At last welfare emphasis will move from punishment to support

12:29 pm on 4 May 2019

Opinion - The battles over welfare are in large part a dispute about whether people who find themselves relying on social security are principally in need of punishment or support.

Max Rashbrooke

Max Rashbrooke Photo: supplied

The Welfare Expert Advisory Group's report, released yesterday, is an urgent and much needed call for a strong shift towards the latter.

For decades now, the general trend has been to see welfare recipients as akin to naughty children, needing a harsh overseer to try to force them back into work and punish them if they fail. Other, more gentler elements have persisted but been sidelined. Hence the toxic inconsistency of recent welfare policy: expectations on people to find paid work have been massively strengthened, even as the training, skills and other programmes to support them into that work have declined steadily.

As a general approach, this has not worked very well. To take a recent example, benefit numbers may have fallen post-global financial crisis, but they would have done so anyway thanks to a rebounding economy.

The major effect of the previous government's sanctions was churn: Research shows that half the people who went off the benefit returned within 18 months, stuck in a cycle between welfare and low-paid, poor-quality work. Sanctions have also caused misery to the families affected.

More generally, as the report notes, there is very little evidence that sanctions achieve their claimed effects of getting people back into work. They are just as likely to force people out of the system altogether or into reliance on criminal activities or unsustainable borrowing.

In contrast to the harsh overseer model, the experts' report is an attempt to put a nurturing, caring assistant at the heart of the welfare system. It centres the system on whakamana tāngata - "restoring dignity to people so they can participate meaningfully with their families and communities".

Its implicit belief is that most beneficiaries are, just like anyone else, well-meaning, honest individuals who want to be either caring for others, earning, or learning, and need only well-designed support to achieve their goals.

Hence it calls for a massive increase in funding for programmes that carefully assess people's skills and help them retrain to get high-paid, high-quality work. And, it argues, for as long as they remain on benefits, they should no longer be treated as second-class citizens.

The report's most eye-catching recommendation is that the dole, now technically known as JobSeeker Support, should be raised from $215 a week to $315. This would be a useful step towards ensuring that recipients can indeed live with dignity and participate in society.

To retain incentives for work, the report recommends reducing the rate at which benefits are clawed back from people as their income increases. This would help tackle, though not eliminate, the dreaded 'poverty traps'.

The report also recommends more realistic requirements for sole parents to look for work, a limit on the use of sanctions so that they take no more than 10 percent of someone's benefit except in extreme cases, and an increase in the payments that support children's development.

These changes are estimated to lift the incomes of families with children by, on average, $6400 a year, and to take 45,000 children and 70,000 adults out of poverty. The evidence for such changes can be found in Scandinavia, where much more generous support generally results in less poverty, greater wellbeing, and shorter periods spent on benefits.

The upfront cost of the report's package would be $5.2 billion, no small sum for a country whose government spends around $100b a year. But as the report points out, the costs of doing nothing are even greater.

Child poverty alone is estimated to cost the country $6b to $8b, to which could be added the long-term costs of adult poverty to the health and prison budgets, and the unquantifiable cost to people's dignity of trying to live on $50 a week after bills.

The experts' report does not, as some hoped, spell out a completely new and coherent plan for a 21st century welfare system. It does not sketch out a fully future-proofed welfare system. It represents big change, not transformational change.

But then, like most of this government's working groups, Cindy Kiro and her team were not given the time and resources to deliver on broader ambitions. What they have produced, though, is still immensely important.

The ball is now in the government's court. So far, Social Development Minister Carmel Sepuloni, who is constrained by the Budget Responsibility Rules, has promised only to remove one of the many current sanctions, change abatement thresholds, and fund more staff to help beneficiaries into sustainable employment. Her government will have to take more urgent action if it is to claim that it has truly put nurture at the heart of the welfare system.

* Max Rashbrooke is a senior associate at the Institute for Governance and Policy Studies, and has written widely on inequality.

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