Chris Trotter looks at how Sepuloni's welfare reform agenda bumps up against Robertson's spending control framework, and assesses how this will be resolved

Chris Trotter looks at how Sepuloni's welfare reform agenda bumps up against Robertson's spending control framework, and assesses how this will be resolved

Carmel Sepuloni has her report. The Welfare Working Group has done its job. Now, the real political work begins. How to support, manage, and generally meet the needs of the 300,000 New Zealanders who rely for their survival on the transfer payments made to them by the State.

The Working Group’s recommendations are admirably clear. The raw quantum of state support needs to rise. The management of beneficiaries needs to become much less punitive and much more facilitative. The most glaring need? For the thousands of New Zealanders in receipt of benefits to be made to feel that they are free and equal citizens: assets of their country – not liabilities.

That’s a tall order.

Quite how Grant Robertson, the Finance Minister, is supposed to materially improve the living standards of the nation’s beneficiaries without, at the same time, breaching his Budget Responsibility Rules (BRR), remains frustratingly vague. The most obvious solution, and the one recommended by the Working Group, is to increase the amount beneficiaries can earn from paid employment before their state-provided income begins to abate. All well and good, but for those in the unfortunate position of not being able to take even the most part-time of jobs, the declining purchasing power of the benefit continues to be a big problem.

Robertson could, of course, cast aside his BRR and make the necessary adjustments to benefit levels. He could also raise the tax rates of the country’s wealthiest citizens to pay for it. Both courses of action would, however, entail breaching the solemn promises which Labour made to the electorate during the 2017 election campaign. They would also undo all of the effort Robertson has put in to reinforcing the notion that he is not a typical, left-wing, “tax-and-spend” finance minister. Fiscal responsibility has been his signature phrase for nearly two years now. It is, therefore, pretty safe to assume that he will not be making anything larger than the normal inflation-driven cost-of-living adjustments to the nation’s social-welfare benefits in this month’s Budget.

Perhaps sensing the absence of political realism in calls for substantial benefit increases, the Working Group has called for a significant re-orientation of the Ministry of Social Development’s (MSD) interactions with its “clients”. Rather than focus its energy on monitoring beneficiaries’ compliance with its rules and regulations, and sanctioning those who fail to meet their “contractual” obligations to the State, MSD is being urged to devote considerably more of its resources towards actively assisting beneficiaries into some form of socially useful – and preferably paid – work.

The current practice is to place the bulk of the responsibility for finding work onto the shoulders of each individual beneficiary. The resulting, confidence-destroying, dispatch of endless (and almost always unsuccessful) applications for employment (most of which are never even acknowledged) accompanied by the constant updating and tweaking of CVs that most of the people doing the actual hiring will never read, constitute two of the most familiar, heart-breaking, and soul-destroying aspects of beneficiary existence.

Of much more practical assistance would be a reassertion of the very earliest objectives of “Labour Departments” around the globe: namely, to act as state-run labour exchanges where the needs of employers and workers could be conveniently matched. This would, obviously, involve a great deal more than simply pinning “positions vacant” cards to a notice-board. Implied in the whole notion of a labour exchange was a large measure of “active” labour market management and planning. Direct state intervention designed to advance not only the interests of employers and employees, but also those of the national economy as a whole.

There is every reason for Robertson to be all over this hands-on approach to moving citizens from welfare to work. He was, after all, the man assigned the task of investigating “The Future of Work” by Labour leader, Jacinda Ardern’s, predecessor, Andrew Little. He knows full well that as artificial intelligence wipes out more-and-more middle-class professional occupations, the whole concept of a “steady, well-paid, nine-to-five job” will become increasingly archaic. The trick, politically, will be to make it possible for the same technological and scientific revolution that is wiping out all these “good” jobs to be harnessed to the task of ensuring that the emerging “gig economy” is both less individually exploitative and more socially beneficial.

It is in this potentially game-changing context that the Ministry of Social Development might finally begin to live up to its name. The expertise it gains in assisting the least qualified and most vulnerable citizens into situations where their strengths can be maximised and their weaknesses worked around will become increasingly useful in a society where the work required to make profits for capitalists will be the preserve of intelligent machines, and the work required to sustain social, cultural and physical environments will be the preserve – and delight – of human-beings.

