Reforming The Welfare System - Muriel Newman
Friday, September 7 2001
Dr Muriel Newman
Speeches -- Social Welfare
Speech to public meeting, Hearing Association, Deveron Street, Whangarei, 6:30pm, Friday, September 7, 2001
In 1996, the United States embarked on an ambitious welfare reform programme designed to "end welfare as we know it". Welfare as they knew it was similar to what we have in New Zealand - an entitlement-based system which has been responsible for widespread family breakdown and poverty. Welfare has resulted in entrenched intergenerational benefit dependency along with the associated systemic problems of child abuse, alcohol and drug addictions, teenage pregnancy, youth suicide, educational failure, violence and crime. Minority groups in particular have been disproportionately affected by the destructive consequence of welfare. They are over represented in a growing underclass.
Democratic President Bill Clinton was the champion of the United States welfare reform programme, passing into law the 1996 "Personal Responsibility and Work Opportunity Reconciliation Act". This bill had two main goals: firstly to reduce welfare dependency by increasing employment, and secondly to reduce illegitimacy and increase marriage, since family breakdown was identified as a key determinant of poverty. The new legislation ended welfare as an entitlement available to all parents who qualified, by requiring recipients to look for work.
In spite of all the warnings of the sceptics, the results have been dramatic. Over the last five years, the number of families on the American equivalent of the Domestic Purposes Benefit, has more than halved. Millions of people got jobs.
According to a recent report from the Federal Forum on Child and Family Statistics, when poor single women found jobs ' many for the first time ' they raised children who became better educated and healthier than poor children raised during the 1980s. By 1999, the rates for child poverty, teen deaths and birth to teenage mothers were the lowest in two decades. The report found that "the decrease in poverty is apparent for children living in female-headed families and is more pronounced for black children" ' two in three black children in single parent families were living in poverty in the 1980s, but By 1999 that ratio had been cut almost in half. In other words, those who gained the most from welfare reform were those who had the most to gain, namely the black underclass.
In effect America's welfare reform programme took a culture characterised by welfare dependence, a high rate of births out of wedlock, high male unemployment, and crime and replaced it with a new more virtuous social dynamic. Marriage is seen to be one of the best indicators of this complex change, and welfare reform has reversed the seemingly relentless rise in out of wedlock births and increased marriage. Again black children have been the biggest beneficiaries of these changes as the proportion of those living with married parents rose more than three times greater than for the population as a whole.
A recent article on America's welfare reform in the Economist concluded: "It is rare enough that any government policy, let alone one dealing with poverty, is so near an unambiguous success as welfare reform has been. For decades, the underclass has loomed as America's deepest social problem. In just five years, reform has halved the size of the problem and made it possible to move onto the next stage".
I would suggest that New Zealanders are not too different in the concerns that we hold. Over the last year, an incident that highlighted the problem and deeply touched most of us was the killing of baby Lillybing. I want to re-visit that tragedy for a few moments, lest we forget the reality of the extent of the "underclass" problem.
23-month-old Lillybing was tortured to death by someone she called auntie, shaken, burned, bruised and bloodied. She grew up in a family where doing booze and drugs throughout pregnancy was not uncommon. When she was born her mother refused to buy her milk.
According to an article by a Listener journalist who visited the families, she spent a great deal of time in a home where there were "two rusting cars, one piled with fetid rubbish. There is a boarded window and the floors are filthy. One of the chooks from the outside scratches around in the living room. There are kittens everywhere. None of them are house-trained".
Although there was no money for plunket, nappies or farex, there was sufficient for booze, drugs, nightly takeaways, pokkies and housie. Violence was not unusual, fraud was not unknown.
The article exposed gross family dysfunction common in the underclass. But their problems were not caused by poverty ' there was upwards of $1000 going into that home every week. They were the result of misguided changes made to our social welfare system back in the seventies. These changes saw growing numbers of welfare families and communities on welfare for two and three generations.
Thirty years of entrenched welfare dependency has now created an underclass of New Zealanders who have lost their sense of personal responsibility. They have poor values, little discipline, and as adults they are very, very selfish. They have been conditioned to expect the government to provide for them no matter what sort of hedonistic and destructive behaviours they exhibit. They no longer hold traditional values of work, study and self-improvement, nor do they ask what they can do to help themselves and their families, asking only what the government can do for them.
Worse, lacking the inner resources to leave the welfare system behind, these parents all-too-often pass to their children a defeating set of values and attitudes. Inflicted with impoverished intellectual and emotional development, their children are imprisoned in failure as well.
The children growing up in those households are in grave risk ' not necessarily because they are not loved, because all the families say how much they loved Lillybing, James Whakaruru and all of the other children who have been tortured and killed ' but because their parents have lost the values of their forefathers who lived in an age when welfare was a genuine safety net.
To put it bluntly, a long-term dependence on welfare is not only harmful it is dangerous. It corrupts the human spirit, and destroys the normal attitudes and values which guide people to be good citizens.
Dependence on welfare is also addictive. I spoke to a distraught father the other day, whose son has been on welfare for 10 years. The family has tried everything to encourage him to get a job and get a life but they have failed. He refuses to leave welfare and is quite happy to live off the family and the taxpayer even though he is young and able-bodied. People like him recognise that the present government philosophy that underpins social welfare today is that "if you don't want to work, you don't have to work".
It didn't used to be like this. Designed by Rt Hon Michael Joseph Savage in 1938 to be a hand-up to work, the social welfare system supplemented community-based charitable efforts to assist those in need. The system served us well, right up until the late sixties. In fact, for 30 years there were less than 15,000 people receiving state welfare, with fewer than a thousand unemployed.
