Welfare numbers back to pre-rescession levels

April 19, 2014

The number of people receiving welfare has dropped back to pre-recession levels.

Social Development Minister Paula Bennett says the latest benefit figures showing a five year low confirm New Zealand welfare numbers are back to where they were pre-global recession.

Benefit numbers have dropped five percent or nearly 15,000 to 295,320 in the past year (March 2013 – March 2014).  This has resulted in 17,700 fewer children living in beneficiary households compared to March last year and a whopping 29,500 children fewer than two years ago.

“Beneficiary numbers have fallen to the lowest level since March 2009.  When the Government took office in late 2008, the global financial crisis was already beginning to bite with benefit numbers increasing in the three quarters prior to and including the election,” says Mrs Bennett.

“The big success is the 10 per cent drop in sole parents and their children coming off Sole Parent Support. 

“More than 8,600 sole parents have come off Sole Parent Support in the past 12 months, making up almost 60 per cent of the total reduction.

“Particularly pleasing is the 13.4 per cent decrease in young parents aged 18 on Young Parent Payments.  We know that going on a benefit as teenager with children puts that person and their kids at huge risk of becoming trapped in welfare dependency. 

“In fact 70 per cent of the country’s future liability welfare bill can be attributed to people who first went on benefit in their teens.

“The reductions we’re now seeing will mean fewer people on benefit in the years to come.  We have more young people getting education and training through our Youth Service support which means we’re going to see healthier, more prosperous households,” says Mrs Bennett.

“Post peak recession in March 2010, beneficiaries made up 12 per cent of the working age population.  This has dropped to 10.6 per cent as at the end of March. 

“This Government is putting more money than ever before into the welfare system.  We are supporting people earlier, being clearer in our job expectations and putting more focus on at-risk teens.  All of this is making a significant difference.

“Only a few weeks ago New Zealand was judged the best country in the world to live in – our latest welfare figures show things are just getting better,” says Mrs Bennett.

Full benefit data is available at: http://www.msd.govt.nz

There are obvious financial benefits for the individuals on welfare and the country from having fewer beneficiaries and their children.

Just as important are the social outcomes which go with work rather than welfare – better health and education outcomes, less crime . . .

The decrease has been achieved by improving economic conditions and active engagement with beneficiaries to help and encourage those who could work to do so.

Photo: Welfare numbers are now back to pre-recessions levels.

 

 


Welfare reform that works

April 15, 2014

Robert Doar writes on welfare reform that works and he does it from the inside:

. . . From early 2007 until the end of 2013, I was the commissioner of the New York City Human Resources Administration (HRA), the agency with the 1960s-era name that occupies 180 Water Street. And before 2007, going back to early 1996, I worked at, and for a time led, the state agency that was responsible for overseeing many of the government-assistance programs administered by the city. But while my perspective is that of an insider, the facts speak for themselves: From 1995 until the end of 2013, New York City’s cash-welfare caseload shrunk from almost 1.1 million recipients to less than 347,000 — a drop of more than 700,000 men, women, and children.

The achievements of welfare reform in New York City were about more than reducing the number of people on cash welfare. There were also big increases in work rates for single mothers (up from 43 percent in 1994 to 63 percent in 2009) and large reductions in child poverty (down from 42 percent in 1994 to 28.3 percent in 2008). Even in the wake of the 2008 recession, child poverty in New York City in 2011 was almost ten percentage points lower than it had been the year before welfare reforms started.

Welfare-caseload declines, work-rate increases, and child-poverty declines all happened largely because, for eight years under Mayor Giuliani and twelve years under Mayor Bloomberg, New York City required welfare applicants and recipients to work, or look for work, in return for benefits. We aggressively detected and prevented fraud and waste (although we didn’t stop all of them); and we enforced these requirements with a vigilance that every day led to hundreds of case closings and welfare-grant reductions as we made clear that welfare came with responsibilities. . .

He gives 10 tips on welfare reform which includes:

Always promote personal responsibility. The minute an applicant believes that government will solve all of her problems, she loses. Accepting responsibility for one’s own future is the vital first step to moving up. . .

Employment is far better than training and education. In the years leading up to the passage of the federal welfare-reform legislation, study after study showed that programs that encouraged training and education over rapid employment proved less successful at getting people into jobs that lasted.  . .

The priority should be work first, then education or on-the-job training as a supplement.

Making work pay is welfare reform too. Being off of cash welfare does not mean a person is off of all assistance. Not only are a lot of former cash-welfare recipients still dependent on some form of assistance, but the increasing use of these programs means that total spending has not been reduced as a result of federal welfare reform. It has actually increased.

Food-stamp benefits, child-care vouchers, and public health insurance all were part of this arsenal of non-cash “work supports” that we promoted in New York. And so long as these forms of government assistance went to working people, the public was supportive. . .

Be honest about the importance of married two-parent families. Very few families with married and involved parents, both working, ever need any form of welfare. This is why I came to believe that it was dishonest for us not to talk about the importance of parents’ marriage in reducing the poverty of children. Children need stable, two-parent families. No government or public program can replace a missing parent. It was the recognition of government’s inadequate response to the problem — and my desire to be honest about it — that led us to put together the city’s public-messaging campaign about the consequences of teen pregnancy.. . . 

Caseworkers don’t cost much; benefits do. I understand the temptation to rail against bureaucrats and bureaucracy, but in welfare the money is spent mostly on benefits to clients, not the administrative costs of the agency. Welfare-administration costs are typically less than 5 percent of a program’s total costs. . .

Welfare recipients (and workers too) will try to “get over.” “To get over” is a very New York expression meaning to steal – usually from government and usually to obtain benefits that one isn’t entitled to. There’s no better opportunity for it than welfare programs. Turning a blind eye to the potential for fraud and abuse is naïve.. .