Potentially, then, the report of the Welfare Working Group could be the political catalyst for precisely the “transformational” government Prime Minister Ardern has been promising since 2017. The sixty-four-thousand-dollar question, politically-speaking, however, is whether or not the Minister of Social Development, Carmel Sepuloni, possesses the imagination and the requisite heft in Cabinet to persuade her colleagues to apply it to Labour’s transformational project. To date, Minister Sepuloni has not impressed as either a visionary or a risk-taker. Indeed, the only firm commitment she has made, vis-à-vis changes to the MSD regime, is to end the sanction attached to a solo mother’s refusal to name the father of her offspring.

This is hardly helpful – aggravating as it does the worst prejudices of conservative New Zealanders against welfare beneficiaries. Ethically dubious, at best, the removal of this sanction will provide the right-wing shock-jocks of commercial radio with endless hours of “benny-bashing” sport. What’s more, many of the social conservatives energetically nodding their heads to these diatribes will be existing or erstwhile Labour supporters. Such people can be enlisted in a pro-social welfare political movement (just as they were, to stunning electoral effect, eighty years ago) but Sepuloni’s promise – which substitutes the state for the biological father of a woman’s child – is hardly the best start!

With an election looming in eighteen months time, the opportunities for initiating transformational change that genuinely addresses the needs of a society which is being reshaped by forces over which voters urgently need to regain some real measure of control are rapidly fading. The Welfare Working Group’s report, like the 300,000 people it has been written about and for, can be seen as an opportunity or a cost. It is to be hoped that Minister Sepuloni has what it takes to make it the former – and not the latter.


Chris Trotter has been writing and commenting professionally about New Zealand politics for more than 30 years. His work may be found at http://bowalleyroad.blogspot.com. He writes a fortnightly column for interest.co.nz.

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Thought provoking article. I disagree with machines taking over middle class jobs - well it may happen but certainly not yet. In the past a local council had minimal number of office bound managers and vast numbers of basic manual labourers sweeping streets etc. The latter have been partly mechanised and are now almost all contractors now whereas council offices are ever expanding and fulling with paper pushing officials.
The problem for beneficiaries is the sheer number of low paid contract jobs. If you have any personal responsibilities how can you take flexible hourly paid work? Mr Trotter fails to mention that entry to our workforce means striving against 3rd world students who are hard to compete with since they young bright and desperate as can be seen at almost every food outlet.

I would not make myself too comfortable with the thought that technology and machines (more technology) will not take over middle class jobs, as it is already happening, has been for some while, it is just that we adjust to the "new normals" very quickly and fail to notice it.

I spent 45 years as a computer programmer and the demise of paper was promised for 35 of them. Similarly a program that could identify something in a photo was handed out as a programming task in the mid 1960s and actually happened rather recently. The IRD is spending a fortune on upgrading its software - until this year I could do my tax return before the end of April - now I have to wait for them. Yes jobs will and do go but they always seem to be replaced by a flood of new and usually less meaningful jobs.

There have been many ages. Bronze, Iron, Enlightenment. Whoever is out there in the future, is likely to name our present, the age of technology. Agree it is a creeping progression and it does tend to dehumanise our every day life. The biggest problem I have is that whenever it fails, getting a fix is far more remote and far less understandable than doing the same for a human or manual error.

I'd say the age of technology really started with the first steel mills supplying the first cotton mills - everything since has been like stone age man making ever more effective handles for their axes. That was the ultimate tool making man stronger. The age of Artifical Intelligence will be when it makes us seriously brighter - at least axes and cotton mills needed people - not sure if a really smart piece of AI will need us at all.

There is one little thing people will be needed for and that is to purchase the product of mechanization/technology.
Already we see more and more people unable, beyond the very basic, partake in the economy. The only growth economy they seem to be able to find a way to be in, is the black, drug economy, so they can blot out the meaningless desperation of their lives.

Oh and the way this is all progressing is very, very racist

Surely not racist; our culture praises diversity for its own sake and what is more different than self-aware software? There will be no judicial prejudice against them; that would be bigotted pro-homo sapien.

Nah, it's racist alright, no amount of software will alter that. Those that been worst affected are also shouldering much of the blame. I don't think I need to explain that any further.

""The most glaring need? For the thousands of New Zealanders in receipt of benefits to be made to feel that they are free and equal citizens: assets of their country – not liabilities.""
Solved with a proven solution: Universal Child Benefit. Get the public to realise Kiwi children are assets that are well worth developing. Every parent is the supervisor of a unique precious gift that will be the future life blood of our economy. Therefore essential to anyone expecting to have a long retirement in NZ.
Pay it to both parental guardians to nudge couples to stay together. Poverty of love is worse than poverty of wealth for a child.

