Bradford blasts insurance welfare

Sue Bradford. Photo / Janna Dixon

A possible shift to an insurance-based welfare system came under fierce attack at a forum organised by the Government's Welfare Working Group yesterday.

Former Green MP Sue Bradford, now doing a doctorate in public policy with Professor Marilyn Waring at Auckland University of Technology, told the forum the insurance model would be "the worst possible scenario for any society that calls itself humane".

But working group head Paula Rebstock said New Zealand and Australia were the only OECD countries which paid flat-rate welfare benefits funded out of general taxation.

"All those other countries that we sometimes think do so well with their social welfare approaches are using insurance-based approaches," she said.

"I don't know whether the working group will think there is merit in looking at recommendations in that space, but given that we have been invited to look widely, how can we not look at the approach being pursued in all other jurisdictions other than Australia and New Zealand?"

In most developed countries, workers and their employers pay levies out of their wage bills into social insurance funds which pay out a proportion of a worker's previous income when he or she becomes sick, disabled or unemployed.

The insurance payouts typically last for only a year or two. After that, people who are still out of work drop down to flat-rate "social assistance".

Ms Bradford said shifting to an insurance system here would overturn "a fundamental principle of the 1938 Social Security Act, that there is a community responsibility for making sure that people are helped when economic conditions mean they are unable to help themselves".

She predicted that when insurance payments ran out people would be forced into begging, crime, prostitution or death.

"We are entering a critically dangerous time for the future of our social security system," she said.

"The shape of an ACC or insurance-based system is likely to mean, in stark terms, that most people on ... benefits will be hounded into at least looking for paid work, no matter how precarious or unpleasant that work might be or how few jobs there actually are out there."

She said many people ended up on benefits because jobs were increasingly casual, insecure and involved long antisocial hours.

"How about the working group seriously addressing this issue and making a few recommendations to the Government about what could be done to strengthen workers' rights on the job, to encourage steadier, more fulltime employment and to, for example, require employers to pay redundancy?" she asked.

But Ms Rebstock said all social insurance systems included a social assistance safety net for those who did not qualify for the insurance payments.

She said the working group would publish a paper next month defining the key issues with the current welfare system, and another paper in August or September on options for reform. Public submissions would be invited on both papers.

The group is due to report to the Government by the end of the year.