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Welfare Debate Finally Opening Up

Welfare Debate Finally Opening Up

Weekly Column by Dr Muriel Newman

It is refreshing to see that the welfare debate has intensified this year. As a result, welfare activists no longer label people speaking out as 'benefit bashers', in order to close the debate down, but allow their voices to be heard.

The welfare discussion is not only taking place in the political arena - with the National Labour MPs joining ACT's call for welfare reform - but also at the recent Knowledge Wave conference in Auckland, where an excellent paper on the subject was presented.

Peter Saunders, the Director of Social Policy Research at the Centre for Independent Studies in Australia, questioned why it is that Government spokesmen, academics and welfare commentators, denounce the world's most successful welfare reform programme, in order to crow about the benefits of the far less effective European model.

The answer, of course, is that - as a socialist government - Labour's agenda is to expand the welfare state through increasing benefit dependency and redistributing wealth: taking money off those who earn it, to give to those who don't. They claim their goal is greater 'social cohesion' similar to that found in the welfare states of the highly taxed, highly regulated Scandinavian countries. As a result, Labour has poured millions, if not billions, of dollars into nebulous schemes like 'closing the gaps' and 'capacity building' - schemes that elude measurement and accountability - but that sound and feel good.

His paper has come hard on the heels of a report by the Washington-based Heritage Foundation, which analyses the outstanding success of the US welfare reform programme introduced into Federal Law in 1996 by President Bill Clinton. President Clinton's goal was to "abolish welfare as we know it". He subscribed to the view expressed by President Jimmy Carter 20 years earlier that "the welfare system is anti-work, anti-family, inequitable in its treatment of the poor and wasteful of the taxpayers' dollars".

What I find interesting is that these Democratic Presidents were prepared to tell the truth about the damaging effects of welfare. In Clinton's case, he introduced the most sweeping and effective welfare reform changes in that country's history.

His welfare reform programme had three goals: to reduce welfare dependence and increase employment, to reduce child poverty, and to reduce illegitimacy and strengthen marriage.

The particular welfare group targeted by "The Personal Responsibility and Work Opportunity Reconciliation Act" were sole parents on the 'Aid to Families With Dependent Children' benefit - the US equivalent of the Domestic Purposes Benefit. This group was the focus of the 1996 reforms, because of overwhelming research that showing that, in general, children raised in sole parent families where no-one worked for a living failed to do as well in all areas of life, as children raised by a working parent.

Interestingly, research released last year by our Government's own social policy agency reached the same conclusion but, rather than seek to change the DPB in a way that would lead to work and independence, the Government has relaxed the criteria, making that benefit more accessible and more generous. As the Heritage Foundation report shows, the US results speak for themselves. Overall poverty, child poverty, and black child poverty have all dropped substantially, with some 2.9 million fewer children living in poverty today than in 1995. Welfare caseloads have been cut nearly in half, and the explosive growth of out-of-wedlock childbearing has come to a virtual halt.

Further, as a consequence of these changes, the rate of serious crime has dropped dramatically and is now lower than that in New Zealand. There are half as many households being burgled and people being assaulted as 10 years ago, with robberies down by two-thirds and car thefts down by three-quarters.

The reduction in beneficiary numbers has substantially reduced the cost of welfare and, with more workers contributing to the tax system, federal taxes have been slashed. The federal tax liability for a family of four with an annual income of NZ$72,500 is now just NZ$81 a year.

The American model of welfare reform substantially reduced welfare's reward for non-work. It created a reciprocal obligation and left the welfare recipient in no doubt at all that they were required to take personal responsibility for moving into work.

Firstly, the programme limited eligibility to welfare for the able-bodied to no more than two years at any one time, and five years over a lifetime. This sent a very strong message to those who could work that they were expected to get a job.

Secondly, the requirement that the able-bodied engage in supervised job search, community service work or skills training as a condition of receiving assistance, enabled them to get into the habits and skills of the workplace - as well as build networks of contacts on a scale not possible when sitting isolated at home.

Critics of the programme predicted a substantial increase in dire social ills. The actual results - less dependency, poverty, family breakdown, crime, and lower taxes - have made them bite their tongues.

Here in New Zealand, however, advocates of more welfare still try to claim - in spite of the overwhelming evidence - that the US experiment has failed. What they are loath to admit is that it is not the US system, but our own welfare system, that is failing. To still have 400,000 working adults on welfare - including 122,000 sole parents and their 200,000 children - despite New Zealand having the best economic and employment conditions in decades, is an absolute indictment of Labour's welfare system. Developing a strategy to communicate the benefits of welfare reform - to those on welfare, their wider families and communities, as well as the nation - is my goal. We will be discussing this at our ACT conference next Saturday - it would be great if you could come along with your suggestions. If you can't, but would like to send in your ideas, I would appreciate it. For conference details visit

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