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Some people are very, very bad parents and giving them more money is not going to change that.

Indeed, there are people the system doesn't permit to drive a car, and yet we let them "raise" children?

Isn't there a problem here that we are avoiding? Is the state the best administrator? The focus in a state run institution is usually mainly on the process, not the mission, not getting things done. So we tend to end up with a heavy handed bureaucracy that is hard for people to deal with, and very, very, little by way of experimentation or creativity, or even, at worst, efficiency. It's not what bureaucracies do best.

Government should set the rules and organise the funds, that is their purpose. Perhaps if there were other organisations involved so that people could "take their business elsewhere" there might be a lifting of standards. Isn't it unrealistic to ask a major bureaucracy to take risks and be visionary? It just is not what bureaucracies are good at, they are great at providing stability and continuity and a rock like resistance to change of all forms. That is their strength.

The aim could be to provide competition and choice in service delivery, so people could choose whether they used the Salvation Army, their nurse, or their employment agency as their primary interface with the monolithic Giant of government. The concept is as a businessman uses his accountant to produce his accounts, or someone getting their builder to organise the building materials.

Ref a Universal Child Benefit is minimal admin. If Jacinda decides to spend hers on a bigger wedding cake that is OK. It is as sensible as our current system giving unemployment and accomodation benefits to a subset of beneficiaries who are sub-letting their slum dwellings and letting children go hungry while they spend on alcohol and drugs. But it would need minimal admin: merely was the child born, are you looking after it, is it still alive?

Exactly. There must be better ways than the current system. Unfortunately, left to themselves, bureaucracies have a tendency to expand to absorb the funds available.

Well said. Parkinson's Law: 1 the number of subordinates increases at a fixed rate regardless of the amount of work produced. 2 work expands so as to fill the time available for its completion. Combine with the Peter Principle: the tendency in most organizational hierarchies for every employee to rise in the hierarchy through promotion until they reach a level of respective incompetence.

1) "needs of the 300,000 New Zealanders who rely for their survival on the transfer payments made to them by the State." - no, its much higher including those on super.

2) "For the thousands of New Zealanders in receipt of benefits to be made to feel that they are free and equal citizens: assets of their country – not liabilities." +1

3) "the declining purchasing power of the benefit continues to be a big problem." +1

4) "MSD is being urged to devote considerably more of its resources towards actively assisting beneficiaries into some form of socially useful – and preferably paid – work." -1 its illogical.
We run an economic system based on price stability which requires a % unemployed. Those that cannot contribute through paid employment or training into paid employment could contribute through voluntary community work where feasible.

5) Given 3) above, the age at which superannuation is provided should rise to say 67 and be linked to life expectancy & the additional funds used to raise benefits to a sustainable level. No one in NZ has the political gumption to do it though.

Is it true that a person who isn't even taking the most part-time of jobs is an asset? Is a drug addicted unemployedable father of 12 children to 5 different women, an asset? Interesting times we live in, is it ignorance or willful blindness?

Who do you blame the unemployable father or the 5 dumb women?

I blame the state for enabling the dumb women to make bad decisions that we all pay for. Letting them choose to become baby farmers to support themselves in indolent lifestyles or as cash cows to support gangs (a reality), is just stopping them from ever growing up and becoming responsible contributing adults, and the kids they have are real victims. Beneficiaries are way too highly represented in the 'bad parent' statistics. A recent nzinitiative study showed that basically all of the bad outcomes for lower socioeconomic /beneficiary kids are down to parenting, schools have almost no impact - there is no way society can fix it if infantalised parent/s lack discipline needed to do the job, it is just breeding another generation of unhappy beneficiaries. It's bad enough that it needs policy changes, no benefits without contraception.

The state should offer monetary incentives for long acting contraception.

It's simple maths that having too many children is a cause of poverty for families.

It is the 1st child that is the main cost. After that each subseqent child is a comparatively minor cost. It wasn't so bad when one parent's pay could cover all the family costs (rent, food, clothes).

Every one of those kids is screwed over by bad parenting. They are unlikely to ever be net tax payers. Better to stop at one, as maybe Mum will put more of an effort into raising them well.

