John Armstrong: Any ugly welfare debate would be welcome distraction for Bennett

Paula Bennett. Photo / Doug Sherring

Paula Bennett's inflammatory remarks this week about the welfare reform debate turning ugly were lost in the firestorm kindled by the exposure of former Labour ministers' rorting of their taxpayer-funded credit cards.

But the Social Development Minister's musings on the Government's forthcoming benefit system overhaul are arguably of far greater political relevance than the copious documentation showing when, where and on what ministers flashed the plastic.

In expressing fears that the debate could turn ugly, Bennett was trying to denigrate opponents of welfare reform without directly saying so. The attempted spin was rather transparent. It was also somewhat disingenuous.

The only people who stand to gain from what is likely to be a humdinger of a political argument becoming ugly are Bennett and her National Party colleagues.

That is because much of what National is likely to include in its welfare reform package has been tried and tested in other countries. A huge amount of evidence - much of it conflicting - has been amassed on the practicality of various options for getting people off benefits and into work.

Any distraction which skews the public debate away from a detailed appraisal of the value, viability and validity of the Government's eventual blueprint for restructuring the welfare system in the light of such overseas evidence will be to Bennett's advantage.

As it is, she already has her hands full with her Social Assistance (Future Focus) Bill which tightens sanctions and increases incentives for beneficiaries to find jobs.

Of particular note, the legislation imposes a new obligation by introducing part-time work tests for sole parents on the DPB whose youngest child is 6 or older.

Now in front of Parliament's social services select committee, the bill has attracted many submissions questioning the availability and adequacy of child-care facilities which are a prerequisite for the measure to work.

But this is a walk in the park for the minister in comparison with arguing the merits of time-limited benefits and a two-tier contributory social insurance which is presumably being mooted as a means of eventually cutting dole payments.

Bennett confirmed this week that both those ideas will be canvassed by the welfare working group she has established to come up with recommendations by December for restructuring the benefit system.

This is uncharted territory and on the margins of National's comfort zone. Nevertheless, the question is whether National has the political bottle to follow the United States example where eligibility to pick up a federal benefit is limited in many states to a maximum of 60 months.

That may seem tough. But in practice, many states allow exemptions from and extensions to those limits, some simply continuing to pay welfare using state funds once the 60-month limit brings the cut-off in federal funding. Moreover, those who have not found jobs at that point are still eligible for food stamps and Medicaid.

The bigger question is whether time limits cut numbers on welfare. One independent study found some evidence that time limits prompted welfare recipients to find jobs.

But the magnitude of this effect was not clear. The difficulty of measuring such an effect lies in separating it from other factors which might be responsible for getting people off welfare, such as an improving labour market.

Bennett will be punting on the welfare working group navigating a path through this potential minefield, leaving her to gauge public reaction to the group's suggestions before choosing which ones to run with.

That is politically preferable to putting up proposals of her own from which she might later have to back away.

But her view that the welfare reform debate could "spark prejudices" and reveal "an ugly side of New Zealand" is also an admission of the difficulties of convincing people of the merits of initiatives that have previously only found favour with the likes of Act and the Business Roundtable.

It is Bennett's version of the Good, the Bad and the Ugly, in which she is trying to paint National as working for the public good and opponents of reform on the political left as negative and out of touch.

Bennett's warning that things could turn ugly came at a two-day conference organised by Victoria University's Institute of Policy Studies to help the welfare working group engage with individuals and organisations "in the conversation about creating a more sustainable and fair welfare system".

Such loaded language already has critics claiming that conversation will be very one-sided. They say the only ugliness is Bennett's use of the working group as a vehicle for the beneficiary-bashing necessary to soften up the public to the merits of restructuring.

Nothing those critics heard from Paula Rebstock, the working group's chairwoman and former chairwoman of the Commerce Commission, will have altered their view that this exercise is picking up where Ruth Richardson and Jenny Shipley left off nearly 20 years ago when they launched an unsuccessful offensive on the foundations of the welfare state.

Those two politicians failed because the country was not ready for such an overhaul or the conviction politics driving it.

National has learned to be less brazen and more subtle in the way it tackles fundamental reform. That is exemplified by the Institute of Policy Studies' "hosting" of the welfare working group. That follows a similar partnership between Victoria University and Bill English's tax working group. But the latter's assembly of specialists to advise the Government on tax policy was a very different animal to Bennett's group.

The institute is at severe risk of being seen to be providing academic cover for a politically charged exercise which anyway has a secretariat of senior bureaucrats seconded from across the public service to provide expert advice.

Bennett's remarks should have rung alarm bells in the institute's ivory towers about the highly divisive direction in which the welfare working group's work is likely to move. Rebstock's paternalistic talk of the current system locking "many people" into life on a benefit which "robs them of their potential" is the giveaway of the kind of agenda operating here.

Such talk also does not equate with the facts. Ministry of Social Development data shows those getting the domestic purposes benefit number about 110,000.

But that disguises the stream of sole parents flowing in and out of that category. About 31,000 people signed up for the DPB in the year to March. But in the same period nearly 26,000 came off it.

And despite the recession and a weak labour market resulting in 103,000 people signing up for the dole, about 78,000 came off the unemployment benefit in that period.

The figures suggest the current system does not lock people into benefits and that people want to work, but the determining factor is the state of the labour market.

Bennett can expect an avalanche of such statistics and high-decibel contrary arguments from voluntary organisations, trade unions and political opponents when the time comes to start selling the welfare working group's recommendations.

She may possess a warmer, more down-to-earth persona than the coolly doctrinaire Richardson and Shipley displayed.

But her restructuring of welfare is shaping as the toughest test for a still relatively junior minister who likes to keep the arguments simple when the concepts she will be grappling with are anything but.