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Muriel Newman’s The Column


Muriel Newman’s The Column

The Road To Welfare Reform

On Wednesday I was invited to the launch of the National Party’s welfare discussion paper, “Saving The Next Generation From Welfare Dependency”.

The event was significant for two important reasons. While ACT has campaigned alone for welfare reform since entering Parliament in 1996, National’s decision to prioritise it means that welfare reform is now one step closer. Secondly, asking ACT to attend the launch sends a strong signal that, in our MMP Parliamentary system, our centre right parties can and do work together.

The discussion document highlights the increasing levels of dependency at a time of record economic growth, and puts forward some suggestions of how other countries have tackled welfare-related problems.

The response of other political parties to the report has been predictable: Labour accused National of benefit bashing, the Greens claimed welfare reform would cause people to die, force others to become beggars, and cause crime to increase, and the United Party couldn’t figure out whether it should support or oppose the ideas.

By implementing the demands of the beneficiary unions, Labour has seriously undermined our welfare system: incentives to move into work have been weakened by increasing supplementary benefits, removing work for the dole, softening benefit fraud recovery, and reversing the need for Domestic Purposes Benefit recipients to find work. As a result, for hundreds of thousands of adults and their children, welfare is no longer the springboard to a better life that the architects of the welfare state intended, but a long-term way of life.

And there in lies the problem.

New Zealanders are compassionate people. They want to provide a helping hand to people in need. But they don’t want nor expect that kindness to be exploited.

When taxpayers, who may well be struggling to make ends meet, see people on welfare who are fit and able, getting similar money to what they get from working, failing to even try to get a job, they feel abused. That’s why a successful welfare system is one that provides short-term help and support to the able-bodied, but requires them to take responsibility for becoming self-sufficient.

In the eighties, our welfare system offered ‘voluntary unemployment’ to anyone who declined to accept a suitable job – it was a tough love approach which sent the strong message to the Piha surfer, and others like him, that he could choose to live at Piha where there were no jobs, but he couldn’t expect to be paid by the taxpayer to do so.

Many countries, faced with the problem of welfare intransigence, have trailed different approaches. The major debates have surrounded whether welfare programmes should be training-based like our TOPS programmes, or employment-based like work for the dole, and whether programmes should be mandatory or voluntary.

Last month, David Ellwood of Harvard University shed some light on this issue during a presentation to the Social Policy Research and Evaluation Conference in Wellington. Having spent most of his career in academia as a professor of social policy and a critic of welfare reform, in the mid-nineties he was invited to join President Clinton’s administration, to help develop the welfare reform policies that would fulfil the Presidents campaign promise to “end to welfare as we know it”.

Ellwood discussed the results of well-constructed randomised controlled experiments in the human capital development versus labour force attachment debate, which categorically showed that mandatory programmes were more effective than voluntary ones, and that programmes which focussed on employment were far more successful than those that focussed on education and training. (p22: Connecting Policy Research and Practice)

As a result of this research, Clinton’s reform programme was based on a mandatory work requirement, which sent the clear message to welfare administrators that “people were required to work or they would lose benefits”, and to case workers that their job was to “get people off welfare and into work”.

In his presentation, he went on to note that, when Clinton’s reform programme was released in 1996: “Most advocates and scholars were appalled by the heavy-handedness of the policies and the mean-spiritedness. Many predicted massive increases in poverty. But a remarkable thing happened. Work increased dramatically. And poverty fell sharply. The messages changed the whole culture of welfare offices. Welfare seems to no longer be about check writing and benefits. It is about work”.(p17: Connecting Policy Research and Practice)

During a 1999 interview with Radio New Zealand’s Kim Hill, the former Governor of the State of Wisconsin, Tommy Thompson stated that as a result of welfare reform, the gap between rich and poor had narrowed, “our wages for the lowest one third of the people in Wisconsin have increased, our illegitimacy has gone down, our crime has gone down”.(p3: Kim Hill interview)

Far from causing poverty, death and crime, as the parties of the left predict, research shows welfare reform leads to higher living standards, better health, less crime, lower school drop-out rates, and less teenage pregnancy. Further, as people move from welfare into work, they lift their horizons, and realise that they and their children can have aspirations of success that are simply impossible when dependent on benefits.


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