The vast majority of expenditures in welfare programs are consistent with program rules and not fraudulent. But the overall size of the spending is so great that even a 5 percent error rate is significant. And, more important, taxpayers have a right to expect that spending on programs be managed properly. . . .

When it comes to the disabled, trust but verify. Obviously a work-based welfare program can’t be successful if someone is too sick or disabled to work. But accepting disability claims at face value isn’t the right answer either. That’s why we set up a whole separate (and, yes, bureaucratic) process for welfare applicants who claimed they could not work because of some physical or mental condition. . .

Over the years, we found thousands of people who said they could not work but in fact could. We helped an equal number improve their underlying conditions so that they could go to work. And we helped those who really did qualify for the federal program gather the documentation necessary to apply.Always cheer for the economy. I spent seven years running New York City’s welfare programs for Michael Bloomberg, and as proud as I was of what our social-service programs provided to poor New Yorkers, I never forgot that perhaps the most important key to helping struggling families was a vibrant economy that offered an abundance of entry-level jobs. That’s why I was always first in line to support and encourage every kind of thoughtful economic-development idea that promised job creation.   . .

To make welfare programs succeed, always cheer for the economy, and those who nurture it. . .

All of these factors apply just as much in New Zealand as New York.

Welfare reforms that work are better for the people who move from welfare to work, or who get the right help because they can’t work.

The benefits aren’t just economic they’re social too with improvements in positive statistics like health and decreases in negative ones like crime.

Welfare reforms that work pay-off for us all.

Hat Tip AEIdeas


Seeking interest in social bond pilots

April 14, 2014

The Ministry of Health is seeking groups interested in social bond pilots:

A new and innovative alternative to the way social services are delivered has come a step closer, Minister of Finance Bill English and Health Minister Tony Ryall say.

The Government last year agreed to a social bonds pilot and people are now able to register their interest in becoming an intermediary in the pilot programme.

An intermediary is a person or group who brings investors and service providers together. The intermediary uses their skills in project management and finance to raise funds and drive performance to achieve agreed outcomes. 

“The Government does not have all the answers to our communities’ problems and social bonds are one new way to involve investors and private or not-for-profit organisations in improving social outcomes, while achieving value for taxpayers,” Mr English says. 

Mr Ryall says social bonds give service providers greater freedom and flexibility to use private capital and expertise to deliver services to their communities – with the Government paying a return depending on achievement of agreed outcomes.

“This shifts risk from the taxpayer and provides an incentive for our investment community to use its expertise for generating results in the social sector,” Mr Ryall says.

Social bonds trials are underway in the United Kingdom, United States, and Australia where examples of their use include targets of reducing reoffending, increasing employment, improving outcomes for children in care, and improving management of chronic health conditions.

In New Zealand, service providers have submitted their ideas and a shortlist is being compiled by the Ministry of Health, which is leading cross-agency work on the pilot.

“We’re still in the early stages here but progress from the overseas pilots is encouraging,” says Mr Ryall.

“We see potential for social bonds to deliver better results and attract investment to preventative services and we think the time is right to pilot this model here.”

Mr English says there is a strong alignment between the social bonds model and many of the other initiatives being put in place across government like Better Public Services where the focus is on achieving results for the investment New Zealanders make in public services through their taxes.

“If successful, the social bonds pilot might attract investment and offer lessons that could be used for contracting in future, including further social bonds,” Mr English says.

How refreshing, and encouraging, to have a government which admits it doesn’t have all the answers and is willing to try a different approach to solve problems.

Rewarding achievement puts the risk with the provider while giving them a strong incentive to succeed.

This isn’t just throwing money at problems, it’s aimed at getting solutions.

More information of Social Bond Pilots is here.


Tough on tax evasion

April 12, 2014

One of the left’s complaints is that tax evaders are treated more leniently than those who abuse welfare.

That is not supported by the facts:

Speaking at the OECD Cash and Hidden Economy Conference today, Revenue Minister Todd McClay reiterated the Government’s commitment to clamping down on tax evasion and avoidance.

“This is an area the Government has invested heavily in and we are starting to see results,” says Mr McClay.

“In Budget 2010, we invested $120 million in going after tax non-compliance; another $78.4 million was further invested in Budget 2012.”

“Last year compliance activity for ‘hidden economy’ tax evasion gave a return of $45 million, $5.60 for every dollar spent. For non-compliance through property speculation, $53.8 million worth of discrepancies were found, a return of $8.42 for every dollar invested.”

“That is money we now have to invest in things like health, education and rebuilding Christchurch.”

“Our opponents claim that we are obsessed with welfare fraud while do nothing about tax dodging, however, this couldn’t be further from the truth.”

“Spending on Welfare Fraud has remained at exactly the same level as it was under the last Government, around $35 million a year, yet the management of debt and outstanding returns by IRD has gone up from $88 million to $125 million in Budget 2013.”

Overall last year, Inland Revenue collected around $4 billion worth of debt and outstanding returns.

“Prevention is always better than the cure, however.”

“Inland Revenue works hard to help people understand their obligations and is constantly finding ways to simplify and speed up compliance for taxpayers.”

“I encourage anyone who may be struggling to meet their obligations to contact Inland Revenue and work out a repayment plan.”

“It is easier for taxpayers if they comply on time than have Inland Revenue chase them up later,” says Mr McClay.

 

Photo: Since National's been in power, extra money has been spent to make sure everyone pays their fair share of tax. http://nzyn.at/1gRPkse


$10.5m saved cutting benefits for travellers

April 5, 2014

When the left accuse National of benefit bashing they show they have no affinity for hard working people on low incomes.

