Welfare and immigration set for a 'reset'

The prime minister’s State of the Nation speech got the media’s attention when he said welfare needs reform. He didn't mention record-level immigration but that’s also been deemed unsustainable and set for a reset too. What did the media tell about these problems - and what’s at stake?

In his State of the Nation speech last Sunday the prime minister described Kiwis today as resourceful, reasonable and resilient - but the country as fractured, fragile and lacking lost mojo. 

But the pundits mostly agreed the new prime minister found his mojo. 

“Yesterday’s speech was good. Better still was the presentation: Luxon sounded like a normal person,” Stuff’s Andrea Vance said in The Post on Monday.  

That made the paper’s front page under the headline ‘Who de-programmed Luxon?’

The same day, BusinessDesk’s Pattrick Smellie was also wondering.  

“Christopher Luxon has looked for a while like a man in need of a decent speechwriter. His State of the Nation speech suggests either that one has been found - or Luxon is starting to find his voice as prime minister. Or possibly both”

Smellie also reckoned Luxon came across as a “bit of a scold” when repeatedly highlighting our “fragility” and the need for “tough love”.

“[The speech] was him giving the country a bit of a boot up the backside. And let's be honest, we all need that from time to time,” TVNZ’s Maiki Sherman told 1 News viewers last Monday. 

But not everyone was feeling Luxon’s boot.  

Zeroing in on welfare ‘blowout’ 

“We got a lot of talk about beneficiaries. And they were told that the free ride was over. And then in the end, there was an admission to reporters that the government has yet to explain how it would address and finance the solution to our woes,” Newstalk ZB Afternoon host Andrew Dickens told listeners.

“Choosing to make it the centrepiece of the post-Cabinet press conference was more about pure political theatre. But the fact it was largely theatre does not mean it is not good politics,” said New Zealand Herald political editor Claire Trevett the same day. 

But what the media then framed as a “welfare reset” was at this point little more than a one-and-a-half page letter to the Ministry of Social Development’s chief executive outlining the new government expectations of greater enforcement of existing welfare sanctions - and a media statement announcing "early action" to curb a “dependency blowout.”

In her weekly newsletter on Tuesday, the Herald’s Audrey Young pointed out some of minister Louise Upston's press statement seemed to pass the media by. 

"Of almost 190,000 people currently on jobseeker benefits, MSD only has strong visibility over the 60,000 or so who are receiving case management - including whether they are regularly applying for jobs," the minister said.

Extending oversight to the other two-thirds of cases would be a big ask for a ministry which - like rest of the public service - has to cut its budget.

“There's two sets of research that give different messages. But the statistics ... talk of of 70,000 more people on the Jobseeker Benefit at the same time that we've seen a 58 percent reduction in the use of sanctions. That's evidence enough for me to be deeply worried,” Upston told press gallery reporters who asked why she had cited old international research on welfare dependency rather than stuff about New Zealand our own ministry had put together. 

Having heard that, journalist Bernard Hickey published Stats NZ data showing the proportion of 15-24 year olds in work steadily rose between 2017 and 2023, including among those with disabilities. 

And a week before the State of the Nation speech, TVNZ’s Jack Tame had pressed the welfare minister on the Q+A show for evidence sanctions would actually work and whether she’d seen the Welfare Expert Advisory Group 2019 finding “there is little evidence in support of using obligations and sanctions to change behaviour”.

The prime minister called it a "perverse and obscene situation” on TVNZ’s Breakfast on Tuesday. 

Echoing numbers in Upston’s media statement, he said “work-ready job seekers are forecast to spend an average of 13 years on a benefit, and teenagers could become trapped on welfare for 24 years of their working lives”.

Those alarming figures aren’t official ones. They are forecasts by actuaries supplied to the MSD, already in the public domain thanks to the Herald’s Alex Spence and the OIA. 

Earlier this month, he said these reports were published annually on MSD’s website until 2017. He also reported that the Taylor Fry actuaries concluded “the estimates are skewed by a growing minority of beneficiaries staying on welfare” such as nearly 19,000 people receiving sole parent support and about 500 young people expected to be on income support for “almost the rest of their working lives”.

Population booming too

While the prime minister expressed alarm in his State of the Nation speech about “adding every man, woman and child in Napier onto the Jobseeker benefit in just six years”, he didn't mention a Dunedin’s-worth of new citizens added last year alone.

“We were adding a Taupō's-worth of people every second month or so. That's contributed to the largest population gain New Zealand has ever seen since the end of the Second World War," Infometrics Economist Brad Olsen told Newshub when new immigration stats appeared two days earlier. 

The next night TVNZ reported the difference between births and deaths was now the lowest it has been since the World War II. 

On TVNZ's Q + A with Jack Tame the previous weekend, Immigration Minister Erica Stanford agreed the current annual immigration rise was “unsustainable”.

“In 2022, the RBNZ [Reserve Bank of New Zealand] and [the central bank's governor] Adrian Orr were saying we desperately need workers - and they put a lot of pressure on the government to basically close their eyes and open the doors with a knee jerk reaction. And we are where we are because of that,” Stanford told Q+A. 

The Herald’s business editor Liam Dann found that “ironic” on the Herald’s daily podcast The Front Page last Tuesday. 

“National was crying out for more workers and saying they need to loosen up. And now you got National saying we're going to tighten it all up. They'll say we want a more nuanced setting, more reactive and more able to adjust. All these things are good and easy to say,” he said. 

Before the election last year, Scoop’s Gordon Campbell pointed out National cited increased immigration visa charges as a source of revenue which would help fund tax cuts they campaigned on - along with foreign house buyers and taxing online gambling. 

Its election manifesto called for new visas for graduates of world's top universities and high earners from top global tech companies - and even a Digital Nomad Visa for one year with options for work or residence after that.  

It also called for five-year multiple entry visa for migrants' parents and grandparents with option to renew for further five years - and expanding international student work rights was in the education policy.  

ACT wanted to remove 'work to residence' category of the immigration green list; replace the Accredited Employer Work Visa with demand-based pricing - and remove the cap on Parent Resident Visas.  

This week, only Auckland-based Indian Weekender newspaper reminded readers investigative journalism late last year “exposed a nexus of profiteers, including employers and agents, bringing in migrants who were proving a burden on the economy”.

In that long interview on TVNZ’s Q+A, the minister admitted much has yet to be thought through for an immigration reset. 

"What I want it to do is give us a planning framework, understand what our absorptive capacity is, and make sure that our hospitals, our schools, our infrastructure, are working with immigration so that we have better long-term planning," Stanford told TVNZ.

How did we do ‘absorptive capacity’ back then? 

Financial journalist Bernard Hickey pointed out New Zealand planned for population growth of about 2 percent a year back then by putting between 5 percent and 10 percent of GDP on infrastructure each year. 

In the 1980s and '90s that fell back as tax rates were cut on the assumption of low-to-no population growth, he said. Land taxes, estate duties and taxes on capital gains were also dropped. 

But Hickey also pointed that since 2004 our population’s grown at a rate only a little lower than the previous population baby-boomtime between 1947 to 1967.

Yet infrastructure investment has been less than half the rate of the baby-boom years, helping create the deficit that’s part of the state of the nation today. 

This month, the briefing to the Immigration Minister Erica Stanford said a Productivity Commission Inquiry into immigration in 2022 had made this clear. 

The Productivity Commission is set to be scrapped as part of new coalition’s first 100-day achievements, though that was one of the achievements listed in the prime minister's State of the Nation speech last weekend.