Welfare reform about more than money

Quote of the week from Prime Minister John Key:

 “Welfare reform is not just about financial outcomes, but about improving the lives of a large group of New Zealanders.”

Improved finances for individuals, who would earn more in work than on a benefit, and the state, that would have to pay less, are only part of the story.

The financial outcomes for people in work are better than for those on benefits. But so too are the educational, health and social outcomes for them and their families.

A few people will always need assistance but for most benefits should be a temporary measure, for their sakes and society’s.

Short term gain long term pain on benefit

Benefits aren’t designed to give recipients a very good living for a very good reason – that would be a disincentive to independence and mean low income working people were little, if any better off as wage earners than they’d be on benefits.

The ones who manage a two-year holiday on the dole are the exception and even those of us with Presbyterian upbringings who’ve had some experience of  living on a very low income would find it difficult to manage on a benefit for long.

Why then do some people see benefits not as temporary assistance through a bad patch, but a long term solution?

Anti Dismal has an answer:

The most compelling explanation for the marked shift in the fortunes of the poor is that they continued to respond, as they always had, to the world as they found it, but that we — meaning the not-poor and un-disadvantaged — had changed the rules of their world. Not of our world, just of theirs. The first effect of the new rules was to make it profitable for the poor to behave in the short term in ways that were destructive in the long term. Their second effect was to mask these long-term losses — to subsidize irretrievable mistakes. We tried to provide more for the poor and produced more poor instead. We tried to remove the barriers to escape from poverty, and inadvertently built a trap. – Charles Murray, Losing Ground, p. 9

 This is why the government is aiming to encourage those beneficiaries who could work to do so. It is in the best long-term interests of beneficiaries and the country to have more people independent.

That doesn’t mean it will be easy.

The job market is tight and many unemployed are unskilled. Some would find it difficult to juggle child care and work and might find the cost of child care took too much of their wages.

It might well cost more in the short term to help people into work than to have them on benefits but if it can be done it will be worth it for them, and the rest of us, in the long run.

For the sake of the children

“If you really want to do something “for the sake of the children” then get their parents employed.”

This comes from Macdoctor who does his usual thorough analysis of stats showing more children were admitted to hospital during the recession.

Lindsay Mitchell comes to a similar conclusion:

Children in families with work do better than children with families on benefits despite both being on low incomes.

Children in families that work suffer the least abuse or neglect.

Children in families that work grow up with similar expectations for themselves.

The first aim of welfare reform must be to get people who can work into work. It is best for them, their children, society and the economy.

A caring society has a responsibility to look after those who can’t look after themselves. But a caring society must also help those who can help themselves to do so.

This could well be more expensive than just giving people benefits in the short term but it is the only way to halt  benefit dependence and the vicious circle of deprivation it leads to.

Long term benefit dependency not good for individuals or society

Does anyone really believe that long term benefit dependency is good for either the people receiving them or society?

Judging from the howls of anguish which have met the release of the Welfare Working Group’s summary paper some people do otherwise they wouldn’t be so upset at the prospect of addressing the problem.

Nobody is suggesting that benefits shouldn’t be available to offer short term assistance for people in temporary need. Nor is anyone suggesting people who are unable to work because of health issues or other circumstances beyond their control should not get long term assistance.

The problem is people who could work to support themselves and don’t.

They’re the ones, which Garrick Tremain portrayed so well, taking welfare not as a safety net but a hammock.

I can remember reporting on second generation beneficiaries nearly 30 years ago, by now some families must have the third or even fourth generation on benefits.

One of the reasons people choose state asistance rather than work is, as Lindsay Mitchell points out, they get more money than thy could earn in wages.

It must be galling for people on in low-paid work to know that some of the tax which comes out of their pay contributes to keeping people who get more in welfare than they earn.

There are no quick and easy solutions to the problem, but economic growth will help. More better paid jobs would ensure those in work are better off than they’d be on benefits.

Just $1 an hour

Why should anyone work for just $1 an hour? the opponents to the government’s plans to work-test sickness beneficiaries are asking.

The answer is: is the abatement rates which impose a high marginal tax on extra income for all beneficiaries.

But if the benefit isn’t abated, beneficiaries would get more for part time work than some others would for fulltime work and that’s definitely neither fair nor right.

The problem isn’t that beneficiaries are working for just $1 an hour, it’s that they aren’t working for all the other dollars they get.

There are good reasons why some people need a benefit temporarily. There are good reasons why a few people will need a benefit permanently.

But getting those who are able to work in to work, albeit part time, is better than leaving them to do nothing on a benefit.

Working isn’t just about the money you earn, it’s about satisfaction, standing on your own feet, and requiring less from the public purse which frees up money for those who need it more.

It’s unfortunate but unavoidable that some beneficiaries may find they’re only $1 an hour better off than they would be if they weren’t working. But they won’t be working for only $1 an hour.

They’ll be working for all the dollars the taxpayer gives them plus the $1 an hour.

That’s better for them, better for the economy and better for society.

Foreign place in our country

Jim Hopkins has been to a foreign place, but it wasn’t in another country.

For all sorts of reasons, principally a stubborn refusal to challenge our own shibboleths, we’ve created a monument to indifference, an unintended but shameful urban disaster.

Calling it the perfect slum would be satisfyingly glib – and unfair. But it is the ghetto of good intentions, an ill-considered, ill-designed place created by well-meaning souls who’ve unwittingly turned a 1935 dream into a 21st century nightmare.

There’s no doubt they believed they were doing the Lord’s work. There’s no doubt the rest of us didn’t give a toss so long as things were out of sight and out of mind. And there’s no doubt the benign objectives of an egalitarian society have yielded a malignant result. . .

South Auckland is architectural evidence there is a Law of Unintended Consequences. It’s what you get when you marry munificence and indifference.

It’s what you create when no one asks questions about what they’re creating. It’s an accident of angels, a bureaucratic folly and a public shame.

The lawlessness, the fear, the deliberate damage and the neglect ought to be foreign to New Zealand, so why aren’t they?

Drug and alcohol abuse, lack of education, poor health, intergenerational dysfunction and poverty are among the causes. 

The welfare state which was designed to help those in need ought to have prevented some of that but it too has contributed to the problem.

Welfare doens’t cause problems when it’s short-term assistance for people temporarily in need. It’s not a problem when it’s long term assistance for those who will never be able to help themselves.

But it creates problems when it gives long term assistance for people who ought to be able to look after themselves and can’t or won’t. By giving without expecting anything in return it creates a culture of dependency, and a dislocation from society.

The benefit system gives people the right to other people’s money without making them responsible for using it wisely. Those who give that money – the businesses and workers who pay the taxes from which benefits come- have responsbilities and if they don’t meet them they face consequences, which could include losing their jobs.

Cutting benefits in part or altogether would cause more problems, especially for families where children would suffer. But the opposite extreme of allowing people to languish on welfare indefinitely and opt out of society while doing so isn’t working either.

Perhaps the answer lies somewhere between. It won’t be simple and it won’t be cheap but not finding it will be more expensive in human and financial terms than pretending South Auckland’s a foreign land whose problems aren’t ours.