How galling it must be for them to know that their taxes help support people who could work but don’t and that some on benefits are able to enjoy luxuries like overseas travel which they can’t afford themselves.

Helping those in genuine need is the duty of a compassionate society, that help doesn’t mean indulging those who could be helping themselves. That is why initiatives like benefits cuts for overseas travellers are necessary.

Social Development Minister Paula Bennett says more than 21,000 people have had their benefit cut for travelling overseas since July last year.

“We tightened the overseas travel rules as part of welfare reform and have saved New Zealand more than $10.5 million in suspended payments for beneficiaries who still chose to travel.

“That’s a staggering number of people. More than 1,750 people have had their benefit suspended for multiple overseas trips.  This includes 191 people who travelled three times and 1,555 who have travelled twice since last July.

“These figures don’t include those on Superannuation. 

“The largest group of suspensions applied to nearly 11,200 people on job seeker benefits, followed by more than 4,800 sole parents.

“The new rules recognise that beneficiaries should be ready and available for work not prioritising travel.

“Since the changes 4,880 peoples’ benefits were cancelled because they failed to reconnect with Work and Income eight weeks after their departure from New Zealand.

“The rules, while tighter, still allow for overseas travel on compassionate or health grounds in certain cases for job seekers.  People without work obligations may in most cases travel overseas for up to 28 days. 

“These figures are the number of people who chose to travel knowing their benefit would be suspended.  Every day we hear stories of how people cannot live on the benefit.  Today you’re hearing that literally thousands can not only live on it but can afford to travel overseas as well,” said Mrs Bennett.

I don’t think the original architects of the welfare system intended support to extend to such luxuries and it’s not what the modern system should be covering either.

Photo: Under National’s welfare reforms, beneficiaries are expected to be ready and available for work, not travelling overseas - www.national.org.nz/Article.aspx?articleId=43536


Is welfare part of the problem?

March 21, 2014

Is poverty driving family break-ups?

Surprise Census figures suggest that poverty may be breaking up the nuclear family. . .

Wellington analyst Paul Callister and Statistics NZ demographer Robert Didham said in Auckland poverty was increasingly concentrated because of housing costs.

“What you are seeing in Auckland is a real sorting effect in the housing market, it’s pushing the sole parents into certain areas,” Dr Callister said.

He said the welfare system meant many couples were better off by separating. Welfare entitlements are based on family income, so if one person loses a job they can’t get a benefit if their partner is working. . .

Lindsay Mitchell points out that this isn’t a chicken or egg scenario:

For a nuclear family to “break-up” it has to exist first. In 2012 the proportion of unmarried births was 48 percent. In the same year, 21 percent of babies born were dependent on welfare – usually the DPB – by Christmas. Around half of these children will spend 7 or more years in the benefit system.

It isn’t poverty driving family disintegration. It’s the availability and heavy use of welfare. This is particularly prevalent amongst Maori because welfare incomes are close to incomes from low paid, unskilled jobs.

As the article notes, “Education is also a powerful factor.” Exactly. In time females with qualifications and aspirations may choose not to embark on a career of poverty-stricken single parenthood. Then again, as long as it’s a seemingly ‘easy’ option the pattern of single mothering and subsequent hardship will continue.

If welfare is regarded as a preferred option for people it is part of the poverty problem, not the solution.

Welfare has a place for those unable to look after themselves, some of those will require long-term, possibly permanent assistance.

But for most recipients it should be a temporary safety net not a long-term hammock.

This is why this government’s policies which are addressing long-term benefit dependency are helping those who can help themselves to do so.


Why stop at $15?

February 25, 2014

Labour Minister Simon Bridges announced the minimum wage will increase from $13.75 an hour to $14.25.

 . . The Starting-Out and training minimum wages will increase from $11 an hour to $11.40 an hour, which is 80 per cent of the adult minimum wage.

“Setting these wage rates represents a careful balance between protecting low paid workers and ensuring jobs are not lost,” says Mr Bridges.

“The increase announced today balances the needs of both businesses and workers and will have minimal impact on the wider labour market and inflationary pressures.

“This increase will keep the minimum wage at around 50 per cent of the average hourly rate, which is the highest rate in the OECD.

“The Government is firmly focussed on growing the economy and boosting incomes. Through our Business Growth Agenda we are creating opportunities to help grow more jobs in New Zealand, for New Zealanders.” . . .

That nearly half those surveyed think that’s not enough goes to show most people don’t understand the issues.

The only sustainable way to increase wages is by economic growth.

Without an increase in productivity and profit, an increase in wage rates will result in a decrease in job numbers.

The Green Party doesn’t understand that.

The Greens would have immediately raised the minimum wage to $15 an hour, Green Party Co-leader Metiria Turei said today. . .

Why stop there?

“Around 125,000 kids live in families where the adults earn less than the living wage. It is in the government’s hands to end poverty for working families and improve the lives of those kids. . .

Those families get Welfare for Families through which those with two children pay no net tax until they earn $50,000. Any increase in their pay will reduce their welfare. That’s less money from public coffers but they’ll be no better off and could be worse off if jobs are lost.

That living wage is an arbitrary figure and last week’s increase in it was based on different methodology from the original figure:

The ‘new’ living wage has shifted the goalposts and appears to be more about politics than public policy, says BusinessNZ.

Last year the living wage campaign said $18.40 should be the living wage, calculated on the basis of the living costs of a family of four.

The promoters now say the living wage for this year should be updated to the higher rate of $18.80.

“But the report shifts the goalposts,” BusinessNZ Chief Executive Phil O’Reilly said.

“The increase from $18.40 to $18.80 is not based on the same methodology as last year.

“Using the same methodology, for the same family of four, would show the new living wage should really be $22.89.

