Ending Welfare As We Know It

Dr Muriel Newman Speech to Christchurch National Conference

ACT New Zealand was formed as a ginger group to lobby for the rights of taxpayers and consumers. A major focus was the unfinished business of politics: finding a way to give the dis-enfranchised - who had lost their stake in society - a pathway to opportunity and purpose.

ACT focussed on looking behind the symptoms of society's failure, to identify what was causing the problems and then to find solutions. As we used to joke, back in those early days, we were finding answers to questions that no one else was asking!

When ACT launched itself onto the political scene to contest our first MMP election, we had developed a blueprint for transforming New Zealand into a stake-holding society. At its heart was the need to modernise social welfare.

While New Zealanders agree that the truly needy require generous welfare support, most do not condone a system that traps families into a cycle of inter-generational dependency and deprivation. Rather, they want to see welfare supporting, empowering and liberating people into a life of achievement and success.

Driven by my own experiences on a benefit - and the glimpse I had of the welfare state's underbelly - developing a modern approach to welfare and building a constituency for change has been my primary mission since entering Parliament. While the politically correct Left still uses personal attacks to try to silence any criticism of welfare, most New Zealanders have come to recognise that our present welfare system is fundamentally flawed.

Quite simply, if welfare were working well, then - at a time when the country has a critical shortage of workers - we would not have over 100,000 on the dole. The number of able-bodied sole-parents on the Domestic Purposes Benefit would not have risen to more than 111,000 for the first time since 1998, and the Invalid and Sickness Benefits would not be escalating out of control.

If welfare were truly the hand-up to better opportunity envisaged by Michael Joseph Savage - the creator of the welfare state - the ratio of workers to beneficiaries would not have changed from 28 full-time workers for each person on a full-time benefit 30 years ago, to four workers to each beneficiary today. We would not have third generation New Zealanders dependent on welfare, nor would we be spending a massive $7.3 billion a year on benefits - and we certainly would not be perpetuating a system that encourages the breakdown of the family, the alienation of fathers and the marginalisation of children.

But of, all of the problems associated with the welfare system, it is the damage to children that is the most worrying.

Research is unequivocal: children raised by parents who are not working for a living fail to do as well in all areas of life than children raised by working parents. Further, while almost everyone knows capable sole-parents who are raising children very successfully, this does not offset the sobering fact that sole-parenthood is a major risk factor for children.

At the present time, some 300,000 New Zealand children are growing up in welfare-dependent households. A majority of these children are in sole-parent families. For some, their future is so bleak that there are entire primary school classes where girls aspire to nothing more than going on the DPB when they grow up, and boys, the dole.

Labour's response is to claim that child poverty can be alleviated with more generous welfare. Yet history, research and commonsense tells us that welfare is not a way out of poverty - it never has been, and never will be. It is work that provides the escalator to move people out of poverty - for poor families like my own, that meant Mum and Dad holding down three or four jobs, budgeting with military precision and living off the smell of an oily rag.

What I find so objectionable about the child poverty debate is that it is unbelievably dishonest: by using the issue to justify higher taxes and more welfare - to satisfy its voter base - the Labour Government is turning a blind eye to the fact that welfare is harming children on a daily basis.

In the US, the alarm was raised about the damage that long-term welfare causes to children a decade ago. As a result, former President Bill Clinton introduced sweeping changes "to end welfare as we know it".

The results speak for themselves: the poverty rate of children living with single mothers is at its lowest point in US history. Single mothers' employment rates have dramatically risen, with the greatest benefits going to the most disadvantaged mothers. The explosive growth in single childbearing has halted, and the proportion of children now living in married families has increased.

The only honest way to move families with children out of welfare poverty is to connect them to the workforce and support them into employment. With the current abundance of job vacancies, the time has never been better than now to end welfare as we know it. To do that, we must overhaul and modernise our benefit system, returning it to its original purpose of providing temporary assistance in times of need.

As a first step, the Unemployment Benefit should be replaced with a time-limited emergency benefit - available for a maximum of six months. After that, if the person still hasn't found a job, they would be required to go onto a full-time Work for the Dole programme to gain the habits, skills and disciplines of the workforce.

The DPB should also be replaced with an emergency benefit, to be followed by full-time Work for the Dole once the children reach school age. Sole parents need to realise that they cannot expect taxpayers to bring up their children. But, by supporting sole parents into employment - with childcare assistance, after- school care, transport help and the like - they can successfully become breadwinners for their family.

Further, aligning the welfare system to the workforce for the able-bodied sends another important signal - just as for those on a wage there is no increase in take home pay for having more children - so it should be for those on welfare.

The Sickness and Invalid Benefits must also be overhauled - work-testing the Sickness Benefit with priorities given to medical assistance and rehabilitation, and - following international trends - encouraging Invalid beneficiaries to contribute to society in their own way, at their own level, as their disability allows.

These changes to our welfare system - taken in conjunction with lower taxes, and a reduction in debilitating small business compliance costs - will become a driving force to create jobs and growth, lifting our economic performance and our standard of living. It will return welfare to being a safety net that New Zealanders can have faith in: a system that provides support for families in need, that helps people to help themselves with a hand up to work, independence and a better future.

"If you follow your vision for reform you will give all New Zealanders pride of self and hope that they can make a positive difference in their own lives and those of the people they love. It is neither kind nor honourable to treat people as victims. That's what the dole does. The message that the dole sends is that "we think so little of your worth to yourself and your country, that we will pay you to stay out of the mainstream... People deserve better. A government that expects the best of its people will ultimately get it." - Jean Rogers (programme director behind US welfare reforms)

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