Policy Quarterly Volume 7 Issue 2
The Welfare Working Group (WWG) was established by the National-led government in March 2010 to undertake a fundamental review of New Zealand’s welfare system, with a primary focus on long-term welfare dependency for people of working age. More specifically, the Group was asked to provide practical recommendations on how to reduce the growth in beneficiary numbers and expenditure, and the related poor economic and social outcomes. The eight-person Group was chaired by Paula Rebstock, and the secretariat (led by Don Gray and drawn from a range of departments) was based at the Institute of Policy Studies. Over the course of about 10 months, the WWG produced three substantial reports: an Issues Paper, an Options Paper and, finally, a detailed Report containing 43 recommendations. As fate would have it, the Report was released at noon on Tuesday 22 February 2011. As expected, it heralded a major ‘shake-up’ of the welfare system. Less than an hour later, however, Christchurch was struck by a damaging earthquake, providing a ‘shake-up’ of a rather different, and even more sobering, kind! Unsurprisingly, the earthquake dominated headlines for many weeks; the WWG’s Report, by contrast, has received only modest media coverage. This is a pity. The Report is a landmark document. If its main recommendations are implemented, there will be significant implications, not merely for beneficiaries and their families, but also for the agencies that administer social assistance programmes. The Report thus deserves careful analysis and
This issue of Policy Quarterly makes a start in this respect. It contains six articles on issues related to the welfare state, welfare dependence and the design of social policy. All being well, the August issue of Policy Quarterly will contain further articles on topics related to the WWG’s final report – although the main focus will be on public management issues. Collectively, the material being published in Policy Quarterly on the WWG’s proposals will, I trust, contribute significantly to public debate about the various policy options available to the government and their respective strengths and weaknesses.
The first article in this issue, by Patrick Nolan, places the New Zealand debate about welfare reform in a wider international context, and highlights the similarities (as well as contrasts) between the recent reform proposals of the Conservative-Liberal coalition government in Britain and those advanced by the WWG. In both countries a central objective is to increase the conditionality of welfare benefits and the incentives for beneficiaries to seek paid work. Drawing on recent British experience, Nolan offers a number of important lessons for New Zealand policy makers, not least the fact that it is impossible simultaneously to reduce fiscal costs, increase incentives for work and lower poverty. Policy trade-offs are thus inevitable.
Louise Humpage’s contribution has a very different focus. Based on data from the New Zealand Election Survey during the period from 1990 to 2008, she explores public attitudes to unemployment, employment, the role of the state, and the impact of welfare benefits on human behaviour. While the available data reveal various changes in public opinion over the past two decades, they also indicate that a clear majority of New Zealanders have remained supportive of the proposition that unemployed people are entitled to a decent standard of living and that the government has a responsibility to provide employment for all those of working age. At the same time, even larger majorities believe that the unemployed should be required to work for the welfare benefits they receive and that such benefits make people lazy and dependent. Such mixed feelings are hardly surprising. Politically, the data provide comfort – and a caution – to parties at both ends of the ideological spectrum. On a different front, Dannette Marie, David Fergusson and Joseph Boden explore the associations between ethnic identity and welfare dependence over recent decades drawing on data from a longitudinal birth cohort of New Zealanders born in 1977. Within this cohort those self-identifying as Maori reported much higher levels of benefit receipt (across the different types of benefit) than non-Maori. The analysis by Dannette et al suggests that ethnic differences in welfare dependence are mediated by a series of adverse life circumstances and events, for which Maori are typically at greater risk than non-Maori. This suggests that reducing ethnic disparities will require a multi-faceted approach that tackles the key disparities in life circumstances – such as family adversity, substance use disorders, low educational achievement, and early parenthood.
The next three articles – by Michael O’Brien, Fraser Jackson and Michael Fletcher – focus on the three reports of the WWG, with particular reference to the underlying philosophy and policy recommendations. The first two authors offer vigorous and relatively systematic critiques; the third poses some important analytical challenges and offers various cautionary remarks, but is less forthright. I will not recount the authors’ many and varied concerns here, but several points are worth highlighting. First, the terms of reference of the WWG were deliberately restrictive. This was politically driven. But the limitations imposed on the Group were potentially debilitating. In particular, the WWG was asked not to offer advice on the adequacy of welfare benefits, or the social assistance programme known as ‘Working for Families’, or the tax-benefit interface, or New Zealand Superannuation. This necessarily limited the nature of the policy issues under investigation and, therefore, the range of policy options that could be evaluated. Moreover, even if the WWG is correct in assuming that its proposals, if implemented, will successfully reduce beneficiary numbers by almost 100,000 within 10 years, more than 250,000 people are likely to remain reliant on some form of benefit – a substantial proportion of whom will be children. The absence of any commentary on the adequacy of such benefits may have suited the political agenda of the current government, but is nonetheless regrettable. Second, the WWG’s terms of reference suggest that the fundamental policy ‘problem’ is ‘long-term benefit dependence’, with the implication being that such ‘dependence’ is largely due to design problems in the benefit system (and/ or the personal characteristics and proclivities of beneficiaries) rather than, say, structural issues in the operation of the labour market. But this begs some very large questions: for instance, of those who end up on unemployment benefits, what proportion do so because of inadequate jobs and what proportion do so for other reasons? Jackson’s reflections on this matter, drawing on labour force data since the mid-1980s, are highly relevant.
The remaining three articles in this issue of Policy Quarterly address a range of broader issues of relevance to the design of social policy: Philip Morrison explores the process of residential sorting and, in particular, how residing in neighbourhoods with relatively high levels of deprivation lowers individual’s prospects of social mobility; Matthew Gibbons endeavours to estimate the degree of intergenerational economic mobility in New Zealand by testing the relationship between the economic circumstances of parents and of their children as they reach adulthood; and Xavier Marquez considers the arguments surrounding income inequality and social justice – is income inequality unjust and, if so, what should be done about it? All contested territory, of course, but of critical importance.
Published in May 2011