“If last year’s formula said $18.40 was needed for a living wage, and the same calculations now show $22.89 is required, why isn’t the campaign seeking $22.89 an hour?” Mr O’Reilly asked.

“Either the original calculations were flawed, or the campaign is just picking numbers out of thin air.”

Mr O’Reilly said decision makers could not have confidence that the living wage figures were soundly based.

“This switch in the figures used is important for taxpayers and ratepayers who are being asked to pay for the campaign. Wellington ratepayers are now funding the living wage policy for council employees and taxpayers would be funding it for all government employees under Labour Party policy.

“There can be no confidence in a living wage proposal set on an arbitrarily changing basis.”

The whole concept of a living wage which decrees everyone should be paid enough to support a family of four, regardless of what the work they do is worth, is flawed.

For the record, all our staff are paid more than the minimum wage.

That’s a decision we make in negotiation with them taking into account their skills and experience, what they’re required to do, the value of all of that and what the business can afford.


More money not always solution

February 20, 2014

When National won the 2008 election it inherited Labour’s forecast of a decade of deficits.

Careful management has turned that round in spite of the economic and natural disasters with which the government has had to deal.

The careful balance between economic management and provision of services to those in need was explained during question time yesterday:

3. SHANE ARDERN (National—Taranaki – King Country) to the Minister of Finance: How is the Government balancing its focus on responsibly managing its finances with addressing some of the most challenging social issues facing vulnerable families?

Hon BILL ENGLISH (Minister of Finance): The Government has been clear since it became the Government that the 50 percent jump in Government spending in the 5 years to 2008 was unsustainable. In setting a path back to surplus, we rejected the option of aggressively cutting spending. Instead, we took the time to understand the drivers of existing spending and whether the spending was delivering results, and to ensure that results were delivered. At the same time, we put significant resourcing and effort into improving the lives of the most vulnerable New Zealanders, particularly children. We are not doing that by throwing taxpayers’ money around indiscriminately. We are attempting to resolve the complex and persistent problems that mean some of our children have lives that sap their sense of opportunity.

Shane Ardern: What are some of the social issues the Government is addressing to improve the lives of the most vulnerable New Zealanders?

Hon BILL ENGLISH: The Government has set out what it believes those social issues are, but, more than that, it is publishing results in order that the public can hold us and the public service to account for achieving something for the most vulnerable New Zealanders. The Better Public Services targets are particularly challenging because they cover some of New Zealand’s most persistent problems, like long-term welfare dependency, vulnerable children and the amount of violence that they suffer, the need to build skills and employment so these young New Zealanders have real opportunities, and also crime reduction and making our communities safer. Overall, we are making good progress towards meeting these results and further updates will be published tomorrow.

Shane Ardern: What kinds of social issues affecting the most vulnerable New Zealanders did this Government inherit in 2008?

Hon BILL ENGLISH: There were a number of long-standing social issues making the lives of New Zealanders miserable in 2008. They are set out clearly in the Salvation Army’s state of the nation report of February 2008. It said: “The social outcomes which we as New Zealanders have achieved over the past five years”—that is, under the previous Labour-led Government—“were somewhat mixed and in some areas quite disappointing.” The report noted that in 2008 more children appeared to be at risk of harm, more young people were engaged in petty crime, there was more violent crime, and the number of people going to jail was rising at a significant rate. I do not think that any of those trends could be seen as progress. The Salvation Army noted in 2008 that New Zealand households were chronically indebted.

Shane Ardern: What else do reports say about the serious social challenges facing New Zealanders when this Government took office, and particularly the fiscal policy approach to dealing with those issues?

Hon BILL ENGLISH: The Salvation Army said in its report in 2008 that perhaps the most disappointing aspect was that New Zealand had invested huge amounts of money in core areas of social spending but the spending seemed to have contributed very little to New Zealand’s social progress. This was not said by the then Opposition’s spokespeople; this was from the people from the Salvation Army. The report listed billions of taxpayers’ dollars that had been spent, and then listed many indicators that were going backwards—rising numbers of referrals to Child, Youth and Family Services, more children in Child, Youth and Family Services care, rising youth offending, rising teenage pregnancy and abortion rates, continuing educational inequality, and early childhood enrolment rates lower than 65 percent. Funnily enough, in 2014, almost all of these indicators are turning positive, when the Government has been very careful about its spending but instead has focused on its effectiveness.

It’s an issue of quality rather than quantity.

More money isn’t always the solution to social problems.

While the Labour-led government of the noughties spent more social indicators worsened.

By looking at causes and focussing on effectiveness the government is achieving more without throwing taxpayers’ money into a black hole where it makes no difference.


Living wage already up 40c

February 18, 2014

The ‘living wage’ has increased by 40 cents in just a few months:

The new figure for a living wage was also up from last year, with campaigners saying it now costs $18.80 an hour to feed two adults and two children in New Zealand.

The wage is based on a family with two children, where one adult is working full-time and the other half-time at the same wage.

The calculations come from the Anglican Family Centre research unit and are up 2.1 percent from last year’s estimate of $18.40 an hour. . .

The figures come from surveyed spending of the poorest half of Kiwi families with two adults and two children. Costs are figured on average New Zealand-wide rents for the cheapest quarter of three-bedroom houses and food costs for foods that meet Otago University’s nutritionists’ “basic” diet of nutritious food.

But the ‘living wage’ doesn’t just cover necessities like food and rent. The calculation was based on all sorts of other things the campaigners deem necessary  for a family with two children to participate in society, including overseas trips which most of us would regard as luxuries rather than necessities.
There is a need for an examination of why New Zealand wages aren’t higher and so many families have their incomes topped up by taxpayers.
But the ‘living wage’ which takes no account of the value of the work done is not the answer to that problem and would cost jobs:

. . . Labour Minister Simon Bridges said the figure seemed to be “much more what they feel rather than what good evidence suggests is right”.

