Time to review our welfare system?

It is very difficult in practice to operate an affordable welfare system that helps those in genuine need adequately without being demeaning, but discourages abuse and free loaders who want a funded lifestyle, and is fair to those who work and pay taxes.

There are obvious problems with our current system, some highlighted by Metiria Turei. Can it be ‘fixed’ with a few tweaks? Or is a major revamp needed?

Budget adviser Michael Barnett at Stuff:  Punitive welfare system is failing those in need

The welfare reforms of the 1930s and 1940s helped to establish the kind of society where the benefits of economic growth were more equitably distributed. However, subsequent welfare measures have been introduced ad hoc and today we have a mish-mash of policy that is inefficient in its delivery and favours some sectors of society at the expense of others.

There is a drastic need to review and reform how welfare is delivered in the 21st century. It is time to acknowledge the loss of traditional manufacturing jobs overseas, the expansion of a low-wage economy and a growing reliance on the unpaid voluntary sector to provide essential social services.

The time is ripe for the provision of a social dividend through the introduction of a Universal Basic Income for all in society. This would lead to a simplification in the delivery of welfare and recognise the contribution of all, both potential and real, toward a fair and equitable society.

Simplification would help, but getting the balance right would be challenging.

A major problem with a Universal Basic Income is the level it would have to be at to provide adequately for those in real need, but that doesn’t encourage non-productive lifestyles as a choice, and doesn’t bankrupt the country.

A welfare system needs to be ‘fair and equitable’ to those in genuine need, but it also needs to be fair and equitable to those who work and pay taxes.

 

27 Comments

  1. Blazer

     /  August 16, 2017

    UBI….is a no brainer.All the anomalies and unusual circumstance are overcome.

    • PDB

       /  August 16, 2017

      Yes – you need ‘no-brain’ in order to believe it works.

      After decades of being talked about it has never been implemented in full for the shear fact it doesn’t work – totally unaffordable and doesn’t pay enough to live on for those not working/not able to work.

      The same people that complain super is unaffordable are many of the same people that want to roll out such a payment for every person in the country.

      • Blazer

         /  August 16, 2017

        so if it hasn’t been tried before how did you arrive at the conclusion it ..doesn’t work….permanent dim bulb logic at work…again.

        • PDB

           /  August 16, 2017

          Another brain-fart Blazer from you – We haven’t tried to put a man on Neptune because we can’t work out how to do it. We can’t implement a full UBI because after all these years no one knows how to do it as the economics doesn’t add up.

    • alloytoo

       /  August 16, 2017

      UBI all sounds very nice until you factor churn cost.

      Far simpler for my children or wife to simply take the money from me directly rather than have a IRD middle man. It is after all what they do now.

      A far better idea is to simply introduce a tax rebate in the value of the current taxes paid on the benefit and reduce the benefit by that amount.

      The net tax home for beneficiaries would be the same. but with less IRD admin

      And taxpayers would get the UBI (again without the admin burden) but it would not extend to people who choose not to work by choice (spouses etc who again can raid the family coffers)

      • Blazer

         /  August 16, 2017

        now that is good considered input.Take note P.DB.

        • alloytoo

           /  August 16, 2017

          Please note, what I described is not UBI.

          it is effectively a tax cut for all taxpayers designed to reduce administration.

          Of course lower income earners will received a far greater % tax cut than “Rich Pricks”, but the $ value will be the same.

    • Gezza

       /  August 16, 2017

      I always think ‘no brainer’ is a risky phrase to use when describing an idea someone likes, because of the obvious implication that it’s brainless. I’m guessing the origin of this term is probably American?

  2. PDB

     /  August 16, 2017

    The whole UBI is like the Loch Ness monster – a myth. It is simply money redistribution under another name – more workers money will go to those who don’t work.

    *Workers will be worse off : this nonsense that workers will also be paid a UBI neglects to mention that to pay for a nationwide UBI rollout those same people will be taxed far more heavily making them far worse off.
    *The UBI paid to those who are currently on benefits/super will be less than they are currently getting due to the cost of UBI rollout to all. Will the left just tell these people ‘bad luck’ or will they demand that these people also receive some sort of benefit to assist with their living costs? Of course it will be the latter, so not only will there be a UBI cost but there will still be a welfare cost.

    • Blazer

       /  August 16, 2017

      what figures are you working on to arrive at your conclusions or are you using your wet finger technique…as per..usual?

      • PDB

         /  August 16, 2017

        Economics – something you have no idea about.

        • Blazer

           /  August 16, 2017

          what school of economic wisdom do you ..favour?

    • sorethumb

       /  August 16, 2017

      Surely a worker gets a UBI like everyone else? So in and out?

