Alasdair Thompson: Welfare reform vital for fair society

There are 353,000 Kiwis on welfare benefits, more than 400,000 on Working for Families and 555,000 on superannuation. Photo / Wairarapa Times-Age

Welfare policy in most first world countries has moved significantly from where it began in the 1930s.

Broadly speaking, welfare has moved well away from only funding public education and healthcare and providing a financial "safety net" for those who are between jobs, disabled or too sick to work.

Now it sets minimum income levels for single people looking after children (domestic purposes benefit) and for people in work with children (Working for Families).

It also provides for the long-term or permanently unemployed and there is universal superannuation for people over 65 years old, irrespective of whether they are still working and earning.

There are 353,000 Kiwis on welfare benefits, more than 400,000 on Working for Families and 555,000 on superannuation. In other words, 1.3 million New Zealanders are supported by the 2.2 million of us who are in work and otherwise paying taxes.

Most New Zealanders support the redistribution of income via taxation to pay for universally available public education and healthcare, apart from concerns about getting good results and best value for money.

Likewise, most New Zealanders support redistributing income to pay welfare to people transferring between jobs, and to those with health issues, a disability or sole responsibility for young children.

All of our political parties subscribe to that. Act goes further and says people who want access to public-funded health and education should be allowed to choose where they get it.

Most New Zealanders also support our universal superannuation system but I doubt most think it should become universal as young as 65, when people live longer and should be expected, where possible, to support themselves longer.

The unemployment benefit was fine during the heyday of near-full employment. But now, with so many people permanently unemployed, who own little or nothing and may have no skills, and are often so anti-social they would not find work in a booming economy even if they wanted to, their burden on hard-working taxpayers is a serious bone of contention.

Long-term unemployment is now inter-generational and permanent for a growing number of people. Three years ago we lifted the numbers of long-term beneficiaries by providing for working people with families on low incomes and Labour now says this will expand to working families with children under 2 years old.

This article is not lining up an argument to blame those supported by long-term welfare. The intention is to acknowledge that the only road out of disadvantage is for people to participate in the real economy.

Welfare can never provide the uplift that work and ownership provides. Welfare can be never be more than a safety net, and hanging in a safety net is no place to be unless you have no choice.

Neither is it my intention to comment on policies that seek to break the cycle of welfare dependency and family dysfunction, other than to commend them. Successive governments have allowed welfare to become, in the minds of too many recipients, their only choice.

In fact, it has become a rational choice because for many welfare recipients bettering their incomes will not deliver any gain. This is particularly so for working parents receiving Working for Families.

Welfare has become a way of life for so many because once you qualify for it there is no real condition to keep on getting it. When you get to the point of funding the dysfunctional lifestyles of unskilled adults who neglect their responsibilities to their children, then unconditional welfare that allows this to happen is senseless.

Requiring children to attend school is understood, yet there is no condition on parents to make sure they meet this responsibility. Neither is there a condition that welfare recipients learn skills that will help them get work.

The well-meaning welfare state in many developed countries now debilitates both the taxpayers who pay for it and those dependent on it. And it is reducing the productivity on which truly needed welfare depends.

We need to start thinking in terms of a fair society that helps adults to build their self reliance, and less about a welfare society that depends on well-educated and hard-working people who support not only themselves but those trapped by welfare.

We need to consider three policy issues: The largest is how to achieve the economic growth on which everyone's living standards depends. The second is welfare reform. The third is how to deal with the challenge of the working poor without them resorting to welfare.

The answer can only be when a society agrees to reward honest work fairly, and fairly in this sense means a working couple on low incomes being able to earn enough to take total financial responsibility for themselves and their family.

Low-income working people need to be rewarded when they pursue self-interest, self-development and better prospects.

Whatever the political leanings of our policymakers they need to keep in mind that while welfare benefits play an important role, our citizens do not have an inalienable right to welfare dependency. But they should have an inalienable right to a fair place in the real economy.

* Alasdair Thompson is chief executive of the Employers and Manufacturers Association.