He said raising the legal minimum wage to the original figure of $18.40 would cost employers $2.3 billion a year and wipe out 24,000 jobs. . .

A wage of $18.80 would be around $40,000 a year but a family with two children would get Working for Families on top of that.
Increasing the minimum wage to that figure would save taxpayers’ money but would not be affordable for all businesses, and would cover young, single and part-time workers without families.
If the figure has gone up by 40 cents in a few months,  it won’t stop at $18.80 and Labour has already raised the bar.
The party’s baby bribe would go to people earning up to $150,000 which is about $72 an hour.

If they think you need an extra $60 when you have a new baby who costs very little, how long before they think you need at least that when the baby is older?

By Labour’s reckoning the living wage isn’t around $40,000 but $150,00 and climbing.


The heart of the issue

February 13, 2014

Answer of the day:

Hon PAULA BENNETT: For me this gets to the heart of the actual issue. So the member thinks that it is only the Government’s throwing money around and getting into every household and giving them 60 bucks a week for a newborn baby that is going to make the difference. I actually think it is not about just the Government; it is about the Government, community, and parents themselves actually putting their children first in many instances. It is about what is happening in the streets. It is about what organisations like the Salvation Army do. So I do not think it is a D for the Government. In fact, what the Salvation Army did say was that “as a national community,”— and I quote—“we have made credible and worthwhile social progress. It is important to acknowledge and celebrate this because, for the most part, it is intentional and hard won. The Government should be applauded for its contribution to this progress.” Paula Bennett

She was responding to a question on child poverty and she’s right.

Children are living in poverty for several reasons and there is no single or simple solution.

The government is helping with no assistance from the opposition who have resisted every measure to reform welfare which is one of the most effective ways to lift families from poverty.

However, government can’t replace parents who don’t put children first.

But it can make matters worse as Lindsay Mitchell observes on similarities between Maori and African American families on welfare:

. . . Both ethnicities had large families. So payments per child could mount up. The sums may have seemed relatively small to middle class families, but for people coming from a paltry income base – Maori from subsistence and African Americans from the abiding legacy of slavery – the sums were meaningful.

From there it is all too easy to understand how the male of these two cultures became increasingly dispensable. The state would provide a steady and guaranteed income if he disappeared. His absence might sometimes be  ‘manufactured’  but in the final analysis, his financial utility was deeply degraded. He had a heavy weight competitor in the government.

(And still some politicians want to continue and even increase these types of ‘needy’ children policies ignoring the damage that visits on the family structure which best supports those kids financially and emotionally.)

One of the reasons for children in poverty is the breakdown of families and the replacement of a wage earner by a benefit.

The solution to that isn’t more welfare.


Sally’s state of nation shows improvements

February 12, 2014

The Salvation Army’s 2014 State of the Nation report shows some improvements:

. . . In its annual report The Salvation Army gives the thumbs up to an improvement in Maori participation in early childhood education, a drop in infant mortality, reducing teenage pregnancy rates, a reduction in overall criminal offending, a drop in unemployment and a reduction in the per capita spend on gambling.

That is good news and some of the credit for the improvements goes to government policies.

But the Salvation Army remains deeply concerned at the lack of progress in reducing child poverty, family violence, the harmful use of alcohol, and the failure to address criminal re-offending and serious crime.  

“Without doubt the most disturbing data in the report relates to child poverty and family violence,” says Major Roberts. “Neither of these areas is improving. Every day Salvation Army workers see the tragic results of the failure to deal with these issues,” he says.

“Government addresses social deficits when New Zealanders indicate they require action,” he said.

“The failure of Government to effectively reduce child poverty and family violence suggests that New Zealanders are not expressing with enough strength and urgency the need for more effective government action.”

Major Roberts suggests that unless ordinary New Zealanders take these matters seriously, Government is unlikely to.

“Public pressure will help policy makers strike a better balance to ensure effective solutions are found for child poverty and domestic violence. As a nation we must take a brave and more deliberate interventionist approach if we are to see child poverty and family violence significantly reduce,” he says. . .

There is no shortage of pressure from the opposition, lobby groups and the general public on child poverty but there isn’t consensus on solutions.

The opposition and left in general have fought welfare reforms tooth at every step but there is very clear evidence that children in families dependent on welfare have worse outcomes than those in families on the same income from work.

Then there’s the elephant in the room – sole parent families, and those where the parent is very young in particular, are far more likely to be poorer with all the problems associated with that.

That’s not an argument to return to the days when young mothers were shamed and forced to give up their babies for adoption.

But it would be helpful to have research on whether the pendulum has now swung too far in the opposite direction.

The full report is here.


Fathers matter too

February 5, 2014

Andrei left a comment on a post a couple of days ago which warrants further discussion.

He wrote:

A young man gets a young woman pregnant. In days of yore he would have most likely married her and taken financial responsibility directly for her and their child. If marriage wasn’t possible for whatever reason the child would have most likely been adopted – a sad situation.

But today the most likely outcome is for the young woman to go onto the DPB and if the young man is at the start of his working life and on low wages it is a financial no brainer for her to do this, she’ll get more money and retain “her independence” – well sort of, not really but it will appear that way.

But the young man – well he is in deep do dos. See he is wacked by the IRD for the upkeep of his child and the mother of said child cannot maintain a romantic style relationship with him without breaking the law and risking her benefit and therefore must distance herself and child from him.

And in a great many cases that young man is now better off not working because the reward for his labours is so low, and the money taken from him while in principle is for his child, his child who he might never see, is no better off no matter how hard he works or doesn’t.

