Effective welfare reform is more than slogans

Reports that National is rethinking its welfare policy with plans to introduce work-for-the-dole and time limits on benefits follow Work and Income’s best ever year for placing job seekers into work. There were 16,464 fewer beneficiaries receiving unemployment benefits in January compared with the same week in 2002. Social Services and Employment Minister Steve Maharey argues that further reform of the welfare system is needed to help more people into jobs, but says National’s proposed solutions will not deliver results.

The Work and Income Service of the Ministry of Social Development had its best ever year for placing job seekers into work in 2002. It placed over 50,000 people into long-term jobs – a 19 percent increase on the number placed in the previous year. Looking further at these results it is clear that employment growth is being widely shared: the placement of long-term unemployment beneficiaries improved by 64 percent and the proportion of Maori and Pacific job seekers placed into work also increased.

New Zealand’s growing economy is clearly making the major contribution to these excellent results. Regional economies are prospering leading to strong job growth across the country which official advice picks to continue this year. Other important factors are also at play. The government’s move to regionalise Work and Income in 2000 has enabled the service to respond directly to local needs. Examples include the active management of seasonal labour needs in Nelson and Hawkes Bay and partnerships with new businesses like the Amercian-owned Jack Links beef jerky factory in Mangere which plans to employ up to 450 staff, 95 percent of whom will be supplied off Work and Income’s job seeker register and trained to meet industry standards. Scrapping the inefficient work-for-the-dole scheme has freed up front-line Work and Income staff to focus on getting beneficiaries into real jobs earning real wages, rather than administering make-work schemes which failed when trialed by the last National government.

It is therefore ironic, but perhaps not surprising, that National plans to reintroduce the work-for-the-dole scheme. Far from defining what the party stands for today new National MP Don Brash, who is leading the party’s policy reevaluation, has shown a distinct unwillingness to move on from the agenda that lost the party government in 1999. Along with advocating tax cuts for the well off he is now advocating abolition of the unemployment benefit and reintroducing work schemes (apparently to the surprise of National’s ‘official’ welfare spokesperson MP Katherine Rich).

Despite its populist overtones, all the evidence shows conclusively that work-for-the-dole does not work. This includes evaluations commissioned by National when they were in office. Beneficiaries became attached to their community work placement and were less likely to look for a real job, while case managers spent all their time administering its complicated sanctioning system rather than identifying paid work opportunities.

Similarly the experience with putting time limits on benefits in the United States has not been the success story often painted. Proponents of time limits point to dropping welfare rolls in the states in which it has been trialed, but they fail to acknowledge independent research showing that beneficiaries have simply moved to other states where benefit entitlements are not capped, or are now reliant on emergency assistance from church and voluntary welfare agencies.

Moving beneficiaries into work remains a priority issue for the government. While National advocates the failed policies of the past, despite evidence they will not work, we have learned that the real solutions rely on lifting skills, ensuring there are job opportunities and putting in place policies that make work pay. Key focuses for the government this term include simplifying the benefit system and removing the financial disincentives that trap people on welfare, giving case managers more time to spend assisting their clients to look for work, and improving the training system so that beneficiaries get the skills employers need. With these policies in place we can look forward to further increases in the number of kiwi families with a working breadwinner.

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