      • PDB

         /  August 16, 2017

        In order to pay a UBI to everyone, even at a low level, tax has to sky-rocket. Workers will be given a UBI but then taxed more heavily making their UBI payment obsolete and making them worse off then they are currently.

        Here’s a left-wing view of the problems with a UBI;

        “In 2010, Treasury worked out what would happen if the government replaced all existing benefits, including NZ Super and Working for Families, with a universal payment of $300 per week for adults plus $86 per child per week. They found that income tax rates would have to rise to over 55% to fund the scheme. And, the proportion of people living on less than 50% of median household disposable income would rise by 5%.

        The system would be costly and would leave the worst off worse off. If the worst off are left worse off, political pressure for layering welfare programmes on top of a basic income scheme would not be small. And hiking tax rates from 33% to 55% would be rather damaging. This was not the tax rate that Treasury thought would apply only to rich people – it would apply to everyone.”

        https://thespinoff.co.nz/featured/31-03-2016/i-love-the-idea-of-a-universal-basic-income-but-heres-the-problem/

        • Brown

           /  August 16, 2017

          Hello Blazer?

          • PDB

             /  August 16, 2017

            Nobody…………….home

          • Blazer

             /  August 16, 2017

            thats a treasury report.National says they cannot be relied on.The UBI I envisage replaces Super and Welfare only without discrimination for those not active in the workforce.That link in context…..

            ‘If you like a UBI, economist Kevin Milligan tells us you can choose two of the following three options. But only two.

            1. A high enough basic income that few people on current benefits are made worse off;

            2. A low phase-out rate so that lower income workers do not face sharp penalties for accepting work;

            3. A cost that isn’t massively higher than current spending on benefit programmes.

            You cannot have more than two of these.’
            1 and 3 ….are whats required.

            • PDB

               /  August 16, 2017

              Unfortunately any of those paired with any other is still undoable and unaffordable – must try harder…….

              1&2 – Cost of having to pay a high basic income is not offset by all workers being taxed around 50% if lower income workers are taxed lightly. Therefore top earners are being taxed 70-75%+ to make up the shortfall, not only to pay the high UBI but all other things our taxes pay for – no chance of working.

              1&3 – Cost of having to pay a high basic income to EVERYONE is always going to be higher than paying welfare to a SELECT portion of the population. It can only be cheaper than current welfare payments if it is a low basic income – simple mathematics. So that combination isn’t even possible.

              2&3 – Lower income workers not taxed heavily whilst cost is the same as current welfare spend? This means the UBI will be very small & not enough to live on for those not working. People currently on welfare, those on super will get far less money then they do currently and won’t be able to cope without a top up. Won’t fly as people not/unable to work will not have enough money to survive on.

          • Blazer

             /  August 16, 2017

            PDB is questioning the conclusions presented in his own link now.All the theory in…the world.

            • PDB

               /  August 16, 2017

              Being a left-wing perspective you can’t expect everything in that article to be correct.

      • alloytoo

         /  August 16, 2017

        A money go round and due to the additional layer of administration everyone ends up with less.

        As I said my kids and spouse get more simply by taking it directly from me and I will ultimately pay less.

        Paying the housewives of leafy suburbs, who may not work, but are not counted as unemployed and do not qualify for benefits due to their spouses high income, a universal benefit is madness.

        • Blazer

           /  August 16, 2017

          and herein is the confusion.They should not even be considered.

          • Brown

             /  August 16, 2017

            See, already we are excluding those you don’t think should get it. I must look up the definition of universal – I suspect its changed since I was in school.

            I’ve been at the sharp end of welfare scamming recently and I think the answer to welfare is simple – get rid of it and start again with some real social contract requirements. Under no circumstances do you get money to piss up against the wall while roaming about unleashed. No DPB unless you are married in the old fashioned way – so much damage is arising from women getting knocked up by losers who will root anything that’s warm. Its all too easy as the lardy lefty darling of the Greens proved. I’m sick of the nice folk hiding behind their gates and alarms while ferals act with impunity. Down-tick away chaps.

            • Blazer

               /  August 16, 2017

              you belong in another era.Pre …Med probably……squire.

          • alloytoo

             /  August 16, 2017

            “They should not even be considered.”

            Um…so not very universal.

            So basically by your own admission not doable, at least not universally.

            • Blazer

               /  August 16, 2017

              just semantics…everything is…words.

            • Alloytoo

               /  August 16, 2017

              Yes Blazer, we know thar Labour’s policy platform is just words, we are however discussing the concept of a Universal Basic Income, problem is, if you start to exclude certain groups (especially by some sort of means test) then it becomes hard to distinguish the proposed regime with the existing one.