worth.

It is condescending to think of older Australians as helpless. Just because someone has reached retirement age does not automatically mean they need government funding. If retirees can support themselves they should do so before asking for taxpayer help.

I've worked hard and saved, I deserve a pension

Perhaps one of the more pernicious myths in retirement income policy is that the pension is a reward for working hard and paying taxes or part of some grand intergenerational bargain.

It's not. The pension is a safety net for those who can't support themselves.

If taxpayers end up having to pay for your retirement anyway, they don't care if you were careful with your money while others blew theirs. The pension should not be a taxpayer-funded reward for looking after yourself.

Changing attitudes is every bit as important as fiscal reform in combating the challenges of an ageing population

  

Lies

This is why we have a mislead, resentment-fueled populace - or segment of. Lies.

From Paul Little in the HOS:

 ....as we have long known the tax burden falls disproportionately on those of limited means, who are also likelier to be poor, as the gap between richest and poorest widens, partly due to measures such as the TPP.

Many poor and even middle income people effectively pay no tax.

and the gap between rich and poor is not widening

DomPost beat-up

My previous post discussed the DomPost coverage of a paper they appear to have acquired under the OIA. Yesterday the editor pushed on with the "lab rat" line, maintaining

This blur of bureaucratic words does not seem to include a denial that the officials proposed to watch the at-risk kids and not intervene even if they were abused. It is hard to believe that any official would ever contemplate such a thing.

Here is the excerpt the DomPost released.

There was nothing in statement 40 to indicate no intervention was proposed. So I requested the paper. I needn't have bothered. MSD has just released on their website.

Here is a prior paragraph.

The predictive modelling (PM) score (calculated using various factors like older siblings having had contact with CYF) would identify a small group whose outcomes and service contacts would be observed.  How far from "not intervene even if they were abused" is that?

Additionally

The vulnerable group would be experiencing far greater oversight than under the usual scheme of things.

And further

That is what the Minister is outraged by. A child could be officially 'flagged' as at high-risk of maltreatment but nothing proactive is done about it. At least not during the study period.

Isn't that pretty much what happens now? Children are unofficially identified or recognised by health  maternity nurses, Plunket, district nurses, family, GPs as high risk but there is no referral or report to CYF until something actually happens.

The DomPost take on this issue is a disgraceful beat-up. Reminder of what they wrote Thursday

documents show officials had sought ethical approval for one study which involved risk-rating a group of newborns and not intervening in high-risk cases, to check whether their predictions came true.

And reminder of what Tolley now plans

Tolley also appeared to signal a major backdown on a proposed population-wide application of the model, saying it was "unlikely" to be used on children that had not already been notified to Child Youth and Family (CYF).


There is no need for a population-wide application. But the plan was to identify only those who were at the greatest risk. Tolley won't agree to progressing this (despite agreement from other groups involved in the whole exercise for much longer).

"Children not lab rats"

The following report intrigues me.

 MSD Minister, Anne Tolley is outraged by a study proposal which she describes treating children as "lab rats".

A plan to treat vulnerable newborns as "lab rats" by sitting back for two years to see if they were abused has been blocked by the Government.
The Ministry of Social Development proposed to include 60,000 children born this year in an "observational study" to test the accuracy of its new predictive risk modelling tool.

It has been described as a study that does not intervene.

There isn't enough information provided from the official papers to confirm that.

Many 'vulnerable' children - if not a majority -  suffer adverse outcomes despite intervention. CYF can be going about its usual business alongside a study that seeks to discover whether a pre-identified group meet predictions.

But if it is correct, that MSD sought a period of no intervention for all children born in 2015... well that's ridiculous. So ridiculous I suspect it was put up to thwart the progress of the predictive modelling regime.

The reporting is rather sensational. "She has called a halt to the study."

But there was no study. It hadn't even been to the ethics committee for approval.

Tolley also appeared to signal a major backdown on a proposed population-wide application of the model, saying it was "unlikely" to be used on children that had not already been notified to Child Youth and Family (CYF).

That's in line with what MSD is saying,

Predictive Modelling will be carefully tested to assess whether it can enhance decision-making at intake for children who are reported to Child Youth and Family because of concerns about abuse or neglect.  The aim is to support, not replace, professional judgement

Ironically this involves waiting for something bad to happen. Or non-intervention despite predictive flags. Which isn't far removed from what has wound the Minister up in the first place.

