Less for more or more for less*

July 3, 2018

Governments have choices when giving assistance.

They can make it universal – giving to more people, but each getting less; or they can target it – giving it to fewer people but each getting more.

With two payments starting this week, the government opted for the less for more approach.

There was $65 a week for a year for all parents of new babies and $450 to help all beneficiaries with winter heating – or whatever else they choose to spend it on – whether or not they needed it.

The baby payment can’t be claimed with Paid Parental Leave so single-earner double-parent households will get it and those earning less than $79,000 will get the payment for up to three years.

But some families still won’t have enough with it and others will have more than enough without it.

Most beneficiaries who get the winter heating payment will need it, but among those receiving it are pensioners, including those still in paid work, in receipt of more than one pension and/ or with more than enough other income.

Act Mp David Seymour says:

Around 9 per cent of superannuitants earn over $60,000 a year – more than the median income and three times the level of the pension.

“Their slice of winter energy payments will cost taxpayers about $73 million. . .

Eloquently as the gentlemen at Point of Order argue for a mate who will use the payment to power up his electric Mercedes, most of us would find more pressing needs for that $73 million.

There are costs to targeting but it would have been very simple with the heating payment.

Had it been opt in most of the better-off pensioners wouldn’t have bothered to claim it. Since it’s opt-out few will bother to turn it down.

Both these payments are part of the nanny state Damien Grant says insulates us from the consequences of failure:

. . . Children protected from the rigours of life fail as adults. We all understand this and parents grimace as our children stumble through the same mistakes we made. Yet we have unlearned this obvious truth when it comes to the wider community.

What happens to an individual when the consequences for failure are removed? What happens to families whose parents are not expected to provide for their own off-spring? What happens to a community over multiple generations of dependency?

We have been taught that we are not responsible for providing for our own education, paying for our healthcare or even scrabbling for food. The existence of poverty is never the fault of the individual but of the wider society who, as a consequence, must bear responsibility for the poor life decisions of all its citizens.

We can see the result, as most OECD nations have been conducting an inter-generational experiment on shielding their citizens from the slings and arrows of outrageous fortune.

Controversial-yet-influential American political scientist Charles Murray’s 1984 book Losing Ground outlines a theory that welfare can increase poverty because it rewards self-defeating decisions, such as avoiding employment. His writing contributed to then-US President Bill Clinton’s limited wind back of federal welfare in 1996.

In New Zealand, every citizen is a beneficiary. We are all eligible for free healthcare, pensions, TVNZ and a welfare system that is so invasive that my local district health board keeps sending me requests for a stool sample. (Seriously, cut it out!)

We are insulated from the full consequences of failure and hampered by a progressive tax and social regime that places a drag on success. The results are rising numbers of single-parent families, record levels of incarceration and persistent pockets of poverty and low academic achievement.

The response to this ongoing failure is ever-increasing intervention.

Today makes the start of the Orwellian Working For Families programme, where middle-class parents receive even more government cash paid for by scrapping the last government’s tax cuts. 

We have become infantilised by this paternalistic managing of much of our economic life and are unwilling to embrace the freedom and responsibility of adulthood. 

It is very difficult to design a welfare system that helps those in genuine need without trapping them; to give people enough without incentivising them to stay dependent; to give hand- outs that provide hands-up without holding people back.

But targeting extra payments would be a good start.

* I know that should be fewer not less, but whenever has correct grammar got in the way of a headline?

 


%d bloggers like this: