Dialogue: Labour's mission one of confusion

By JOHN ROUGHAN

Waking up to the wrong radio station on Wednesday I head the Minister of Social Policy say that his role was no longer to be the poor relation of economic policy, or dull words to that effect.

It was wrong, said Steve Maharey, to think economic policy was about earning money and social policy about spending it. Social spending was really an investment. "You are going to hear that word investment a lot more," he said.

Mercifully, Morning Report did not want to hear much more of it. They knew the minister had in his hand a brand new boring report called "The Social Development Approach." It was the reason he had come on the programme, only to be ambushed by a couple of questions on the Christine Rankin case.

That done, there was a perfunctory discussion about the evil of economics that supposedly relied on unemployment, and the item wound up in agreement that things would be different now.

Such are the mythologies of National Radio. In fact, nobody in his right mind wants unemployment; it is a waste of resources for one thing. And if investment was more than nice word for spending in Mr Maharey's mind, there would be reason to cheer.

Investment means spending for a measurable gain in wealth. It means social policies that are most likely to see beneficiaries of working age become self-supporting contributors to the national cake. That was the brief of Work and Income New Zealand when it was set up a few years ago. Things are fuzzier now.

It is hard to know how much attention to pay to this fitful and, so far, fruitless quest for the Third Way, or "new paradigm" as they now prefer. I detested that word at university and can hardly bear to write it still.

When Labour came to power it happily handed the quest to committees of public servants who periodically produce a volume of paper. It is tedious reading but, you never know, it might be important.

The Coalition's fondest hope - indeed, the reason it gives for getting rid of Christine Rankin - is to turn Social Welfare into a ruminative establishment with the intellectual force to rival the Treasury.

On the evidence of the paper produced by Mr Maharey this week, there is a long way to go.

Curiously headed "A Social Exclusion Strategy", it begins with a quotation of Adam Smith of all people, from The Wealth of Nations: "No society can surely be flourishing and happy of which the far greater part of the members are poor and miserable."

The document then says the same thing less clearly in 28 different ways (paragraphs are numbered) over 6 1/2 pages.

When eventually it attempts to assess social exclusion it concedes that the greater part of our members are not poor and miserable. The best estimate is somewhere between 5 per cent and 15 per cent.

Why? Lack of "access" to things, according to this paper. Lack of opportunities, previous experience and just plain bad luck. It has nothing to do, apparently, with people making unwise decisions - to leave school, quit a job, risk pregnancy, commit crime or, the true daddy of the DPB, get divorced.

What is to be done for our 5 to 15 per cent? Nothing directly to discourage unwise decisions. Just income support, public services, and a list of hopeful social investments that are better reasoned in another recently touted report, by the Treasury.

That paper, "Towards an Inclusive Economy", was eagerly anticipated. It was to be the taming of the Treasury; the titans of market theory were being frog-marched into the Third Way, the new para-, yuk, the "triple bottom line".

The last is the Prime Minister's preference. It has something to do with finding policies that enhance social conditions and the environment as well as the economy.

Political commentator Colin James, in a brilliant address at the conclusion of the Knowledge Wave conference, embraced the triple bottom line to suggest the economy was more in need than the other two.

Helen Clark, following him, said the three ledgers were not comparable. Confused? So is the Government.

Fortunately, the Treasury is keeping a clear head. "Inclusive Economy" is an impressive document which challenges some of the Government's favourite plans.

On social investment, it distinguishes between "passive" spending (tax and transfers and some services) and "active" (such as education, employment and childcare subsidies) which might boost economic growth.

It emphasises that it is important when providing training and job opportunities that beneficiaries are expected to take them. "[International comparison] suggests the New Zealand work test is administered in a relatively gentle way and that a tougher approach is effective."

Income disparities today are largely caused by technological progress, it says, arguing the capabilities people need are not necessarily acquired by formal education.

The paper makes a case for more investment in raising the skills of the 20 per cent, disproportionately Maori and Pacific people, who still leave school unqualified.

This, it says, is a more urgent need than additional funds for universities, by which "private rates of return provide strong incentives for individual students to contribute their own resources, assisted by the student loan scheme".

It opposes paid parental leave and has a caution on the knowledge economy.

"Producing science and engineering graduates, for instance, in the same proportions as Germany, the United States or the United Kingdom might not be beneficial for growth."

Helen Clark concedes the Treasury is "not there yet"- thank heavens.