Jonathan Boston: 'We've got a multiplicity of problems'

Despite the efforts of governments over decades, New Zealand’s welfare state has failed to solve entrenched poverty, an academic says.

For over 30 years, Professor Jonathan Boston from Victoria University has been studying ways in which a welfare state might work and says the New Zealand system needs a radical overhaul.

He published a book last year, Transforming the Welfare State, and he's speaking about it in Auckland this week.

“I think we have to recognise that in the current environment, there are considerable problems with our current welfare state.

“So, despite efforts of governments over quite a long time, we still have significant rates of poverty, and not least child poverty and material deprivation,” Prof Boston told Jesse Mulligan.

These problems are wide-ranging, he says.

“We have very significant ethnic disparities and continuing gender inequalities, we have a relatively burdensome system of income transfers which is not working well and first-year benefits, as they're called, are simply not adequate to meet the needs of most of the people who need them.”

There are also what he describes as “glaring inconsistencies".

“In the way we treat sickness, for example, relative to accidents. All things being equal, it's better to have an accident that delivers a particular outcome than a sickness which delivers the same outcome, because many people are going to receive better assistance and more financial support if they have an accident rather than if they get sick."

New Zealand’s chronic housing problem continues to worsen, he says.

“We've got huge problems in the housing sector: low affordability, poor quality, overcrowding, declining home ownership, and so on. And one could go on.

"So, I guess my key point here is that we've got a multiplicity of problems despite the efforts of Governments over some considerable time, and these problems need addressing.

“And in my view, they require radical changes, not just changes on the margins.”

The aims of the architects of New Zealand’s welfare state in the 1930s are far from being achieved, he says.

“In some areas we've gone backwards. Over recent decades our poverty rates, particularly for children, have been higher over the last 30 years than they were in the 1980s.

“We have far greater housing problems now than we had even 10 years ago, let alone 20 or 30 years ago. So there are some really significant issues that need to be addressed, and mere tinkering isn't going to resolve them in my view.”

He believes some of problems facing us today are the result of historical legacies.

“If we think about how the welfare state was set up, it was set up relying quite heavily on means-tested assistance, or targeted assistance, funded through the tax system.

“That is rather different to the way welfare states operate, particularly in Europe, where there is a much heavier reliance on social insurance, where people pay some component of their taxes in effect into a social insurance scheme, and then receive earnings related benefits through that scheme.”

One of the advantages of a social insurance scheme is there is a clear link between contributions and entitlements, he says.

"In a system which is funded by taxes, and where assistance is means-tested, people don't always see the connection between their contribution, and what they receive if they're in need.

“And indeed, if you have a system in which a lot of the assistance is means-tested, the result is that many middle to high income earners, very rarely receive any of the benefits of the welfare state.”

He gives the example of a couple he was staying with in Denmark.

“I stayed with a family in Denmark over 20 years ago. During that time, one of the partners was made unemployed.

“I immediately thought this is sort of a grim situation, but he immediately pointed out that under the Danish system, he would receive 75 percent of his previous earnings for an extended period, like a year or 18 months.

“And his income was not contingent on his wife's income, and she was in employment.”

In New Zealand a two-income family would become effectively a one-income family, he says, rather than in Denmark where it would be a one and three-quarters-income family.

He believes such a universal, contribution-based, system has advantages.

"One of the things we find about current attitudes towards the welfare state in New Zealand is there is less support here for giving people in need a decent standard of living than almost any other developed country in the world.

“In other words, we have a more you like mean-spirited approach to those in need, than is the case elsewhere.”

This is baked in to the design of the system, he says.

“If we included the middle classes who had fallen on tough times, we might see the welfare state as something to give everybody assistance when they needed it, rather than something to only help out the poorest in society.”

He believes universal superannuation is a good model but the age it kicks in should rise.

“In the interest of fairness, we should be lifting the age of eligibility for universal assistance from its current 65 to say 68 or even 70 in the long run, as longevity increases, and as more people in their mid to late 60s continue in the workforce.

“I think there's something seriously wrong when we have high levels of family poverty and child poverty and have a situation in which someone like myself, when I turn 65 within two years, will be eligible for a universal pension, as well as potentially continuing in work.”

Non-partisan planning has been largely absent when thinking about the welfare state, he says.

“I think what has been lacking in New Zealand has been a willingness of the major political parties to really sit down together and tackle some of the big issues and agree on a long-term strategy for addressing them.”

There has been cross party agreement on super and some child poverty measures, but they have been exceptions, he says.

A political "accord" is needed for intractable problems such as the housing crisis, he says.

“In my view, we desperately need to agree on whether we want to have a higher level of home ownership than we have now. And if so, how are we going to achieve it? Because that's going to be a long-term goal, and it will require consistent policies to achieve.”

Likewise, on social housing, he says.

“Currently we only have a social housing at about three and a half percent of total housing stock, which is extremely low by international standards and half what it used to be 40 to 50 years ago.

“But if that's to be changed, we will need a huge investment in social housing. And that's not going to be possible without multi-party agreement across the house.”