And young men caught this way find themselves in a poverty trap with no way out except perhaps absconding to a place where the IRD can’t find them.

I know three young men in this position and there is no way forward for them – and no chance of ever starting a regular family.

If I understand the system correctly, if a couple goes through WINZ, the amount the liable parent pays is based on how much s/he earns but the custodial parent gets a set amount based on the number of children, not what her/his former partner pays.

If the earner gets a pay rise, s/he pays more but the payment to his/her family doesn’t change.

That’s the bind the young men Andrei writes of are in.

But there are ways out.

When friends’ marriage broke up they were advised to settle payments for their children between themselves.

That way the mother, who in this case was the major breadwinner, paid less, and the father received more than if they had gone through WINZ.

This will only work if the working parent has a better than average income and the care giving parent can trust him or her to pay the agreed amount when it is due.

If the earning parent is on low wages or can’t be trusted, it would be safer for the caregiver to go through official channels.

The young men in  Andrei’s comment obviously aren’t earning much.

However, there is a way out for them too.

If the children’s mother starts working, as they are being encouraged and assisted to do, the benefit abates and so, presumably, does the amount the liable parent has to pay towards it.

The focus for assistance has been on the caregiver, but non-custodial parents, in this case the fathers, matter too.

Andrei’s young men are at least as much in need of encouragement and help to find work as the mothers.

If they are on what were called unemployment benefits, they should be getting assistance to find a job and possibly up skill so they can get a better one which will pay more and ensure they can start getting ahead.

Not only they, but their children, will be better off for having parents in work, and not just in financial terms.

The answer to the difficult situation Andrei describes isn’t a handout.

It’s a hand up so both parents can help themselves and their children and neither will have to worry about any agency concerning itself about their romantic arrangements.


Better use

February 3, 2014

Universal benefits ensure no-one misses out.

But they also ensure those in most need don’t get enough because people who have more than enough get money they don’t need.

As Kerre McIvor puts it:

I suppose if you live in the leafy suburb of Herne Bay and you’re on an Opposition leader’s salary of nearly $263,000 – topped up with whatever salary your clever wife brings home – you might assume that those on $150,000 are wondering where their next bottle of pinot gris is coming from. But most people – including the 150k-ers – would surely think the money could be put to better use.

It’s not just the people on $150,000, it’s all the others former Finance Minister inelegantly described as rich pricks.

The so called living wage which the left have adopted as gospel is around $38,000 for a couple with two children.

Labour’s baby bonus has substantially inflated that.

In doing so it would spread money too thinly, giving to those more than capable of looking after themselves and their families which would leave too little for those in genuine need.


Middle miss out in Labour’s plan

January 30, 2014

Labour leader David Cunliffe bemoaned the plight of middle income families who were struggling, in his state of the nation speech.

He then announced a plan which he said would give every family earning up to $150,000 a $60 a week when they had a baby.

What he said isn’t what the proposal would deliver.

Prime Minister John Key told the whole story in Question Time yesterday:

. . . Rt Hon JOHN KEY: Firstly, I would be interested in the Leader of the Opposition tabling this source that he keeps using saying that one in five New Zealand children own only one pair of shoes. I would be very interested, because that is what he has been saying. We know from his speeches that when he says 59,000 families will all get $60 a week for 52 weeks, it is not true—25,000 of them get paid parental leave, and will not get it for 52 weeks. Today we learnt that 15,000 currently get the parental tax credit, and they will not get it for 52 weeks either. In fact, one in three families are the only people who will get $60 a week for 52 weeks of the year, and they are beneficiary families and the new working poor, who, according to Labour, earn $150,000 a year. . .

Calling Cunliffe a liar isn’t permitted under parliamentary protocol.

Patrick Gower doesn’t face that constraint and writes Labour is dishonest on baby bonus:

The Labour Party has been putting voters wrong about its baby bonus.

Labour has been deliberately misleading, and in my view dishonest by omission.

On Monday night I told 3 News viewers that under Labour’s $60 a week baby bonus policy, families would get $3120 a year for their baby’s first year.

A simple calculation you might think, of $60 mutiplied by 52 weeks, given David Cunliffe announced in his State of the Nation speech: “That’s why today, I am announcing that for 59,000 families with new-born babies, they will all receive a Best Start payment of $60 per week, for the first year of their child’s life.

Now most normal people would think that means “all” those parents will get the payment “for the first year of their child’s life”.

But it wasn’t true – not that you would know that from Cunliffe’s speech, media stand-up, the MPs who were there to “help” and all the glossy material handed out to us.

The Labour Party has been putting voters wrong about its baby bonus.

Labour has been deliberately misleading, and in my view dishonest by omission.

On Monday night I told 3 News viewers that under Labour’s $60 a week baby bonus policy, families would get $3120 a year for their baby’s first year.

A simple calculation you might think, of $60 mutiplied by 52 weeks, given David Cunliffe announced in his State of the Nation speech: “That’s why today, I am announcing that for 59,000 families with new-born babies, they will all receive a Best Start payment of $60 per week, for the first year of their child’s life.

Now most normal people would think that means “all” those parents will get the payment “for the first year of their child’s life”.

But it wasn’t true – not that you would know that from Cunliffe’s speech, media stand-up, the MPs who were there to “help” and all the glossy material handed out to us.

Because buried in the material was a website link that takes you to a more detailed explanation policy.

And on page six of that policy document, in paragraph 3, it revealed the payment would commence at the “end of the household’s time of using Paid Parental Leave, ie. after 26 weeks in most cases.”

So translated, in most cases, the $60 a week payment is not for the first year, but for the second six months.

Obviously 3 News had already broadcast that it was for most babies for a year and a total of $3120.

The truth is it was for most babies for the second six months and was $1560.

