Labour Steps Up Welfare Wagers

Two years ago Labour launched "Pathways to Opportunity" which professed to be a whole new approach to welfare. It promised much but has proven to be little more than an expensive exercise in re-branding. Of the four main benefits only unemployment numbers dropped - the rest climbed.

A report released this month by the Ministry of Social Development evaluated their "Avenues" pilot scheme for Domestic Purposes Benefit applicants. The scheme ran for six months from August 2001 to 30 January 2002, in 25 service centres, across six Work and Income regions. It involved indepth, sometimes at-home, interviews with applicants, "based on the assumption that the assistance would help potential applicants consider and pursue alternatives for meeting their financial support needs, to a greater extent than non-participants."

The outcome of this six month project, which involved almost 4,000 participants was, "Avenues did not affect the rate of which people moved onto a benefit or the rate at which they subsequently left."

The Avenues pilot was a test of the "assumption that enhanced case management would reduce the number of people who pursued a DPB application." The assumption proved false.

In spite of this result, the entire DPB system, which provides for around 110,000 recipients, has been overhauled to embrace the concept of enhanced case management. Why was policy set into practice pending the results of a test of the theory?

Enhanced case management, which gets a further plug in the "Jobs Jolt" package, involves encouraging beneficiaries to "plan and set goals". Beneficiary advocates and welfare reformers appearing before the select committee both argued against this approach. Motivated recipients will take any opportunity going and resent being 'case-managed' while others who prefer the steady unearned income from a benefit resent attempts to 'case-manage' them off their 'entitlements'. Perhaps even worse than this stalemate with existing caseloads is that nothing is being done to discourage new entrants.

Unsurprisingly DPB numbers increased in the year to June 2003 by 1,286 (which means around 2,000 more children relying on welfare). This is further evidence that enhanced case management is not a successful strategy for lowering beneficiary numbers. It may be the opposite.

A benefit lifestyle, on a steady income, with a case manager who "gets alongside you" might be more attractive than working. Working for a low wage is definitely less lucrative than living on a DPB package. Labour have talked a lot about 'making work pay' but this won't happen for most while we have low economic growth. The talk is more to do with slogan pinching from their 'third way' darlings.

Instead of non-interventionist policies that will leave employers free to grow, Labour have chosen to tax and "invest" heavily in welfare. In 2002 a package of $131 million was announced. $55.2 million was for the new DPB case management system. One year on and another $104.5 scheme is announced. They are gambling big time but so far the dividends have failed to materialise. Welfare expenditure is by far the biggest chunk of government spending and it has to come down - no ifs, buts, or maybes about it.

A centre-left government cannot simply preside over the status quo and hope for re-election. The pressure is mounting on both sides. The Child Poverty Action group and the Greens incessantly lobby for more generous welfare while taxpayers, increasingly aware of, and anxious about, swelling beneficiary ranks, are starting to question welfare expenditure. While it once appealed to New Zealander's sense of fairness, the very word "welfare" now triggers a rightful resentment at a system that allows - even encourages - those unwilling to be independent to live of the efforts of those who are.

Although Treaty and constitutional issues are challenging hard as contenders, welfare could prove to be this Labour government's downfall.

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

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