Dunne's Weekly: National's Benefit Changes All About Politics

Here we go again. Another National-led government, and another round of cracking down on beneficiaries. That was the reaction of the parties of the left to the coalition government's announcement it was returning to applying sanctions to beneficiaries who fail to meet their job seeking obligations.

Both the government's announcement and the Opposition's reaction were entirely predictable. In different ways, beneficiaries and how they are treated define the divide between the left and the right. National's announcement this week and Labour's reaction are as much about playing to their respective audiences as anything else, with beneficiaries once again being the unfortunate ones caught in the crossfire.

The Greens' reaction that the government was "quickly building a legacy of cruelty ... to penalise the poorest people" was over the top, even for them. But again, it was more about political positioning than concern for those who might be affected. It was a further opportunity for the Greens to push their claim that they, not Labour, are now the party fighting for the poor and dispossessed. Despite Labour stagnating, recent polls show the Greens still have a long way to go to make their claim stick.

Nevertheless, once the fog of politics has been cut through, there are some important issues to be considered. There has always been a benefit sanctions regime, even under previous Labour-led governments, for beneficiaries who fail to meet their various obligations. Ministry of Social Development figures show that from the end of 2017, when Labour came to power, through to the start of the pandemic in 2020, benefit sanctions were being applied at the rate of around 12,000 per quarter. But this figure slumped dramatically during the pandemic when the government not unreasonably softened its approach. But, tellingly, when the pandemic crisis passed, Labour did not return to its earlier approach, so now, the quarterly rate of benefit sanctions is only about half what it was in Labour’s earlier days.

The Prime Minister says that all National is doing with its latest announcement is "just making sure the existing set of sanctions is applied", something Labour had clearly given up on doing during its last three years in office. He added that current modelling showed a young person who spent almost their entire working life on a benefit would end up costing nearly $1 million in taxpayer funding. He said the government's moves would ensure those people who could work, did, but there needed to be consequences for those who did not meet their benefit conditions.

In similarly soothing tones, Social Development Minister Louise Upston added, “It is right that our welfare system acts as a safety net for those who need it. But that support comes with certain responsibilities." At the heart of her concern is the Job Seeker allowance, currently being paid to about 190,000 people, but where numbers have grown by more than 70,000 since 2017, with over 40,000 more of those receiving the allowance for longer than a year. So, she has announced that a “ramping up” of benefit sanctions will begin from June - particularly for young people. She said this would be the first step towards additional monitoring of the benefit system, and would apply to about 2,500 people a month at a cost of about $1.2m a year. At present, only about a third of Job Seeker recipients are being actively monitored by MSD, leaving many questions about what is going on.

Issues relating to the level and duration of benefits are always touchy politically, even more so in the straitened times of the last election campaign. Beneficiaries argue benefit levels are never enough, while others feel the system is too soft and offers people a lifestyle choice, rather than helps those in need through difficult times. The absence of good data about the extent to which beneficiaries are complying with their benefit obligations is regrettable and gives rise to a lot of speculation, much of which could be malicious and unfounded, about what is happening to beneficiaries.

This appalling lack of data makes effective controls on benefit expenditure difficult to achieve. National knows full well the political and social costs of going too far to control – or even cut – benefit levels, as it found out after the 1991 “Mother of All Budgets”, so will not repeat that mistake again. But its supporters will be expecting it to do something, hence the move on young people and the Job Seeker allowance which is likely to be popular with its “personal responsibility” focused supporters. Labour’s softness on sanctions after 2020 makes it easier for National to do not very much to appear more rigorous, and look as though it is applying the Prime Minister’s “tough love” to solving the country’s problems.

If it can present its changes as being in line with what “reasonable” people would expect, while Labour hand-wring that they are too tough, and the Greens take a much harder opposition line, the government will win the argument. They hope their supporters and middle New Zealand will conclude that while tough but fair, their actions are the dose of reality needed to help get the country “back on track”. But getting that balance right is likely to be an ongoing challenge.

The one bit missing in this enduring debate, though, seems to be what those on the Job Seeker allowance think, including why so many remain on it for so long, and how they feel about that. With changes afoot to “tidy up” the system someone might think to ask those involved for their views and solutions.

They might provide better answers than all the figures the various parties are currently throwing around.

In case you missed it, read my latest Newsroom column on www.newsroom.co.nz

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