During the sixties, however, there were growing concerns that the benefit system had lost relativity with the booming economy, and in 1969 the Holyoake Government established a Royal Commission under the chairmanship of Sir Thaddeus McCarthy to review social security in New Zealand.
The Commission published its report, Social Security in New Zealand, in March 1972, with many of the recommendations being adopted by the Kirk Labour Government. Three recommendations in particular were responsible for changing the face of welfare as we knew it.
The first changed benefit eligibility from being needs-based for those 'of good moral character and sober habits', to a universal entitlement. That destroyed a well-established social contract that ensured only those who were good citizens and met community standards were eligible for a state benefit. For the first time ever, the welfare system began to reward destructive behaviours such as alcoholism, drug addiction, and idleness.
Secondly, the Commission recommended that the level of benefits be raised, to be similar to a working wage. They wanted to ensure that someone on a benefit could "enjoy a standard of living close enough to the general community standard for him to feel a sense of participating in the community and belonging to it". With the closing of the income gap between welfare and work, the urgent incentive for a beneficiary to take a job to make themselves and their family appreciably better off all but disappeared. This set the scene for the establishment of long-term, intergenerational benefit dependency.
Thirdly, the Domestic Purposes Benefit - a statutory benefit for sole mothers with dependent children - was established to enable an estimated 20,000 women trapped in violent relationships to escape with their children. The creation of the DPB was a landmark change to the benefit system. It was the first benefit to be made available for reasons of personal choice, such as no longer wanting to remain married, rather than for reasons outside of a person's control such as the death of a spouse, the loss of a job, injury or accident.
The DPB has been responsible for undermining marriage and the family, by providing a financial incentive to break up the family and to not marry. As a result one in four New Zealand children are now living in single parent families. If present trends continue, by the year 2010, three quarters of all Maori babies under twelve months of age, and half of non-Maori, will be living in families where there are no fathers.
It was precisely this sort of worrying trend that caused the United States Congress, led by President Clinton, to find the courage to abolish their equivalent of the DPB back in 1996. Now even ardent critics have to admit that welfare reform has been far more successful than they thought, possible.
A significant benefit of welfare reform is that it helps provide people with choices about the sort of country they want. For example, given the choice of spending $10,000 a year to provide welfare and housing for a fit young man or $10,000 for cancer treatment I suspect that most New Zealanders would choose cancer treatment. Similarly most would find it unacceptable that half a million dollars should be paid to a woman so she could stay on the DPB for over 20 years, when there are so many more urgent demands on taxpayers' money. In fact, many would view welfare as a drag on the country, not only in terms of the damage and the loss of potential, but also in terms of the cost
Last year our Government spent a total of $38,000 million . That is around $100 million a day. Of that total, welfare spending was $39 million a day. That compares to $20m on health, $19m on education, $4m on law and order, and $4m on defence. If there were not 1.2 million New Zealanders out of our total 3.8 million population who relied on the state for most of their income, then we would be in a far better position to choose where to spend our tax money, including whether or not we really want to pay so much tax.
So what is the secret of America's welfare reform you might well ask, and would it be applicable to New Zealand?
Firstly it important to recognise that the reforms took place at a time of unprecedented economic growth. Yet as the Economist again points out, the correction between welfare rolls and the economy is less firm than you would expect.
During the 1980s when America added 20 million new jobs, welfare rolls grew by over 500,000 families. In the 1990s, real reductions in welfare did not occur until after the 1996 law changes. In fact two recent national studies have concluded that policy has been four times more influential in reducing welfare than the economy.
The changes welfare reform introduced were base on common sense ' idea that if you help people to develop attitudes and habits of the workforce, then when a job comes up, it is easy for them to take it. That meant requiring people to turn up for forty hours a week on programmes that suited their needs ' subsidised work, voluntary work, education and training, job search, adult literacy and numeracy, interview skills, drug and alcohol rehabilitation and so on.
The discipline of the workforce were employed ' "if you don't turn up, you don't get paid; If you turn up late your pay is docked".
Time limits on welfare were imposed ' a two-year limit on receiving welfare continuously and a five year lifetime limit ' to create a sense of urgency about getting off welfare and into work. Targeted assistance was available for those who needed it, from cash grants to buying a uniform to generous child care subsidies for families with children.
The result was that welfare reform programmes, which focussed on helping people, move off welfare and into work empowered parents, encouraging them to take responsibility and find jobs. Poor families lifted themselves out of poverty making a reality of the adage that the best social programme is a job.
Would such a programme be good for New Zealand? You bet your life it would. Welfare reform would transform this country: it would help hundreds of thousands of new Zealanders to get a decent life. It would save their children from a bleak future. It would do more to close the gaps for disadvantaged Maori than any other government programme ever could or would.
Welfare has been described as the social policy equivalent of hard drugs, shielding recipients from the demands and obligations of the ordinary world: available, ease-inducing, will-dissolving, insinuatingly easy to get hooked on, capable of taking over one's entire life and blighting it. Welfare gone wrong is the most destructive social force. Yet welfare done in a sensible fashion can empower, support and liberate, as we have heard tonight.
We need to return welfare to its rightful role of providing on-going support to those who are genuinely unable to help themselves, while requiring those who are able-bodied but need temporary taxpayer help to take responsibility for getting a job and becoming independent of the state. Further, Government needs to take a leadership role and send a strong message that work is valued, contribution is vital, and that the responsibility for our future rests with each and every one of us. And if the Labour and Alliance Government wont do it then we need a change, because an ACT-National Government will make welfare reform a national priority.