On the Government’s latest plans to Americanise the welfare system

lyndon hood - john key, narnia, youth

What is it about National’s plans for welfare reform and natural disasters? On the same day in February that the Welfare Working Group released its loopy agenda of reform proposals – which included the option of sterilising welfare miscreants – the Christchurch earthquake blew that news off the front page. This weekend, immediately after Prime Minister John Key used his party conference speech to launch National’s populist attack on teenage beneficiaries, the country was engulfed by a polar blizzard.

As usual, the target audience for these proposals is not the miniscule number of feckless young people on benefits, but the wider population of voters who think the young have had it too easy for too long. ‘Ephebiphobia’ is the term for people who exhibit an irrational fear and loathing of teenagers, and National’s conference delegates seemed to have quite a bad case of it. Bad enough at least, to completely ignore the irrationality of the Key government choosing to focus on making the welfare system get tougher with teenagers on benefits – rather than say, helping create the jobs that will avoid them going on benefits in the first place. There seems to be absolutely no coordination between the government’s youth employment strategy, and its welfare policies.

The main reason for this disjunction being being that National doesn’t seem to have a youth employment strategy. It is quite happy to lambast young people about their responsibilities and obligations to the state, while blithely ignoring the state’s own responsibility to manage the economy in a way that offers work opportunities for them.

To the young unemployed, it must seem be a bit like getting lectures on sobriety from an alcoholic uncle. When have the boomer generation – well represented at the National party conference – ever deferred its own indulgences? It used free education, loads of job opportunity and class mobility to further its advancement in the 1970s and 1980s, and has given itself tax cuts at every stop along the way – but now preaches the virtues of slashing government spending and cracking down on the miserly amounts the state awards to the youngest and least advantaged in the society that the boomers have created? Spare me. Forget about the rednecks in New Zealand First. What was on show in the audience for Key’s conference speech on the weekend was the ugliest side of the New Zealand character.

At the core of Key’s speech were two proposals that amount to the Americanisation of welfare delivery in this country. Believe me, this is only the thin end of the wedge. The payment card for 16 and 17 year old beneficiaries (and for 18 year old mothers) is the American food stamp programme in digital drag. There is no reason for thinking it will not be extended to other beneficiaries, once the rest of the welfare reform package is unveiled.

The second element of Americanisation is the mandatory use of welfare bureaucrats from the private sector to manage the transition of teenage beneficiaries into work, education or training. As the US experience has shown, this privatisation of welfare delivery means that said ‘managers’ will have absolutely no interest or stake in the wellbeing of the clients whose money they control – no, because the managers get paid for purging as many people off welfare as fast as they can. And Key is willing to hand the family income and wellbeing of the babies of 18 year old mothers to a cash incentive scheme of this sort?

What happens if the teenage mother jibes for instance, at the inadequate or unsafe childcare that the manager demands she accept, so that the manager can pocket more money? Why, her case manager will be able to force her into submission on this or any other grounds, simply because the manager will be holding the purse strings. For a party that claims to abhor the nanny state, this is a major extension of state power, and with regard to something far more important than shower nozzles and light bulbs. Again, one can safely assume it will be extended beyond teenage beneficiaries to the wider beneficiary population, once the rest of the policy package gets unveiled in the months before the election.

The gaping hole in the government’s policy framework is, as mentioned, the lack of a youth employment policy. Further to the right, the Act Party are offering youth rates as a panacea. This ignores the fact that many workforce entry jobs – say in the fast food industry, cafes and supermarkets – do not require a level of skills training sufficient to justify any wage differential, And moreover, youth rates would themselves create an incentive to dispose of said workers once the threshold to adult rates was reached. We’ve been through that process of injustice before – why repeat it ? On balance, youth rates would only make the career prospects of young people worse, not better.

I’m not saying that it is easy to devise and promote full employment for the young. All around the world, governments are finding it difficult to cope with an entire generation of young people who seem to be largely surplus to requirements, at least within a global economy wedded to cheap labour costs and job-destroying technology. Yet not even trying to create work opportunities for them – and worse, using them as scapegoats to win votes from the reactionary talkback radio crowd – is pretty shameful stuff.

The gist of the new measures announced on the weekend? Well, once the necessary changes to the Privacy and Education legislation have been passed… by next year, almost all beneficiaries aged between 16 and 18 will have their benefit payments managed by welfare bureaucrats, with only those on invalids benefits being spared the new regime. The cost of rent and power bills will be automatically deducted, and a limited amount of discretionary income would be allowed on what’s left on the payment card, which will be unable to be used to buy alcohol or cigarettes. All 18 year old mothers would be expected to be in work or training, Key explained, by the time their child was one year old.

As mentioned, the best way of reducing the numbers of teenage beneficiaries – which is utterly miniscule compared to the 58,000 youth unemployed – is to manage the economy in a way that creates work opportunities for them. When work is available, the benefit numbers go down, right across the board. Between 2006 and 2008 for instance, the dole numbers plummeted from 40,000 to 18,000 – and then hit a peak of 62,000 during the global recession, before declining slightly this year. These variations are not due to any sudden fluctuations in irresponsibility or outbreaks of diligence. As even the Social Development Ministry website concedes, unemployment rates merely reflect the changes in economic conditions.

The current dole statistics do, however, contain a few noteworthy trends. At the end of June five years ago, 18-24 year olds comprised only 22.5% of those on the dole – but at the end of June 2011, they comprised just under 30%. Big increase. Over the same period, there has been an almost identical rise in the proportion of those on the dole aged 40-54. If the cause truly was one of motivation, it surely can’t be striking teenagers and mature workers alike, at the same time. The sobering reality is that for 18-24 year olds and older workers alike, work opportunities have been drying up.

As yet though, those conditions do not seem to be particularly long-lasting at an individual level. Currently, 98.3 % of those on the dole receive it for less than four years – though that period does include the tail end of the economic boom, and thus will probably deteriorate. Still, as of June 2011, nearly three quarters of those on the dole – some 72% – were on it for less than a year. Again, this suggests that the problem is not people choosing to languish on benefits, or lacking motivation to get off welfare.

For now, the government’s welfare reform package amounts to little more than micro-managing the deckchairs on the proverbial. It is avoiding the hard work that it should be doing – namely, of managing the economy in a way that fosters work opportunities for all those willing to work. For now though, voters seem happy enough to let the government play politics with their children’s future.


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