This whole business is very curious. Very.

(On a third reading I am beginning to think the reporter is talking about two different studies.)

Maori - both on the move... and static

A friend sent through a newly released paper about Maori, mobility and economic liberalisation:

Between 1984 and 2003, New Zealand undertook comprehensive market-oriented economic reforms. In this paper, we use Census data to examine how the internal mobility of Māori compares to that of Europeans in New Zealand in the period after these reforms. It is often suggested that Māori are less mobile than other ethnic groups because of attachment to particular geographical locations. If this were the case, Māori may have been disadvantaged in the post-reform period because they were more likely to be living in adversely affected areas and less likely to move to pursue better employment opportunities. In contrast to the anecdotal evidence, we find that Māori are more mobile on average than similar Europeans. However, Māori who live in areas with strong networks of their iwi are slightly less mobile than Europeans. The difference between Māori who live locally to their iwi and those who do not is even more pronounced when we consider responsiveness to local labour market shocks. Non-local Māori are considerably more responsive to changes in economic opportunities than are Europeans, whereas local Māori are almost entirely unresponsive.

None of this surprised me.

Maori up sticks with more frequency and ease than Pakeha. While this paper covers "internal mobility" the large Maori population in Australia is tangible evidence of this willingness to follow the jobs (and other desired lifestyle factors).

But other Maori, connected to tribal homelands, or, let's be less romantic about it, who live in long-standing  uneconomic bases, but among whanau and iwi, are quite likely to increasingly rely on each other and the state - and to pool those resources - rather than endeavour to be part of the work force.

No disrespect to Urban Maori Authorities (whose intentions are worthy), but their development may have extended or exacerbated the combination of whanau/ iwi/state dependence into the city.

NZ on a similar trajectory to Greece

A post at Kiwiblog about pensions crippling the Greek economy prompted me to look at the path NZ is on.

The following figures are all from a Treasury Report, Affording Our Future 2013:

Of course, most of the people reading this blog won't be around in 2060. But our children will be.

Treasury suggests as responses:

• Government taxes more as a percentage of GDP than it does currently.
• Government restricts spending growth in some areas, relative to historical growth rates. Spending in a particular area may still grow as a percentage of GDP, but not as much as it could grow.
• Government reacts to demographic change. Because one of the major drivers behind future financial pressures is population ageing, services are redefined to compensate for the fact that people are living longer, healthier lives.

How come they didn't suggest growing GDP at a faster rate?

Anyway, the message is,

"No matter what policy changes we decide on, it is important that we decide on them early. Fiscal pressures are already starting to build, and the sooner we can address them the easier it will be. The next step in managing fiscal pressures is deciding what choices we will make to achieve a prudent level of government debt by the end of this decade and maintaining it beyond that date."

Just what Greece failed to do.

And my impression is NZ isn't making any hard decisions either.

The "wrong people"

You hear it all the time. He fell in with the wrong people. She started hanging out with the wrong crowd. My kid started mixing with the wrong people.

Mostly it's a piss poor excuse. Only occasionally does it pertain to people who are easily led and impressionable.

"...he had joined with "a couple of the wrong people and got into drugs", meaning cannabis..."

He WAS the wrong people.

Jail sentences for discriminating against the poor?

Among the bits and piece I've read this morning, from France, Bill aims to lock up offenders who pick on the poor

I wonder what provision will be made for offenders who 'pick on' the rich? Then I wondered if the Greens might like this piece of legislative insanity.

On a more cheerful note, there should be fewer poor to discriminate against according to research from the US;

51 percent of individuals said they are better off than their parents at the same age and only 24 percent said they are worse off.
The frequency that individuals felt better off was constant across socioeconomic starting points, except for individuals whose parents both had a bachelor's degree. 
Only 40 percent of individuals whose parents both hold a bachelor's degree said they are better off.

Worthwhile Sunday morning read

DONALD TRUMP VISITS MY HOMETOWN!

by Jacob G. HornbergerJuly 24, 2015

Leading Republican presidential candidate Donald Trump just visited my hometown of Laredo, Texas!

