Brian Rudman: Positive focus to create jobs better than benefit-bashing

The Government's Welfare Working Group, criticised from set-up as a bunch of beneficiary-bashers in disguise, has tried ever so hard in its just published discussion paper on long-term benefit dependency to stick to the facts.

Few would disagree with their concern about the destructive effects of being long- term on a benefit, one of these being persistent low incomes and poverty.

Or that "being on a benefit and out of paid work has adverse effects on people's health".

There'd also be little argument that the "consequences of long-term benefit receipt are deeply concerning" and "does not provide equal and fair opportunities".

But in the end the group, headed by former Commerce Commission chairwoman Paula Rebstock and including former Act Party president Catherine Isaacs (formerly Judd), couldn't help themselves.

They've tried to put the fear of God into every right-thinking taxpayer by conjuring up the nightmare that if everybody currently on a benefit stayed on it for the rest of their lives, the cost would be $50 billion.

And that's ignoring all the yet-to-be sick and unemployed and pregnant, bludgers who are queuing round the corner, waiting to sign up for their lifetime of sponging off the taxpayer. Shock, horror and pass the smelling salts.

The discussion paper concludes "If current trends in benefit receipt continue unabated, 16 per cent of the working-age population could be receiving a benefit by 2050. The social and economic cost of this will be unsustainable."

It forgets to mention about 16 per cent of working age people were on benefits for most of the 1990s, thanks to high unemployment, yet somehow we managed to survive without marching the beneficiaries off to work camps.

The figures are large, for sure, with 356,000 working age adults - one in eight - on a benefit. Of these, 60,000 for 10 years or more. But ringing the warning bells because beneficiary numbers might reach 16 per cent in 2050 is alarmist.

Even if that proves to be an accurate prediction of what might happen 40 years hence, that's only a 3 per cent increase on the current figure.

The working group's solution is we have to incentivise the halt, the lame, the sole parents and the able unemployed, back to work.

But no matter how many sticks and carrots they come up with, it's all hopelessly theoretical until the Government, or the economy, comes up with some new jobs.

The latest Household Labour Force Survey records 159,000 people are now officially unemployed. Last month, 63,059 of these people received the dole. Just two years before, that figure was just 17,710.

Planning revolutionary ways of encouraging people back to work when there isn't any to go back to is a "make work" assignment confronting the wrong question.

The underlying premise is the benefit budget has to be slashed because with an ageing population, a declining work force will be unable to fund the level of benefits predicted.

This seems to be an unnecessarily gloomy view of life. A Treasury paper from 2002 notes studies such as this, of the fiscal implications of an ageing population, are fixated on health and pensions. There is a bright side. "There are areas of government expenditure that may shrink as a result of ageing populations, the most notable of which are spending on law and order and on education."

The report says as the majority of crime is committed by people between the ages of 15 and 30, "government may find itself able to reduce funding to the police and prisons as the number of young people in New Zealand declines". It adds that "equally in education, declining relative numbers of young ... may act to lower the amount of funding needed in that sector".

There's also an assumption that everyone will retire at age 65. Yet Statistics New Zealand expects the 65-plus labour force to expand from 61,000 in 2006 to 102,000 in 2021.

The Rebstock group also ignores that as a land of migrants, we can counterbalance the ageing process and fill any gaps in the labour force by importing an already educated and trained workforce from abroad.

In 1996, for example, Asians comprised 5 per cent of the total working-age population. By 2016, this will increase to 13 per cent.

More than 90 per cent were born overseas and over half this workforce are under 35 years old. Unfortunately, it's a resource we're wasting.

Just a month ago, Prime Minister John Key declared his local pizza delivery man was a supporter of the law allowing workers to be hired on a 90-day trial.

It then emerged that pizza man Sanjay Kumar has a master's degree in zoology and a business diploma, but the only job he could get was as a self-employed fast-food deliverer.

What a shame there isn't a working group into ending this sort of waste of talent.

It would be a much more profitable exercise than one indulging in another round of beneficiary-prodding.