PM admits tradeoff on Aussie welfare

By JOHN ARMSTRONG and CHRIS DANIELS

The Prime Minister says she has bitten the bullet and stopped agreeing to Australia's recurring demands that New Zealand pay bigger and bigger shares of the welfare bills of Kiwis living in Australia.

The blunt alternatives were to keep sending larger and larger cheques to Canberra, or for Kiwis to lose automatic social welfare entitlements.

Helen Clark's comments, yesterday, follow the embarrassing leak on Friday of a cabinet paper which reveals New Zealanders will no longer automatically be treated as "permanent residents" in Australia, and thus no longer qualify for welfare.

Instead, they will have to apply for formal permanent residence status, although their right to live and work in Australia will be unaffected.

To apply for this status, immigrants must be young and qualified, or have close family links with an Australian.

Helen Clark said previous New Zealand Governments had tried to negotiate how much should be paid by Wellington, but Canberra continued to say "we want more and more from you."

Australia was now claiming it paid around $950 million on welfare to people born in New Zealand, and was demanding a figure closer to that sum than the $169 million New Zealand already contributed.

"We have to stand back a bit and say what is the best use of New Zealand taxpayers' money - spending it here or sending a large cheque to Australia."

The New Zealand cabinet has now told Australia it will not pay more money. The quid pro quo is a likely deal cutting New Zealanders' entitlements to welfare in Australia. It is still under negotiation and is expected to be formalised in February when Australian Prime Minister John Howard visits New Zealand.

The agreement will affect only welfare entitlements, including family tax benefits, maternity allowances, childcare benefits, housing benefits and benefit-related healthcare and concession cards.

Canberra has assured Helen Clark there will be no "flow-on" to education entitlements or Medicare and emergency medical treatment. Superannuation payments and the invalid benefit are also unaffected.

Those already receiving welfare benefits will continue to receive them under "grandparenting" provisions.

However, Australia already has a two-year welfare stand-down for migrants from New Zealand.

Helen Clark said she was "not without sympathy" for the Australian position, given the surge of New Zealanders crossing the Tasman during the 1998-1999 recession.

Australia estimates that half the annual flow of about 30,000 migrants will still qualify for permanent residency, with the remainder failing through insufficient or inappropriate skills, health problems, quota restrictions and other reasons.

But former Immigration Minister Aussie Malcolm, a former Australian, described the planned changes to the status of New Zealanders in Australia as a classic example of xenophobia and racism.

"Either we have a common labour market or we don't," he said. "You can't separate out the people working and paying tax from the ones looking for a benefit."

The Australian Government had been whittling away at the transtasman travel agreements since the 1970s and the changes were clearly linked to last week's comments from Australian Immigration Minister Philip Ruddock about "backdoor immigration."

This related to people from third countries who used New Zealand citizenship as a stepping-stone to Australia.

Mr Malcolm said Australia did not mind white New Zealanders settling there, but did not want Pacific Islanders or Maori, who were less likely to qualify for the new residency requirements.

Australian authorities constantly quoted the number of New Zealanders living there who were unemployed or claiming benefits. That New Zealanders earned more money, paid more tax and contributed in many ways to the country should also be considered.

Mr Malcolm said the New Zealand Government was now in the difficult position of deciding whether to retaliate and introduce tough rules for Australians coming here.

This would start a downward spiral of retaliation, from which neither country would benefit.