Week in Review

What I wish Sepuloni had said on welfare

Susan St John shares what she wishes she had heard Minister Carmel Sepuloni say at the release of the Welfare Expert Advisory Group report

The Welfare Expert Advisory Group’s report could not have made it clearer: “Too many people are leading desperate lives with seriously inadequate incomes”.

But the group’s 209-page report was successfully interred on Friday, May 3 in an obscure hall in far flung West Auckland. An embargo tighter than Fort Knox ensured no one knew anything about the contents beforehand and no one could whisper a thing to the media until 2pm.

But the launch didn’t tell us anything anyway and by late on Friday, with other distractions such as a PM wedding, media interest had evaporated. Since then, media coverage has been woeful: A sad demise for a major $2 million dollar report that should have rattled the foundations of society.

Political speeches at the launch precluded any time for the 11 experts from the WEAG group to explain the contents. Hence the Government’s spin was unchallenged. For example, Minister Carmel Sepuloni made a big deal of her Government picking up on three of the WEAG recommendations in some pre-Budget announcements.

One of these less than earth shattering responses - the one on lifting abatement thresholds - is the most cynical and revealing of the thought processes of the Government, which had the report for nine weeks prior to the launch.

Here’s what WEAG actually wanted in Recommendation 20:

Reform main benefits by:

- increasing main benefits by between 12 percent and 47 percent.

- increasing the abatement thresholds for: – Jobseeker Support to $150 a week – Sole Parent Support and Supported Living Payment to $150 a week and $250 a week.

But lifting benefits was quickly ruled out by Sepuloni who, bizarrely, gave something about the election as a reason. So already we are down to one half of recommendation 20. What we actually got was only about one tenth.

The threshold is vitally important because this is the amount allowed before tax, and abatement of the benefit makes extra income not worth earning. The current threshold is way out of line with rises in the minimum wage and is having devastating effects in places where casual part-time work is all that is on offer. WEAG had asked for an immediate rise of the threshold to $150, and indexation thereafter to wages or prices - whichever is the greater.

The 10 percent response from the Government was a princely rise of $5 a week each year until, by 2023, the threshold becomes just $105. This minor tinkering is worth nothing at all until April 2020, and then a trivial $7 a week in the hand for 2020/2021, rising to only $17.50 a week by 2023.

In sharp contrast to this adhockery and failure to grasp the meaningful response that was actually needed, Professor Cindy Kiro, the WEAG chair had said at the launch:

“Our review of the current system has led us to the clear and unequivocal conclusion that fundamental change is needed. We cannot solve the existing problems, let alone create a system that will serve future needs, through further ad hoc amendments or marginal changes.”

The time for major action is now – and here’s what I wish I had heard Minister Carmel Sepuloni say at the release of the Welfare Expert advisory Group report a week ago:

“Nga mihi o te ata,

There is no escaping the conclusion this report draws. The system is broken. I hear the group when it says: ‘Substantial changes and a fundamentally different societal approach to welfare are needed, if we are to address the inadequacy of existing payments and the complexities resulting from excessive reliance on tightly targeted supplementary and hardship assistance.’

The group discovered that ‘the system diminishes trust, causes anger and resentment, and contributes to toxic levels of stress’.

The WEAG says ‘The welfare system of New Zealand is the product of decades of amendments to the Social Security Act. Some amendments were ad hoc, some were attempts to adapt the system to social change and others focused on short-term cost cutting. In recent years, the focus has been on tight targeting and increased conditionality, with concern for the fiscal impact and number of benefit recipients. The overall result is a system that is badly in need of repair and no longer fit for the needs of New Zealand in the 21st century.”

Labour tried a new direction in 2007 when it amended the Social Security Act to promote paid work as its primary aim and purpose and to downplay income adequacy as a goal. That approach has failed. We want to own that, and ask the opposition to own their role too in the sorry state of communities in pain that greeted the WEAG as they travelled around the country.

At the very heart of the WEAG work is the belief that the ‘social contract is now out of balance’ and that whakamana tāngata, or dignity of the person, must be restored. The purposes and principles of the welfare state must change. Let’s embrace the foundations and rewrite the Act as they suggest to make for a better world:

“The purpose of the welfare system is to whakamana tāngata and ensure a dignified life by:

- providing financial security and social security sufficient for an adequate standard of living

- supporting people to achieve their potential for learning, caring or volunteering, and earning through good and appropriate work.”

Our purpose today is to listen to the expertise in the room. The Government is doing a little in the budget, but we don’t want to diminish the impact of the WEAG report by telling you about those minor changes today. We grasp the enormity of the problem and promise a package of changes after the budget that will put us on track for a welfare state that works in the 21st century.”

Unfortunately, Minister Sepuloni did not oblige, and my hope that the wisdom of the WEAG would galvanise appropriate action remains so far unmet.

Susan St John is economics advisor to Child Poverty Action Group.

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