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Don Brash Writes No. 50 - NZ Needs Welfare Reform

NZ National Party
Don Brash Writes

No. 50, 16 February 2005

New Zealand needs welfare reform

This is my first regular newsletter for 2005, though those on this database will have received a copy of my Orewa speech on welfare reform and my speech replying to Helen Clark's first speech in Parliament, on 1 February.

My welfare speech has been the subject of all kinds of misrepresentation. So let me briefly summarise what I was saying.

First, I made the point that over the last 30 years, during which New Zealand's population has risen by about one-third, working age adults on a benefit have increased in number from fewer than 40,000 to over 300,000 - an increase of some 700% - and this despite the current relatively low unemployment and vast amounts being spent to improve the health of the population. When the children of those adults on a benefit are added in, those dependent on a benefit now exceed the population of Christchurch and Dunedin combined. This involves a cost of over $5 billion a year, equivalent to about $50 per week for every person in the workforce.

The Labour Government is projecting the number of those on benefits to increase over the next three years. National is committed to a reduction in those on benefits from over 300,000 currently to 200,000 over 10 years.

Second, I argued that there can be no excuse for able-bodied working age adults to live on the Unemployment Benefit indefinitely. After a period allowed for job search, continued financial support from taxpayers should be conditional on the recipient undertaking some form of community service or retraining. Realistically, it will take some time to organise the necessary community work to get all those on the Unemployment Benefit into work, and we will focus initially on those who are under 25 and those who have been on the Unemployment Benefit for a lengthy period. (It is a scandal that the number of those on the Unemployment Benefit for a period of over five years has more than doubled since Labour came to office in 1999. But the basic principle should be that no able-bodied adult should be getting the Unemployment Benefit indefinitely without doing something like a 40 hour week of community service (or retraining) in return.

To assist those on the Unemployment Benefit who desperately want to get a job, we will make it possible for employers to end an employment relationship during a trial period of 90 days, without any penalty or drama. There is little doubt that the difficulties which currently face employers in dismissing an unsatisfactory staff member make employers very reluctant to hire people they judge to be a bit "risky" - perhaps because they lack work experience, or are a bit older, or had a criminal conviction some years ago, or don't speak English very well. Allowing a 90-day trial period should materially help such people to get their foot into a job.

To reduce the extent to which doctors are pressured to sign certificates entitling people to a Sickness or Invalids' Benefit, we will work with doctors' groups to ensure consistency in the way those applying for those benefits are evaluated. There really can be no rational justification for the huge increase in the number of people on those two benefits in recent years - an increase of almost 40% since Labour came to office in 1999.

With the DPB, my speech made three main points.

First, there should be a stronger obligation on women to name the father of their children, and a larger penalty on those who do not. There can surely be very few circumstances where the taxpayer should pick up the cost of raising a child when the child's own father makes no contribution to that cost. There are currently over 18,000 women on the DPB who have refused to name the father of their children, with the result that more than 30,000 children do not know the identity of their fathers - or at least don't officially know. When Labour came to office, unpaid parental support totalled $362 million. Now that unpaid amount exceeds $870 million. Why should taxpayers who work hard to support their own children have to carry the cost of raising the children of other men?

Second, because the DPB is paid primarily to assist single parents to care for children, those in receipt of that and other benefits should have an obligation to ensure that they present their pre-school children for all appropriate health and dental checks, and for all vaccinations (subject to conscientious objection); and ensure their school-age children attend school.

Third, to make it clear that the DPB is only intended to assist a single parent until she/he is able to provide for their own financial support, those in receipt of the DPB should be required to undertake part-time employment, retraining, or community service, from the time their youngest child at the time they first receive the DPB (or born within nine months of first receiving the DPB) reaches school age - with a requirement to be available for full-time work or retraining from the time that youngest child reaches 14.

The most contentious part of the speech perhaps was the section dealing with policy towards women who have further children while on the DPB. I acknowledged that this is without question the most difficult area of welfare reform. Nobody wants to punish children for the mistakes of their parents. But there is something fundamentally flawed in a system which seems to make it possible for women to have several additional children on the DPB, and which enables men to walk away from their responsibility. There are more than 6,000 women on the DPB currently who have had two or more children while on the DPB, and over 400 who have had four or more. There should surely be no automatic entitlement to additional financial support for those additional children.

Since giving the speech, I have been inundated with messages, mostly via email and mostly in support: stories of people, both men and women, who have been abusing the system for years; but also stories of the many people who have used the DPB support system wisely, and as it was intended, as temporary assistance to help them deal with the trauma of a broken marriage and with the financial shock of being suddenly alone and left dealing with the strain of supporting young children.

I don't for one moment minimise the difficulty that this involves, and I fully realise that in most circumstances it is the woman who is left to shoulder that burden of child-raising although it must be said I have received many heart-felt letters from fathers who feel unfairly cut off from their children even though they still make significant financial contributions to their well-being.

Suffice to say, this is an area full of sad stories, but also of stories of people who have successfully worked their way through some very demanding times in their lives, supported by our welfare system.

I am determined that welfare should be focused on helping people through those tough times, and helping people to get back on their feet and become independent. But I am equally determined that welfare support must not become regarded as a permanent way of life.

Helen Clark and Steve Maharey talk as if they mean to change the system, but of course have done nothing to reform it in the nearly six years they have been in office.

National will undertake far-reaching welfare reform - reform which will guarantee ongoing and indefinite support for those in genuine need, but which will see those who currently should be supporting themselves doing just that.

Over time, this will have the effect of substantially easing the financial burden on hard-working taxpayers. But even more important, it will break the cycle of inter-generational welfare dependency, to the benefit of those who currently waste away their lives and, even more serious, the lives of their children.


Don Brash

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