A treatise to treat social security symptoms

There are two drivers in the government’s quest to trim “welfare”: to help get the budget back into balance fast; and to ensure the long-term sustainability of the “welfare” system.

“Welfare” needs to be in quote marks because the word has been debased. In economic language it measures material wellbeing. In social policy language it has come to mean dependency and indigence, the opposite of wellbeing. In political language it divides the left from the right.

So if the Welfare Working Group was a root-and-branch match for the Tax Working Group it might last week have suggested a name change back to “social security” as one of its “options” and thus undo the shift of language that followed the 1972 royal commission’s aim of capacity to participate fully in society.

Benefits don’t deliver enough income for full participation in society. More often people on benefits are seen as, and feel themselves to be, outside mainstream society.

The working group’s focus on “enabling”, as a counterweight to “disabling” in fact makes that point. The report takes as an important cue: “Many submissions firmed the … group’s view that the benefit system is frequently disabling rather than enabling.”

In fact, most “beneficiaries” are on “welfare” because something nasty happened, not because they find it a choice lifestyle. Some — many? — do “work”, bringing up children or in voluntary organisations.

But for policymakers trying to get the budget back into balance that work is not GDP work. No taxes come from it. And the numbers long-term on sickness and invalids benefits have been growing and grew even during the boom years.

As the OECD says, advertising a new book: “Too many workers leave the labour market permanently due to health problems or disability and too few people with reduced work capacity manage to remain in employment. This is a social and economic tragedy common to virtually all OECD countries.”

That trajectory is not fiscally sustainable long term and the working group has urged an actuarial approach to uncover the long-term cost of invalids benefits. National superannuation at 65 for the able-bodied and “free” health care for all are also not fiscally sustainable long term but the working group was barred from examining them and had instead to focus all the adjustment on beneficiaries.

Given that constraint, given the government priority of getting the budget out of structural deficit and given that income assistance is a large, demand-led spending item, the group’s main focus had to be on finding ways to get beneficiaries into paid work.

Its one-sentence summary of its brief is “to develop practical options to reduce long-term benefit dependence”. It has put up a lot of options.

There is a strong secondary justification for the work focus: people who can provide for themselves are usually in better shape and better contributors to society. There are many stories of the lift in personal wellbeing — and subsequent contributions to tax — from getting work-capable and into work.

Their children, too, get a better attitude and outlook and are less likely to end up on benefits.

The working group has many ideas on how to help or prod those who can work to do so, including early screening, similar to ACC’s, to identify those most likely to be off work long-term. Critics have focused on the sanctions side of that — especially on the strange idea of kicking a mother out to work when her baby is one year old — but that doesn’t do last week’s report justice.

Welfare Justice, an “alternative welfare working group”, also issued a report last week (and ran a seminar on Friday which I could not get to). That report drew on earlier work by the official group and suggested some modest reforms, including more “community” input to policy, a return to case management (which, oddly, the ministry has dropped), not taking a partner’s income into account in determining eligibility and Gareth Morgan’s resurrection of the decades-old idea of a universal basic income built into the tax system.

But in unavoidably tying itself to the official working group’s brief the alternative group shares its deficiency. The working group has essentially focused on symptoms.

Palliating symptoms has its place in policy, as in medicine. But serious policy starts with causes — as Simon Power started doing, but then gave up on, with his “drivers of crime” workshop in April 2009.

Some of the most diagnosable and treatable causes will be laid before the government soon by Sir Peter Gluckman’s high-powered group of academics which will say that the earlier there is investment in a child’s life the less chance of later failure and the higher the return in taxes paid as adults and spending on treatment and prison not needed.

But governments prefer symptoms. They are visible to voters and proximate. And nearly all voters “know” that “welfare” has gone wrong and is too expensive. They don’t yet know that patient investment might fix that.