Now Cunliffe and Labour knew this $3120 for one year figure was wrong, but nobody rang to correct it.

Usually political parties and the taxpayer-funded spin doctors are screaming down the phone if there is an error (and rightfully so, I might add), but in this case Labour was dead quiet.

And I believe that’s because Labour wanted the punters to think it was $60 for a year.

They were desperate to get cut-through and were happy to omit key information and let the wrong message get out there.

And I think that is deliberately misleading and dishonest from Labour.

At some point, I’m sure senior Labour people made a decision to omit key details on the day to maximise publicity – it was no mistake.

This is what politicians of all colours do; they don’t care if they mislead the public, they are venal and desperate and just want to win. It is not just Labour, it’s all of them. It’s really sad.

And it goes on: Labour’s Sue Moroney has just explained to me that there are 60,000 births in New Zealand each year, 59,000 of those families earn under $150,000, 26,000 are eligible for paid parental leave, meaning 33,000 will get the $60 for the full twelve months.

That means Cunliffe should have said 33,000 people will get the baby bonus for a year, which is not “most” of the 60,000 families that have babies each year.

Bearing in mind Labour’s policy does not start until April 2016, with six months of paid parental leave the majority of $60 payments won’t kick in until October 2016 – that would likely be almost two years after a 2014 Labour Government.

Cunliffe also struggled to explain yesterday whether families would be judged on their pre-baby double income (ie. two earners of $140,000 each, getting $280,000) or after-baby income $140,000.

This seems a pretty straightforward aspect to me, and I wonder if it was policy-on-the-hoof. He either didn’t know the policy properly or was trying to avoid showing how generous the policy is. . .

That’s generous with other people’s money to beneficiaries and the new working poor who until very recently Labour would have called rich pricks.
But not very generous to the people in the middle that the speech gave the impression the policy was designed to help.

 

 

 


Baby bribe threshold higher than $150,000

January 29, 2014

Giving welfare to a couple earning up to $150,000 a year is bad enough, but now the details of Labour’s baby bribe are being released we find that people earning up to twice that could qualify.

. . . Labour leader David Cunliffe has confirmed that the income threshold would apply to what a family expects to earn in the year ahead, not what they earned in the year before the birth.

Under Labour’s policy, it is possible that families earning well over $200,000 before the birth of their child would be eligible for the benefit. . . .

Take a couple each earning $150,000 a year before the baby is born.

The woman takes paid parental leave – extended to 26 weeks under Labour – and when it runs out decides not to return to work until the baby is at least one.

They will already have received the highest possible paid parental leave payments and will now be eligible for the baby bribe of $60 a week for the next 26 weeks.

That is an extreme example but incomes well below this are still too high for welfare.

Labour is a fan of the so-called living wage of $18.40 an hour which is about $38,000 a year.

No-one would call that wealthy, even with what working for families would add on top of that.

But it is by the proponents of the living wage say it is:

. . . the minimum wage necessary for a worker to survive and participate in society. It reflects the basic expenses of workers and their families such as food, transportation, housing and child care.

If just over $38,000 a year, without the working for families supplement on top, is enough for a family of two to survive and participate in society, why is Labour extending welfare to people earning up to $300,000?

Had they offered $60 a week to people earning up to the so-called living wage it would have been difficult to argue against.

Even if they’d extended it to a family on $50,000, who currently pay no net tax if they have two children thanks to working for families, opponents would have found little fertile ground on which to sow their criticism.

But giving welfare to people on well above what Labour accepts as enough, even if there weren’t more pressing needs for taxpayer funding would be questionable.

When there are so many higher priorities, including helping vulnerable children and giving them the best start possible, the policy is irresponsible and show a reckless disregard for public money and those most in need.

It’s easy enough to criticise a policy from which I wouldn’t benefit, but at least one potential recipient is principled enough to say it’s wrong:

Dr. Jane Silloway Smith, Research Manager at independent think tank Maxim Institute and soon to be mother of two, questions how helpful Labour’s Best Start for Children package—and an extension of paid parental leave as indicated by National today—are, calling them poorly targeted to the problem of child poverty and a waste of money.

Smith says: “While there is little doubt that a child’s experiences and care in the first few years of life are vitally important, it’s hard to see how Labour’s intended spending will have as profound of an impact on child poverty as they anticipate.”

“My husband and I are both working, and I am seven months pregnant with our second child. We are a family who would benefit under Labour’s Best Start for Children package—but we shouldn’t.”

“Children are expensive even in two professional-income households like ours, but my husband and I are fortunate enough to be able to handle that financial burden and still be able to make decisions that are in the best interests of our family. Fourteen weeks of paid parental leave are nice, and getting even more leave and $60 a week in our new baby’s first year would be appreciated, but it’s far from necessary in cases like ours.”

There will be some Kiwi families who will truly be helped out by the additional cash. But for so many others the money will be wasted either because the family doesn’t really need it or because there are bigger issues in the family home than mere money can solve—drug and alcohol addictions, lack of family or community support, or volatile adult relationships.”

“Governments have a limited budget, and as a policy researcher, I hate to see any government spending its money on pointless programmes. There are families out there who can’t make the choices that my husband and I can make for our family. So instead, it would be great to see Labour target their spending on families who could really use the money, while diverting the savings from handing out upper-middle class welfare to invest in community initiatives and programmes that have demonstrated an impact on the bigger issues some families face.”

“If any government is going to hand out money, I’d like to see them putting it towards helping families in real need, rather than simply padding the bank accounts of families like mine.”

The necessity to address real need is the point of opposition to Labour’s policy.

New Zealand is facing many pressing needs and it is those to which any spare money should be directed, not welfare for people well able to look after themselves and their children.


How can people who can’t count run the country?