Said it before, will say it again. Want to receive unemployment benefit or DPB (or whatever the current PC moniker they hide behind is), need to present a doctors cert saying the contraceptive implant has been administered and will be effective till a certain date, and have to present a new doctors cert 2 weeks before that date to continue receiving the benefit. No religious or cultural exemptions, only valid medical reasons.

Not everyone cares to be an asset to society.
If the benefit payment is dependent on answering a question of: do you or do you not want to be an asset to society?" everyone will say yes. That does not mean that there is any truth to that.
Giving them an easier life? By and large that would mean increasing the benefit and would probably make them happy for a short while, does that now make them an asset or a bigger liability?
For those who can not work due to a physical or mental issue we have a safety net, either temporary or permanent. But even in that situation these people are often assets to society already.
The unemployment benefit is also a safety net, to use when you loose your job, it is not a permanent right. Most people see it as such and are quickly back working, they are already assets to society. This should be an ever revolving door of "clients".
The issue is those that can't be bothered to find (other) work and those that feel that society owes them.
It is less personal and call it the "state", otherwise it sounds like your working family, friends and neighbours are paying you to do nothing (which is correct).
They have made a conscious decision to remain on a benefit and don't care.
MSD changing their culture? Who needs to change first, MSD or permanent beneficiary attitudes? Even if MSD changes it's culture is there a real chance that this particular group of beneficiaries would care?
The government knows that not everyone cares to be an asset, this may remain election waffle but apart from that won't go anywhere. ( a bit like the recommendation from that other working group)
And the father issue? It will be better for the child's future mental well being to officially know who his father is plus financially better for all tax payers. MSD can chase the male for support payments rather then it all coming out of the big pot.
In some cases the father is already on the benefit, what that shows is that he knows when an opportunity comes along. If he is that clever he can also take the opportunity to get a job.

Here is where we need MMT's Universal Job Guarantee. The state should pay anyone who can't find a job in the private sector a minimum wage plus the usual benefits for doing useful work. Local communities can decide what work needs to be done: river clean ups, graffiti removal, tree planting, shopping for elderly, after-school childcare, sports team coaching, manning school crossings. A transitional job to give people dignity and keep them employable so that when the private sector wants employees again they can offer a bit more than minimum wage and people are ready to go. When there is a surplus of a commodity you can dump it or you can conserve it. Right now we dump surplus labour. We let it decay. Let's conserve it instead. The Job Guarantee would be a great automatic stabiliser, expanding in downturns, contracting in upswings and would be an inflationary anchor for the economy - the wage paid for an hour of JG labour becomes the anchor for the value of the dollar. Right now when there is an upswing we have a giant pool of people who are unemployable after years of being allowed to rot. So we get botttlenecks and kiwifruit unpicked. The JG would mean labour is kept ready to go potentially ameliorating inflationary pressures on wages from labour scarcity (hysterisis effectss). Some people will never be employed in the private sector and remain permanently on the JG. That is okay. The right to work should be a human right - like the rights to education and healthcare. The idea is getting traction overseas. Why is NZ always the last to catch onto these trends?

Once, we would have been among the first to adopt such an idea, but now, after decades of Douglas neo-liberalism, we are well entrenched in the dog eat dog mentality. In righting historical wrongs to Maori and maybe learning a bit of Te Reo and adopting a bit of tikanga into our system, we have had our racism well and truly exposed.

As a species we are contemplating space flight to Mars. Yet we struggle to deal with chronic unemployment and unemployment and giving basic dignity to all when clearly there are enough resources to enable that if put to sustainable productive use. We seem to be stuck living below our means by perverse choice. It is a paucity of imagination to think we can't solve unemployment and underemployment if we want to. Much harder to go to Mars or the Moon. Even the sclerotic Soviet Union managed to employ everyone and give everyone basic housing, utilities, healthcare and education - more security than we give our poorest with a very inefficient economy centrally planned. It wouldn't take much to ensure a basic floor under living standards in a country like NZ. Some commonsense tweaks would do the job. Like a Job Guarantee and bit more deficit spending to sustain aggregate demand. Allow the dynamism of capitalism to deliver what it does well. Allow the state to pick up the slack where the market fails. Why are we so adverse to the latter when capitalism does better with consumption levels sustained for the poorer classes? Anyway, as I've said before, only a Utopian would think things can go on as they are ... political turmoil will have its way if nothing is done about the economic stagnation.

