Keeping The Good Life Going For The Middle Class

Gordon Campbell on National’s welfare plan for the middle class unemployed

On Friday, the National Party will unveil the details of its plan to pay the mortgage and living expenses of those middle-income earners who may lose their jobs next year because of the economic recession Reportedly, the money to do it will come from the fees paid by lending institutions for the government’s bank deposit guarantee scheme . (Ummm. So shouldn’t that money be being kept aside and invested for that purpose ? Just in case like, its needed ? )

Strange days, for sure. State compensation for the mishaps of the free market is usually called socialism. Little did we realise that National’s hidden agenda included John Key’s secret ambition to become the Hugo Chavez of the South Pacific. Think about it. Think about it if you have been getting by on a low wage, or (if you could afford one) trying to pay off a mortgage. That plight has never sparked much compassion before in Key – who once famously described the DPB as “breeding for a business.” No emergency blueprint was rushed from the drawing boards in response to the CPAG Report earlier this year that showed 200,000 New Zealand children are currently living in poverty.

Yet now, on the eve of an election, and in the face of yet-to-be realized job losses among the middle classes, an Action Plan is being developed by National.To help out middle income people who had unwisely – and/or unluckily – chosen to over-commit themselves in the belief that a rainy day would never come. When poor people act similarly they are called feckless or irresponsible – and they tend to be subjected to mandatory conditions under pain of the loss of their entitlements. Since the scrapping of the Special Benefit, those in need have found it harder and harder to access any support to tide them over.

Choice is, of course, a favourite centre-right term. It usually has the twin dimensions of opportunity, and responsibility. Not so much anymore, it seems.

On Friday, we should get from Key the full details of his scheme. We will learn who is deemed eligible for support and for how long, how the scheme is to be funded and how it is to be paid back. In the meantime, something already exists to help the vulnerable and the unlucky through a recession – it is called the benefit system. People who lose their jobs can access it. Rather than create a ‘business class’ category of state dependents curtained off from the hoi polloi, Key could simply increase benefits, and make them more flexibly available. Such a sensible and inclusive response however, would probably be ideologically unacceptable to National’s base.

Outrageous. As Sue Bradford of the Greens has pointed out. Key could start by abolishing the stand down period for the dole. He could lift the abatement level at which extra income reduces the benefit, to above the $100 cut-in period that National is currently proposing. He could raise benefits to ensure that every family without a job during the recession gets adequate support for their living expenses, and he could re-establish the discretion formerly held by WINZ staff to provide a Special Benefit – and which was removed by Labour under the harmfully rigid Temporary Assistance Support scheme that replaced it. These are simple, quick and tangible things that Key and Helen Clark could both be promising to do right now, in the face of the recession. Why aren’t they?

With startling speed, the financial meltdown and the recession have changed the entire social welfare environment. As recently as August, Key was preaching a tough line on benefit entitlement, driven what he called by an “unrelenting focus” on work. Those jobs are now disappearing at warp speed. Back in August, National promised to enforce mandatory work requirements for (a) those on the DPB once their youngest child turns six (b) at least 5,600 current sickness and invalids beneficiaries, and (c) on the long term unemployed, who would be forced to accept whatever ‘ suitable” job offer is made to them, or else have their benefit cancelled.

Now however, the likely loss of jobs in the recession seems to have motivated Key to create a special compensation package for the middle class unemployed. He can’t have it both ways. If the recession is going to bite in the way he is anticipating, then this is plainly not the time to introduce the punitive August package, and he should now abandon it.

Conversely, if he retains the tough line on beneficiaries regardless, he surely can’t make a credible case that people who earn more – and whose children are not ( yet) living in poverty – are somehow more deserving of emergency state support than families who have been living in poverty throughout the recent boom, let alone in the current recession.

A disproportionate number of those families currently living in poverty are Maori. What does Taraina Turia think of the plans by her new friends in National to enforce tough welfare conditions on her constituents, while rushing to the aid of the middle class ? She better get used to it. This is the sort of thing she may well have to rationalize over and over again, during the next three years.

My own hunch? Key is likely to try to square the circle. He is already saying the support offered will be in the context of “a wider framework of getting people back into work”, and that those who lose their jobs in the recession will receive support for only a limited period of time.

That rings a bell. The National Party has long wanted to impose a term limit on benefit entitlement. This election, are we going to see a punitive term limit policy enacted for everyone on a benefit – yet introduced under the guise of compassion for the victims of the recession? Indeed, Friday’s announcement will be an interesting one.

Gerry Brownlee, meet Winston Peters.

Yesterday, there were two competing stories in play about ethics, abuse of power and conflicts of interest. One was about Winston Peters ( again!) and the other about National Party deputy leader Gerry Brownlee. Such things do have a habit of emerging in pairs. Last time round, Peters was hammered over his evasions and convenient bouts of forgetfulness over the Owen Glenn donations, while John Key got off virtually scot free for his evasions and convenient bouts of forgetfulness over his Tranzrail shares.

Well, déjà vu seems to be happening all over again. Peters, judging from the official MFAT papers released yesterday, did support Glenn in his quest to become honorary consul in Monaco. So much for Peters’ comments to reporters in February about his role : “ The minister doesn’t get in before the process has even started and give his view. What sort of ministry do you think I am running? The best thing that Peters could say was that the timing seems a bit off. The efforts revealed in the MFAT documents – if they were supposed to be taken as a quid pro quo for the Glenn donation were made in late 2005 – while the inquiries in the official papers date from August 2007.

Circumstantially though, it adds to the pile of evidence that Peters’ actions in this affair were willfully misleading, and reprehensible.

So what then are to make of Gerry Brownlee? Like his leader, did over Tranzrail, Brownlee seems to have abused parliamentary powers to seek information and a response by government, over matters in which he held a pecuniary interest, undisclosed. The Standard website broke the story on the weekend, citing these examples of parliamentary questions asked by Brownlee, while he held an (undeclared) stake of Contact Energy shares:


Gerry Brownlee: In the light of that answer, why has Contact Energy put on hold its combined-cycle gas plant planned for Otahuhu [Hansard,8 Oct, 2002

Here is another from 2003

Gerry Brownlee: Can the Minister confirm that the Government is considering establishing a systems operator who will buy and sell all generated electricity, doing away with the market and destroying all incentives for investment in new generation that we desperately need?

And one more from 2003 :

Gerry Brownlee: Is the Minister aware that similar comments from the Prime Minister last week wiped millions of dollars off the capital value of Contact Energy; can he tell us whether he has discussed those threats with the Minister for State Owned Enterprises; and can he also tell us how bringing generators to their knees helps the current crisis?


That last question in particular, does sounds like the lonely wail of a shareholder in pain, not like a parliamentarian working for the common good. Surprise, surprise though – only one of these two politicians has received front page, head of the bulletin attention – and it wasn’t the big, chunky guy who sat in judgement on Peters in the privileges committee.