Susan St John and Dr Gerry Cotterell: Our social security safety net has unravelled

Little has changed for the better since this hikoi demonstration against child poverty marched up Queen Street in 2014. Photo / Doug Sherring

• Susan St John is an honorary associate professor in the economics department at the University of Auckland. Dr Gerry Cotterell is research operations manager for the university's institute for Pacific research. They are co-authors of Further Fraying of the Welfare State.

The Labour-NZ First coalition, supported by the Greens, will have a challenging task to stitch up the frayed and neglected welfare safety net.

In 2008, the Catholic foundation Caritas Aotearoa documented the cutbacks that began in 1991 in their report they called The Unravelling of the Welfare Safety Net. By 2008, the welfare state was unrecognisable to those who had grown up in the more benign post-war era and, as Caritas noted, it was no longer performing its traditional role.

They stated in this report: "Beneficiaries and benefit advocates are sounding an alarm that the safety net is unravelling. Caritas believes many people are unaware of changes that have occurred in recent years. More disturbingly, it appears to us that, despite overall increased social spending, many of the changes are fundamentally at odds with the concept of meeting need."

The last Labour Government may not have intended to, but by 2008 it had paved the way for National to damage further the foundations of the welfare state in the next nine years. The key to understanding this is the principles and purposes section that Labour introduced into the Social Security Act in 2007. This amendment enshrined the supremacy of paid work at the heart of the social welfare state and emphasised that people should look to their own resources before calling on the state.

The Child Poverty Action Group's latest report, Further Fraying of the Social Safety Net, documents the rapid and confusing but far-reaching welfare changes between 2008-2017. These changes helped to undermine further values of community responsibility, adequacy of support to ensure participating and belonging, the prioritising of children, and the meeting of immediate need.

The last nine years were characterised by harsh sanctions, increased hassle, denial of entitlements, prosecutions, incarcerations, poverty traps, actuarial reports, use of predictive modelling tools to find potentially deviant families, cutbacks and uncertainties in the social services sector and the introduction of goals of reducing the number of people on benefits with no monitoring of what happened to them or their children.

Over this time, the use of charities and foodbanks to assist families to meet their basic needs became normalised. By the end of 2017 many charities were alarmed at the rising tide of misery and their inability to service the desperate needs landing at their doorstep.

Unfortunately, Labour's family package does not take effect until July. It will begin to restore some of the damage done to family incomes, but shoring up their undermined balance sheets will take a lot longer. The improvements made to Working for Families are only part of the answer as the Government well knows.

Debt is now a chronic problem among the worst–off families. Worryingly, the Ministry of Social Development has begun treating loans as income, arguing a loan is evidence the person had access to other resources and therefore was not entitled to state help. The decision in a key test case before the High Court is expected any day.

The task for Labour is to begin a conversation about what we want from our welfare system in the 21st century. To begin, there needs to be a review of the obsession with paid work over other forms of equally valuable work, the outmoded ideas of who is in a relationship and what that means, and what a genuinely supportive system looks like that does not trap people in unjust poverty.

The very different treatment of those covered by Accident Compensation or NZ Superannuation leaves welfare benefits as a standout failure.

A new set of aspirations needs to replace the tired and cruel 2007 Social Security Act Amendment purposes and principles. Fundamentally, a welfare state should be about social insurance for the adverse events we can all suffer.

Not everyone can, or should, do paid work, and not all work is paid enough to prevent poverty.

Social security is about security. It is about meeting immediate need and then supporting people to feel they belong to society and their children can participate in normal New Zealand activities. That way they have a chance of getting back on their feet without the impoverishment that creates near insoluble social problems and costs for the future.

It is not rocket science. The punitive and unjust sanctions and prosecutions based on narrow interpretations of confusing laws must go. Those on a benefit should not have to apply for means-tested hardship top-ups or private charity just to survive. They should not be hounded, fined or incarcerated for their relationships.

Annual wage-linked indexation is needed for all parts of the welfare system and child tax credits, not just for superannuitants. The list goes on.

Labour's package puts children at the centre and has the potential to embed a whole new way of thinking. Let's hope society gets behind it and encourages Labour to conduct a thorough overhaul of all aspects of the welfare state with the intent of transformational change.