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Muriel Newman's Weekly Column

A Goal Worthy of Fighting For

Why Scrapping the Dole is Not the Answer


The recent report that moteliers are unable to find cleaners while almost 400,000 people receive welfare benefits - with 6,166 having sat on the dole for over ten years - is the latest demonstration our present welfare system is not working.

Yet that hasn't always been the case.

Prior to the early seventies, the welfare system - introduced by Michael Joseph Savage in 1938 - worked well. There were never more than 36,000 people on welfare. Fewer than 1,000 were unemployed.

The prevailing belief was that welfare should be restricted to the demonstrably needy, and that for the able-bodied it should be a hand up to work. Fundamental to its sustainability was the nation's ability to pay.

Supporting those 36,000 beneficiaries were one million full-time workers. Today, our workforce of one and a half million full-time workers supports 400,000 beneficiaries. In 1970, there were 28 fulltime workers for each full time benefit. Today, there are four fulltime workers for each full time benefit.

If we look at the bigger picture and take into account the 450,000 pensioners, that's around two people on a state benefit or pension for every three full time workers. No nation with this level of state dependency to fund by taxing a small workforce can grow as fast as, or faster than, its competitors.

We simply cannot hope to have the lower tax rates, high educational achievements, leading health services, strong families, and low crime rates, that we aspire to, when our welfare system prevents hundreds of thousands of working age Kiwis from contributing through the workforce.

A large part of the problems we face were caused by the 1973 Kirk Labour Government. In enacting recommendations of the McCarthy Royal Commission on social security, they fundamentally changed the incentives that operated in the welfare system: they created the DPB, the objective of social welfare was no longer to help people get a job, but to provide a standard of living similar to that enjoyed by someone who worked.

But closing the income gap between welfare and work removed a major incentive to move off a benefit. As a result there is little incentive for the unemployed person who can receive - according to my parliamentary questions- up to $41,000 a year, to get a job.

Labour transformed welfare into a universal entitlement - a right to be demanded rather than earned. In doing so, it destroyed the social contract that had required people receiving benefits to meet basic community standards. As a consequence, welfare now funds not only destructive lifestyles but organised crime as well. The most seriously damaging of Labour's changes was the introduction of the Domestic Purposes Benefit. Designed to provide support for women wanting to escape from violent relationships, it effectively provided an incentive for family breakdown. As a result New Zealand now leads the OECD in single parent families and we have the most underfathered generation in our history. Today 26% of all dependent children, a total of 240,000 are being raised in one parent families, most of which are dependent on the DPB.

Evidence that welfare and single parenthood damages children is overwhelming. This includes new research published just this week in The Lancet medical journal, which studied almost one million children and showed that children are more at risk living with one parent. The National Party's suggestion of scrapping the dole is not the answer.

What is needed is a complete overhaul of the welfare system, returning it to being a safety net for those who genuinely can't support themselves, and a hand up to work, independence and a better future, for those who can.

The first step, based on programmes that have produced unprecedented results overseas, is to introduce time limits to the DPB and the Unemployment Benefit to create a sense of urgency - a five-year lifetime limit with a maximum spell of two years continuously. Those reaching the time limits should be guaranteed job placements, with a small discretionary exemption for Regional Commissioners.

Secondly, all beneficiaries who can work and have children should be required to participate in individually designed 40 hour a week programmes of work, training and organised job search - activities designed to improve their chances of getting a good job as well as to develop the habits, skills and disciplines needed in the workforce. In line with the realities of the workforce, sanctions should be strictly applied - if someone doesn't turn up or doesn't comply, they should not be paid.

To support people in overcoming their barriers to work, childcare subsidies, intense individual placement support, and assistance with transport and relocation expenses should also be available where needed.

These two initiatives would send the signal that welfare is there to provide temporary help in times of need: those who deserve help will get it, but in return they will have the same 40 hour work week as the rest of adult society. People who are in a position to work will no longer be paid to do nothing, and as a result, tens of thousands of our poorest New Zealanders will regain control of their own future through work and higher incomes.

In conjunction with lower taxes and a reduction in small business compliance costs, proper welfare reform - by empowering all New Zealanders to pursue success in their own way - would help to transform this country into one of the most prosperous nations on earth. I believe that is a goal worthy of fighting for.

If you agree, please send this column on to others and join my welfare reform campaign by emailing me at muriel.newman@parliament.govt.nz

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