Tapu Misa: Welfare due for review - but this isn't it

The working group argues that moving single mothers from welfare to work results in better outcomes for their children, but the research isn't quite so unequivocal. Photo / Brett Phibbs

The welfare working group spends a lot of time in its discussion paper extolling the virtues of paid work - as the answer to all our prayers, the cure-all for poverty, social isolation, and whatever else ails us - but not much time spelling out how we'll achieve the nirvana of full employment at a time of high unemployment, especially for those who it deems allergic to the prospect of working for a living.

Sole parents, primarily, and those shirkers on sickness and invalids' benefits.

That's not within its brief, of course, and neither is the reduction of child poverty which an OECD official identified as one of our most pressing problems.

Officially, its role is to review the benefit system. Unofficially, it seems to be charged with scaring the bejesus out of taxpayers. It has decided that the current system "locks in" long-term welfare dependency, that it is inefficient and unsustainable.

Hence the inclusion in its paper of the scary but rather spurious $50 billion estimate of how much those now on a benefit will cost the state over their lifetimes.

As my colleague John Armstrong pointed out in the weekend, the figure is meaningless, "concocted to paint the benefit system as an intolerable financial burden".

Our welfare system is overdue for a comprehensive review, but this clearly isn't it. The public needs to be able to trust the integrity of the process, yet the review seems compromised already by its narrow parameters and predetermined conclusions.

Still, we should be thankful for the working group's insights thus far: that work is good, and that being unemployed and on the benefit is bad, not least because it leads to being poor, which is also bad. (This is why they get the big bucks.)

For example: "There is powerful evidence to suggest that a long period spent on a benefit, and hence a low income, is associated with a range of adverse social and economic outcomes, especially for young adults and children. These adverse outcomes may be transmitted across generations and become entrenched in communities.

"A short period of low income does not necessarily result in long-term deprivation. However evidence suggests persistent periods on a low income significantly increase the risk of deep deprivation, reflected in financial stress, low living standards, and poor housing."

And: "People who are out of work and on a benefit have a higher risk of poverty, social dislocation, and deteriorating overall health ... there is strong evidence that being without work is itself harmful to health. This is reflected in higher mortality, poorer general health, and poorer mental health. Long periods on a benefit are likely to cause existing health conditions to deteriorate or new health conditions to arise."

Might this mean benefits are too low? Not part of the brief - but should it conclude that sole parents should have their benefits cut, it will, of course, be doing it for their own good.

Few would argue that there are too many people on benefits and not enough in paid work - not least the 255,000 or so people currently looking for work.

The fact that beneficiary numbers fell when the job market was buoyant, and climbed again after the recession hit in 2008 gets scant attention from the working group. (Those getting the unemployment benefit fell 161,000 in 1998 to a low of about 20,000 in late 2007. After the recession, the trend reversed, with 66,000 collecting an unemployment benefit in December 2009.)

The working group is more concerned with sickness and invalid beneficiaries and sole parents. The working group argues that moving single mothers from welfare to work results in better outcomes for their children, but the research isn't quite so unequivocal.

American research shows that there are positive effects if the child is young and the pay is adequate, but negative effects if the child is of adolescent age.

According to a recent report from Child Poverty Action Group, most DPB recipients are on the benefit for a relatively short time while their children are young, and most re-enter the workforce when their circumstances allow.

Despite the recession and a weak labour market, in the year to March 2010 nearly 26,000 came off the DPB, and about 31,000 people signed on. Similar turnover is seen with those on the dole, with 103,000 signing on and about 78,000 coming off in the same period.

"Overall, sole parents' capacity to work is affected by the age of their children, the availability of childcare, and the availability and accessibility of suitable employment. A further issue is the difficulty of having the benefit reinstated if employment ceases."

New Zealand may have a crisis, it says, but it is a crisis of inter-generational poverty. "Until the Government comes up with a credible plan to create the jobs it wants sole parents to get, it would be better off offering additional support to all low-income families to help children escape poverty."


Tapu.Misa@gmail.com