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Weekly Column by Dr Muriel Newman


Welfare: Neither Well, Nor Fair, Under Labour

Weekly Column by Dr Muriel Newman

It is ironic that in the same week the Labour Government is scrapping work testing of sole parents on the Domestic Purposes Benefit, a major new study being published in the US shows that children benefit if their sole parents on welfare move into work.

The research - financed by the National Institutes of Health and being published on Friday in the journal 'Science' - suggests that children in sole parent families do better when their mother works. It vindicates President Bill Clinton's decision to abolish the US sole parent benefit, a move which has helped to lift the well-being and living standards of children in sole parent families and resulted in sole parent welfare rolls plunging to five million in September 2002 from 12.2 million in 1996.

The study, of some 2,400 families, found that a mother's moving from welfare to work causes no harm to her children's emotional development, intellectual achievement or mental health. Further, by working, household income nearly doubled, lifting most families out of poverty: the average income of a sole mother on a benefit was 35 percent below the poverty level. After they took jobs, however, their income rose to more than 25 percent above the poverty level.

The increase in family income and the improvement in the self-esteem of working mothers were seen to provide substantial benefits to families, particularly those with adolescents. Conversely, researchers found that, when mothers left the labour force, adolescent children were more likely to display behavioural problems - including depression and anger.

This research provides yet another link in the irrefutable chain of evidence of the beneficial effects of welfare reform. Yet Labour continues to push for greater levels of welfare dependency, blindly ignoring - or hiding - the damage that welfare causes to children.

Rates of sole parent welfare dependency in New Zealand are worse than previously realised. Answers to my Parliamentary Questions show that, as well as the 110,000 sole parents on the DPB, a further 12,000 sole parents receive other benefits.

With more than 122,000 sole parents on benefits, supporting more than 200,000 children, New Zealand's proportion of single parent families - 29 percent - is, by far, the highest in the OECD. It is little wonder that we lead the OECD in negative statistics that effect children - infant mortality, child abuse, teenage pregnancy, youth suicide, cannabis use, youth crime and truancy.

The changes to the DPB, introduced this week, have scrapped the 13-week stand down period which prevented a sole parent quitting work one day to go on the DPB to get more money the next. Sole parents will now be able to go on an overseas holiday for up to a month and still get paid. But the major change resulting from the removal of work testing is that a sole parent is no longer required to take a job until their youngest child is 18.

The changes also reduce the abatement rate for part-time earnings from 70 cents in the dollar to 30 cents - boosting income, but also making it harder to find a job paying more than the benefit. This change will effectively trap many sole parents in the benefit system.

Treasury opposed the scrapping of work testing, but their advice was ignored. Surveys of sole parents who had moved from welfare into work - and overwhelmingly reported that they were much better off - were also ignored.

In light of the US study assuring that mothers may leave welfare and enter the job market without harmful effects to their children, New Zealand's Labour Government is doing sole parents and their children a gross dis-service by scrapping the most successful policy move ever introduced to encourage sole parents on welfare back to work.

Muriel is running a workshop developing a strategy for making welfare reform a national priority at ACT's Wellington conference on the weekend - for more details contact her on muriel.newman@parliament.govt.nz


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