Sunday, August 15, 2010

The final disembowelment of the NZ Welfare State? Maybe, maybe not...

United States President Bill Clinton meets wit...Image via Wikipedia

The final disembowelment of the New Zealand welfare state? Maybe, Maybe maybe not!

 Last week's release of the Welfare Working Group's report and the Government's intention to set up another working group on compulsory superannuation signals one thing - that the last edifices of the welfare state are being smashed.

Ever since the time of the Ballance-Seddon Liberal governments and the First Labour Government of 1935-49, New Zealanders have (more or less) been able to access the support offered by the state in times of need. Not only that, the state has previously fully supported people raising families and individuals in their old age. The welfare system created a sense of social solidarity and equality, something that has gradually diminished since 1984. It also gave people an expectation that they could enjoy a minimum standard of living, even in the hardest times. As the 1972 Royal Commission on Social Security commented, the welfare system enabled even the lowest income earning New Zealanders to participate within their society through, for example, having some money to buy birthday presents or go out occassionally.

In 1990, that ideal was smashed by the Fourth National Government's benefit cuts. Jenny Shipley and Ruth Richardson, ideological diehards both, attacked the welfare system with a viciousness not seen since the Great Depression of the 1930s. Benefit rates were slashed while entitlement criterion were tightened. This impacted on the most vulnerable groups in society, namely, the unemployed, sick, those living with disability and single parents.

It now appears that the current National Government wants to finish the job. Last week's report of the Welfare Working Group, chaired by former Securities Commission head Paula Rebstock and stuffed with neoliberal sympathisers like former Act president Catherine Judd, made some hysterical assertions about the costs of the welfare state. The group estimated that if every New Zealander currently on a welfare benefit (like me) were to stay on it for a large chunk of their lifetimes, then the welfare system could cost up to $50 billion a year by 2025.

This $50 billion figure was designed to whip up a sense of 'crisis' about the system. Deliberately creating crises has always been a favourite tactic of the New Right. This was based on many assumptions and one is that most people on a benefit tend to stay there. True, there are issues around long-term receipt for people on sickness and invalids benefits but I would contend that has more to do with discrimination against disabled people in the labour market than anything else. Another thing is that many long-term ACC clients who were culled from that system during the 1990s (who are collectively known as 'the tail') were placed on sickness and invalids benefits. Furthermore, more disabled people and those with health issues are likely to be laid off in recessionary times like these (as happened to me) and the best place to go if you want to survive is onto an invalids benefit. But that is not to say that me and other disabled people might stay there forever. In my own case, once I have completed my Masters degree (and given that I have a work history), I will probably be more employable. However, recent research undertaken by Workbridge and CCS Disability Action also shows that many well qualified disabled people have the same job placement rate as those who are unskilled - which is pretty low. And I personally know of many well qualified disabled people who have found the job search process extremely difficult.

All these issues show that there are more complex issues involved. But the National Government and their big business allies aren't prepared to listen to these. They simply want to destroy the welfare state in order to further alleviate the tax burden on their wealthy mates. That's why they want results pretty soon.

I can't help but think too that the desire for further welfare reform is being driven in tandem with proposed labour market reforms. Wait, hasn't this happened before? Yes, it was in 1991 when both the benefit cuts and the Employment Contracts Act were both introduced at around the same time. This was in accordance with neoliberal supply-side theory which holds that to create 'incentives' to encourage beneficiaries into work, you have to lower wage rates and attack working conditions. This, in turn, creates an oversupplied labour market where the price of labour is further reduced, thus lowering employer costs and raising their profit margins. Now, it all makes sense!

In fact, if you think I'm being conspiratorial about this, I'm not. In one part of their report, the working group looks at a scheme designed to get long-term ACC recipients into work. It mentions, as part of this example, that relatively high benefit levels as well as personal grievance and minimum wage laws essentially 'hurts more than helps' the most vulnerable people in our society. This assertion was not supported with any empirical evidence and is merely being used to create a justification for scrapping both protective labour and welfare laws.

And as for the cost of superannuation, yes, I believe in the need for some contributory super scheme but it should remain voluntary. In fact, we have KiwiSaver and the Cullen Fund right now. Even so, I saw a report from an economic think tank the other day which held that even with a dramatic increase in the over 65 year age group population, superannuation will still be affordable given that there will fewer young people requiring an education or even appearing before our justice system. Therefore, this will create savings that could be put into paying for additional superannuation payments.

Right now, the John Key National Government is popular. They are supposedly presenting a 'centrist' image to the electorate but, yet, they are planning to implement extreme right-wing policies in a piecemeal manner. No more the blitzkrieg approach adopted by Sir Roger Douglas or Ruth Richardson in days gone by. Getting the electorate to placidly swallow things is electorally better for National and makes it supposedly more difficult for opponents to pin the Tories down. But we on the left can see the benefit and superannuation working groups for what they are - a mere prelude to a welfare state massacre that even Jenny Shipley would blush at!

That would be true if the situation of a year ago still existed; but I believe that things are slowly going to custard for John Key and his Rusty Lock administration. Everybody has forgotten wily Winston Peters and his lost 4.5% of the vote in the last election campaign; something National didn't have and wasn't  utilised - the government was decided on 95.5% of votes cast.


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