What's Wrong With Welfare?
By Lindsay Mitchell

"Welfare" isn't just cash benefits. It includes the provision of health; the care and treatment we receive in public hospitals.

Today there is a strongly disciplined culture of moving people through hospitals rapidly. Resources are limited and beds are needed hence hospitals make sure folk are discouraged from lingering. There is no privacy, showers and toilets are shared with strangers, the food is basic, beverages sparse, and no smoking is strictly enforced.

The birth of my youngest was followed by a bribe of a carton of disposable nappies to leave the next day. The bribe was unnecessary. The absence of environmental cleanliness was enough to send me packing pronto.

Contrast this culture with that prevalent in the benefit regime. The domestic purposes benefit has just been made easier to get on and easier to stay on. Now you can stay on the DPB "until your family responsibilities allow you to move into the workplace." Imagine if conditions in hospital were comfortable and the duration of stay limited by only your desire to get up and go. We would be spending as much on health as we do on social welfare and be even poorer than we are now.

Over the past few decades, governments have been happier to accommodate the attitude of "the world owes me a living" than the idea that, "the taxpayer deserves the decent standard of healthcare for which he has paid." While keeping a firm grip on health spending, relying on the private system to provide a release valve, successive governments have allowed living off the public purse to be turned into an art form. Take the man complaining on talkback radio that he couldn't get the accommodation supplement added to his benefit because he owned his own home. He was quickly advised by a further caller how to overcome this problem. He should sell his home and invest any equity in a public trust, move to a provincial centre or small rural town where rents are low (and incidentally, or perhaps conveniently, jobs are even harder to come by). He would then be able to claim accommodation, wouldn't have the expenses of a homeowner and his quality of life would be better.

Moreover, he would have the security of money in a trust.

These recommendations , which the second caller had already implemented, are a direct result of the incentives manifest in the welfare system. Apart from those who persist in turning up at Accident and Emergency when their GP should have been their first port of call, there are no incentives to draw anybody into hospital - nor are there any incentives to keep you there.

If our benefit system treated a stay on welfare like our hospitals treat a stay in hospital, with compassion but ruthless efficiency, we wouldn't be in the disastrous situation we find ourselves - hundreds of thousands working-age people sitting on benefits because the government and the bureaucrats don't have the rigour or motivation to move them on.

Somehow we have created a topsy turvy environment which is the opposite of what privately run health and welfare look like. Private hospitals are rather pleasant places to be but, because we are so heavily taxed to pay for the government spending 22 cents of every tax dollar on benefits for the working-age population, most of us can't afford to go to them.

Private welfare institutions are not such pleasant places to be and are therefore effective. The Industrial Labour Service Corporation, a private American labour supply firm, provides work and shelter for men from the bottom of the social scale. Rules are strict but necessary. The shelters are 'dry'. The workers are treated with professional courtesy and staff demands the same in return. The expectation is that these previously unemployed men will restore a level of discipline and routine into their lives and be able to move on positively. This is a true hand-up.

In New Zealand, we have two public systems that aren't performing properly. Public hospitals that provide a substandard service, hospitals that you are lucky to get into and feel even luckier to get out of. And a welfare system that has probably been the fastest growing industry in New Zealand over the past thirty years. Why? Because getting new customers is easy, getting more funding is a given and many private employers can no longer compete with welfare 'pay' rates.

Perverse incentives will always develop in systems designed to collectively provide services with public money. Unfortunately, this fact is lost on the vast majority.

(760 words)

Lindsay Mitchell is a Research Fellow for the Institute for Liberal Values (www.liberalvalues.org.nz) and specialises in issues relating to welfare policy.

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