Not surprisingly, Trump entered Laredo filled with fear. I say “not surprisingly” because Republicans live their lives filled with fear. Communists! Terrorists! Muslims! Illegal aliens! Drug dealers! Bin Laden! Saddam! Ho Chi Minh! Republicans are convinced that they’re all coming to get us. Knees are always a’knockin’ among Republicans.

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Again, Left criticise govt but Labour was worse

Again, the Left is carping but the data under Labour was worse (from their viewpoint - not mine).

The NZ  Council of Christian Social Services collects a large amount of data and uses it to criticize the government.

What happens to people declined support? A total of 35,128 applications for ‘working age benefits’ were declined for the period July 2013 to September 2014. Collectively, this represents a comparatively large number of people who walked away from a Work and Income Office without the support they requested. 

This data isn't routinely published but I have some comparative figures from my own OIA requests. Note the NZCCS data is for 14.5 months - mine is for 12 months.

 Under a Labour government the number of sole parents declined a benefit was higher.

Labour creates a policy and then complains when it's implemented

From a CPAG paper about benefit sanctions:

Sanctions are not a new addition to the welfare legislation. They were part of Labour’s reforms to the Domestic Purposes Benefit (DPB) in 2002, although at a time when the economy was adding jobs they attracted little attention. 

Yesterday Carmel Sepuloni issued a press release:

“Figures, obtained through Parliamentary questions show 3000 more sanctions, affecting parents of children, were issued in 2014/15 than in the previous year. Sole parents fared the worst
“Being sanctioned is another way of saying ‘financially penalised’.
“Some of these families have sick or disabled children, some have just come out of abusive relationships and some have been left high and dry to look after children on their own.
“All of these parents have limited resources and are just trying to do the best that they can with very little constructive support from this government. Reducing their incomes even further can make it impossible.

In Labour's last year in government 23,000 sanctions were applied to work-tested benefits, including those with dependent children. Sanctions on the DPB were lower only because Labour didn't work-test that benefit. Sanctions could still be applied to the few thousand who had a Personal Development Employment Plan (PDEP).

In anticipation of requiring sole parents to be available for work,  National's Future Focus reforms 2010 limited the sanction for anyone with dependent children to only 50% of their benefit.

Back to Carmel Sepuloni:

“The truth is this government’s punitive approach is leading to entrenched poverty, not more jobs, and is hurting our children.”

The employment of sole parents is gradually improving,

As is child poverty,



But if facts were allowed to get in the way, Labour would have little to moan about (I think there's an unintended pun in there somewhere.)

Greens demand all rights and no responsibility

Yesterday the legislation necessary to extend youth service provision and attendant obligations was passed. The Greens put up the only opposition. From the NZ Herald

"Green Party MP Eugenie Sage said the party opposed the bill because of the paternalistic approach it took.
"We also have quite serious concerns about forcing single young people up to the age of 20 into a model with quite onerous accountability, based on the state's identification of them as at-risk young people."
There was a risk of arbitrary and unfair decision-making, Ms Sage said, and could lead to young people feeling stigmatised and resentful.
"This is a huge infringement on human rights by having the state determine which category you fall into, and therefore which services you should have access to."

The whole welfare state concept is paternalism writ large.

Attempts to reduce reliance on welfare - the youth service is achieving this - reduce paternalism.

Parents are paternalistic. They exercise authority over the individual. Over time they reduce their paternalism and the child assumes increasing amounts of self-responsibility. (Though I do note that if there is a parent letting their child run riot it's most likely to be a Green type preaching freedom of expression, so perhaps the demand that teenagers should get taxpayer money without obligations is at least consistent.)

As for feeling 'stigmatised and resentful', that's just the disincentive some people need.

And the last objection is utter BS.  How does WINZ decide which beneficiary requires employment help and which needs drug rehab without "infringing on human rights"? How does the public health system  diagnose and allocate treatment without "infringing on human rights"?

The Greens need to grow up.

Anyway, thumbs up to the other opposition parties that could see the sense in passing this legislation.

Auckland Asian population

For no other reason than it is topical and it interests me, here is a breakdown of the Asian Auckland population at last census.

And this link takes you to a graphic that automatically refreshes by each census to show the Asian population density growth across Auckland. Watch it for a few seconds to get the feel of it. Unfortunately it only traverses 1996 to 2006. The screen probably couldn't have accommodated the next change.