January 29, 2014

Labour leader David Cunliffe claimed on Monday that one in five families couldn’t afford a second pair of shoes for their children.

Matthew Hooton writes in the NBR that this figure is apparently based on the 2008 New Zealand Living Standards report that one in 20 families struggled to buy a second pair of shoes.

How do you turn one in 20 into one in five? By confusing one in 20 with 20%.

Someone made a very basic maths error, none of the advisers and MPs who worked on the policy picked it up and welfare for the wealthy is the result.

How can people who can’t count run the country?

Badly – you only have to look at the damage inflicted on the economy last time Labour let loose with its largesse for proof.

 

 


Speech from the heart, solutions from experience

January 28, 2014

Every now and then an MP makes a speech from the heart.

Today John Banks did that.

He also offered solutions to the problem of poverty, based on his own experience as a victim of it.


How much is enough?

January 28, 2014

A living wage for a family of two was, until yesterday, supposed to be $18.40 an hour.

Inflation must be raging because after the announcement by Labour leader David Cunliffe, promising $60 a week to people who have a baby, a living wage for a family with just one child has risen to $75 an hour or $150,000 a year.

Only those who earn more than that won’t be eligible for $60 a week when they have a baby.

It would be very difficult to argue against giving children the best start possible, but how much is enough to do that?

The first year of a child’s life isn’t the most expensive in terms of providing for her or his needs.

You need equipment – a cot, bedding, buggy, high chair, car seat, clothes, napkins, books, toys . . .

However, nothing apart from the napkins has to be new – they can be bought second hand or borrowed.

Once you’ve got them, if you’re willing and able to breast feed, there’s no cost for food for the first few months and not much after that.

The biggest cost is income forgone if one parent chooses to be a full-time parent and in spite of social and financial pressure to return to work, many women and some men don’t while their children are young.

Most will have saved before they had children and all will have decided that the time and energy they can devote to their children is worth more to them and their family than anything they can earn.

All will make financial sacrifices to do this but they will have worked out that they have enough.

How much that is will be different for each family and when it’s their money it’s their business.

But Labour is planning to spend our money on its $60 a week for every baby which makes it our business.

It is not paid parental leave – parents in work will get the same as those who stay at home, until the combined income gets to $150,000.

There’s no requirement for it to be spent on the baby.

It is a no-strings-attached gift to new parents, whether they need it or not.

If it was targeted at the very poor to ensure they had enough, it would be difficult to argue against.

But it’s not targeted – unless the 95% of new parents who earn less than $150,000 can be called targeting.

It’s an almost universal payment that isn’t based on need, and it gives an equal amount to those who have too little and those who have more than enough.

How much is enough is debatable – but families earning well above the average income are getting too much to need welfare like this.


Best stop Best Start before it starts

January 28, 2014

You’re both working full time in unskilled jobs. You’re only just better off doing that than being on a benefit because of Working for Families and a grandmother who takes care of the children after school. You’re still renting but trying hard to save a deposit for a house.

How would you feel about people earning up to three times what you do because they have a baby?

You’ve just graduated. You want to pay off your student loan as quickly as possible, you need to buy a car, you’re earning $75,000 and it will be a couple of years before you get much more.

How would you feel about paying more tax than you need to so a whole lot of people earning up to twice your salary can get $60 a week because they have a baby?

You’ve just bought your first house. You’re paying off the last of your student loans and servicing a mortgage. The house is a doer-upper and every spare moment either of you have is spent doing it up because you can’t afford to pay anyone else to do it.

How would you feel about some of your tax going to pay $60 a week to people living in a far newer, bigger, better  house than yours, and earn far more than you do, because they have a baby?

You’ve got a couple of preschoolers. One of you works full-time, the other part-time. You’re servicing a mortgage, trying to save for much-needed alterations to your house and put a bit away for travel, retirement and contingencies.

How will you feel knowing some of your tax is paying $60 a week to people earning the same as and more than you, because they have a baby?

You’ve got a couple of teenagers. You earn a bit too much to get anything near $60 a week from Working For families. You’re servicing a mortgage, trying to save for your retirement while feeding, clothing, educating and entertaining your teens.

How would you feel about some of your tax paying $60 a week to people earning more than twice what you do because they have a baby?

You raised your children before Working for Families was introduced and never claimed welfare even though at times you’d have been better off on a benefit than in work. You’re still working, saving for your first overseas holiday and your retirement.

How would you feel about some of the money you earn and could well use towards your retirement going in tax to pay $60 a week to people earning far more than you ever have or will, because they have a baby?

You worked hard all your life, raised your family without anything to spare for extras and went without to save a nest egg for your retirement.

How would you feel about some of the tax you pay going to pay $60 to people who have and earn far more than you ever could just because they have a baby?

If you’d feel aggrieved, you’d be justified because Labour’s Best Start is a corruption of what welfare should be.

It isn’t based on need.

It’s redistribution but it’s not just taking from those who have more than enough to go to those with too little.

It will be taking for people who don’t have enough and going to people who have far more.

Labour leader David Cunliffe said in his speech:

. . . we will be unashamedly asking the wealthiest few percent of income earners to contribute to giving all Kiwi kids the best start.

But increasing tax on incomes over $150,000 is very unlikely to cover the cost of this policy.

Even if it did, it will be paying many people money they don’t need when it could be used to pay for other things the tax on those on much lower incomes has to cover.

This is a very expensive bribe which will give some more than they need while others still don’t have enough.

It’s not a best start it’s bad policy and the best way to stop it before it starts is to vote against the parties supporting it.


Ah, it’s social democracy

January 27, 2014

Wondering why families earning well above the average wage need welfare?

Here’s an answer:

Quite how that works, remains moot.

 


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