Yes, a Gulag labour camp in Siberia sort of provided housing, work and security, I guess....

Actually, liberalism is racist by definition as it harks back to the days and attitudes of exploitive corporations like the virgina tobacco company and the east india company.

While I strongly believe in the safety-net, too-easy welfare is incredibly destructive to cultures that don't have a strong work ethic or stigmatise welfare. It has laid waste to much of Maori population in NZ, infantalising them and turning them into little more than life-long unhappy, sullen and irresponsible teens, dooming their kids. Pacific Island community with their stronger culture and stigmatising of laziness have by contrast (relatively) thrived. NZ is on dangerous ground as the number of (net) beneficiaries is close to outvoting net taxpayers, aided by well meaning but ignorant/naive/irresponsible politicians of left. No country can survive that (Venezuela, South Africa, Zimbabwe, and much of South America providing object lessons in the dangers)

Are we allowed to say one culture is stronger than another? Anyway we need to do away with these "social constructs" and treat everyone as individuals.

Who is the judge of that and what are the criteria?

Nice dream. I think measure of your culture is; are your kids able to compete effectively for jobs with kids of other cultures? by that measure Korean>Chinese>Japanese>Western>Southern European>..>..>Africa,Islam,Aboriginals are all knocking around the bottom

I don't think the competitiveness of offspring is a measure of "culture" so much as a measure of direct parental input into children's education and home life. All of the groups above have successful and unsuccessful individuals however it is the ones who discard the outdated aspects of their culture that do the best.

All cultures in the world can be almost discarded in their entirety in favour of the modern Western style nuclear family which isn't really a culture so much as the most practical, least oppressive and most sensible way for an individual to live. Most successful immigrants and natives adopt this strategy and their children certainly do.

Cultural artifacts are relegated to being simply entertaining or to provide culinary variety. They are not very important at all to high functioning individuals who look forwards and live in the now and don't embrace nonsense. Focusing too much on your culture will hold you back because it is in effect looking back.

Oh for crying out loud. Again!

While Lapun, Roger and PocketAces all correctly identify some of the issues with this policy only Lapun comes close to the main issue. The elephant in (or in reality missing from) the room is the lack of meaningful, well paying jobs for the great uneducated masses. That majority group of the population with the most basic of education, no talent, and who struggle to find the motivation and rationale to lift themselves. They are outnumbered by their critics, and lack decent support structures. Ultimately this results in mental health issues. I understand that those jobs are one of the less defined of our current Government's policies, but it will take a long time before the liabilities our welfare system presents will start to reduce, and people who fall out the bottom of our society are able to be given any real opportunity to better their lot. At least they are trying, but there is much to do and it is far from simple and easy.

High minimum wage makes them ever more unemployable. Under about IQ 75 there is almost nothing that they can productively do, and that bar is going to rapidly rise with increasing versatility of machine learning.

Probably no jobs for most kids being born today.

Firstly, another good article from CT. He is maturing nicely... for a leftie.
Secondly, welfare presses everyone's buttons. Whether you love it or hate it, you have an opinion on it.
In fact, so famous is western welfare that the rest of the world will break down every barrier to be a part of it. From the outside looking in, welfare is our biggest asset. Yes, they hate us but love our welfare. From the inside things are a little murky. The professional beneficiaries who f.... around all day are a huge cost to us all. Most of them couldn't give a s.... either. Many of them are angry people. Many more are just plain dumb, the result, I believe, of the last 40 years of premeditated welfare from certain groups. This is unhelpful (& they know this) but it is utu. And as each generation of it manifests every 14-16-18 years the anger gets angrier & the utu keeps happening, much of it to pleasure the satisfying that anger. This is not helpful for them & it's not helpful for us. Worse, it could be another 3 or 4 of their generations before it dissipates. Or longer if we don't get this sorted. I don't hold out much hope for this lot to come up with the answers. I'll still be breathing.

I don't know about maturing, but I agree that Chris Totter columns here have been excellent. They're always interesting. Perhaps this is because he has to write to convince instead of leaving to the converted.

I often wonder if the centralised system of paying out benefits could be replaced by local communities paying them - perhaps at the Community Board level. Localism I think they call the movement overseas.

Then a range of support could be offered - maybe the person would like to do some voluntary work or help out at the local pool and become more involved in the community. Maybe the local manager would see a need for additional help - this might be from other volunteers. Cut firewood, mow a lawn, fix a car?