Editorial: Radical ideas mask rational welfare steps

Prime Minister John Key. Photo / Greg Bowker

The Welfare Working Group did itself no favours with its more radical suggestions for reducing the state's unacceptably high welfare bill. The Prime Minister's comment that one such proposal made him feel "a bit queasy" overshadowed much that was cogent and coherent in the group's final report.

Indeed, its 43 recommendations offer far more than the work-for-dole schemes, tougher work capacity testing and the like that have been tried - and failed - over the years.

The key proposal is the scrapping of all existing benefits and replacing them with a single Jobseeker Support payment, paid at the rate of the dole, with supplements for sick and disabled beneficiaries and sole parents.

The welfare system would be administered by a single Crown agency, Employment and Support NZ. This business-oriented entity would eventually contract out welfare payments and support to consortiums of iwi, voluntary and private organisations. All but the most seriously ill and disabled would be required to look for work.

This structure makes sense and the suggested financial benefit - an estimated annual net saving of about $1.3 billion a year by 2021 - is impressive. But the group errs in spreading its net too widely. John Key's queasiness related to women who had more children when they were already on the benefit being required to look for part-time work when their baby was just 14 weeks old.

The intention is to stop mothers having additional children simply as a means of remaining a beneficiary. Every so often, an example of this gains publicity. It is probable, however, that the problem is overstated.

Either way, the Prime Minister is right to rule out the proposal. In the same way, the working group goes over the top in recommending that mothers should be forced to look for work once their first child turns 3. Many couples on two incomes may well be willing to return to work soon after a baby's birth. But that does not mean other people's priorities are wrong.

In parenting terms, there is much to be said for mothers who stay at home with their pre-school children. Whatever the benefits of work, for the individual and the economy, insisting that sole mothers take paid work before their children attend school is a step too far.

More broadly, there is merit in the group's wish that people on welfare should be under no illusions about the need to look for a job - and face gradual reductions of assistance if they do not meet their obligations.

Beneficiaries would get a 25 per cent payment cut for the first failure to meet a work test, drug and alcohol and other requirements, 50 per cent for the second, 100 per cent for the third, and a 13-week stand-down for a fourth or any subsequent failure. Most beneficiaries fulfil their obligations. For the minority, this procedure may be a suitable stick.

Commendably, the report also wants carrots to encourage beneficiaries to move into paid work. It says the new work testing requirements would have to go hand in hand with a major boost to investment in early childhood education and after-school care and drug and alcohol rehabilitation services.

This provides a balance that enhances the report. If its programme would entail up to $285 million a year in additional services, this would be money well spent if it succeeded, as the report suggests, in cutting the number of people on benefits by 100,000 by 2021.

The group's estimates lose some of their lustre once the more extreme recommendations are discarded. But there is much of value in most of its proposals to meaningfully overhaul the welfare system - and to reap considerable savings from the discouragement of long-term dependence. These demand Government attention.