Expert Group announced for ‘overhaul of the welfare system’

An overhaul of the welfare system was included in the Labour-Green confidence and supply agreement:

Fair Society

10. Overhaul the welfare system, ensure access to entitlements, remove excessive sanctions and review Working For Families so that everyone has a standard of living and income that enables them to live in dignity and participate in their communities, and lifts children and their families out of poverty.

‘Overhaul’ sounds like the Government is expecting major change. I think we can assume few if any beneficiaries will be worse off as a result of any changes, so this could be expensive to implement.

One aim in particular is contentious – “remove excessive sanctions”. Some say that removing ‘punishments’ is essential to be fair, while others fear a no questions asked welfare system, effectively providing a choice for some, will increase the number on welfare considerably.

Yesterday the Government announced an expert advisory group.

Expert Group established to provide independent advice on welfare system improvements

Minister for Social Development, Hon Carmel Sepuloni, has today announced the formation of an expert advisory group to support the overhaul of the welfare system.

“This Government is committed to overhauling the welfare system to ensure it is accessible and fair for all New Zealanders,” Carmel Sepuloni said.

“To support the overhaul of the welfare system” sounds like the experts are required to advise an overhaul. What if they decide that tweaks would be better? Are the compelled to support an overhaul?

“The Welfare Expert Advisory Group has been asked to undertake a broad-ranging review of the welfare system. It will deliver advice to the Government on ways to ensure people have an adequate income and standard of living, are treated with respect, can live in dignity, and are able to participate meaningfully in their communities.

A broad-ranging review of the welfare system is a good idea if it is able to recommend anything the Group sees as appropriate.

“Areas that the Welfare Expert Advisory Group has been asked to focus on range from considering the overall purpose of the system, through to specific recommendations on the current obligations and sanctions regime.

“The welfare system touches the lives of New Zealanders from all walks of life. I am pleased that the Welfare Expert Advisory Group members themselves come from a diverse range of backgrounds and experience, including but not limited to Māori, Pacific, disabled, and young people.

“The Welfare Expert Advisory Group will deliver its advice to the Government in February 2019. I am looking forward to receiving the Group’s recommendations.”

Minister Tracey Martin said the working group would be a great support to the much needed overhaul of the welfare system.

“Having a range of experienced perspectives outside of government contributing to the Government’s vision in this sector is crucial to getting it right and delivering better outcomes for New Zealanders.”

The perspectives of the group are largely social orientated. Having people with experience in social services is a good thing, as long as that is balanced with what is practical and within a possible budget. There is no indication whether the group is required to consider budgets and what might be ‘affordable’ reform.

The group with (abbreviated) biographies:

CHAIR – Professor Cynthia (Cindy) Kiro (Ngapuhi, Ngati Kahu, Ngati Hine):

Having focussed on Education for the past five years, Professor Kiro also worked in Public Health and Children’s Advocacy for many years. She has extensive experience working in roles to improve outcomes for the New Zealand population. Professor Cindy Kiro is Director of the Starpath Project and also ‘Te Tumu’ – responsible for Māori/indigenous education in the Faculty of Education at the University of Auckland, where she has worked for the last three years.

Professor Innes Asher…

…is a Paediatrician, with vast experience of children and families interacting with the welfare system, and the broader determinants of well-being of children and families. Professor Asher is a committee member and health spokesperson for the Child Poverty Action Group.

Kay Brereton…

…is an experienced advocate for people within the welfare system. She is currently employed as a senior advocate at the Beneficiaries and Unwaged Workers Trust. She has extensive experience working directly with Work and Income clients assisting them to access their full and correct benefit entitlement, and to access their statutory review and appeal rights.

Dr Huhana Hickey (Ngāti Tahinga, Tainui, Ngai Tai)…

…has a long standing interest in the human rights of people from marginal backgrounds and the consequences of discrimination and social oppression. Dr Hickey currently sits on the NZ Human Rights Review Tribunal and is the Chair of the Auckland Council Disability Strategic Advisory Panel. As the recipient of a main benefit, Dr Hickey brings lived experience of the welfare system.

Professor Tracey McIntosh…

…is the Head of Department for Sociology at the University of Auckland and has conducted extensive research in the field of sociology and Māori and Pacific studies. Professor McIntosh advocates for sociology that supports and reflects issues that concern Māori communities. Professor McIntosh also served as the co-chair of the Children’s Commissioner’s Expert Advisory Group on Solutions to Child Poverty.

Dr Ganesh Nana…

…is currently the Chief Economist at BERL, having joined the company in 1998 as a Senior Economist. Dr Nana’s work is often related to the Māori economy, regional New Zealand and its economic development, and education and workforce training plans and programmes.

Labour have used BERL to cost their campaign policies, so Nana will be familiar with their policies and their financial inclinations. There are both advantages and disadvantages to this.

Phil O’Reilly…

…has developed long-term working relationships at all levels in the business community as a previous Chief Executive of BusinessNZ. He chaired the Green Growth Advisory Group and his membership of public and private advisory boards and committee appointments has spanned academia, research and development, business, labour and social development, and manufacturing and trade.

Robert Reid

…has over 40 years’ experience in trade unions and in community employment development.  Much of Robert’s work has been with disadvantaged groups and has included work with Maori, Pacific Peoples and migrant communities. Mr Reid is currently Honorary President of FIRST Union.

Trevor McGlinchey…

…is currently the Executive Officer for the New Zealand Council of Christian Social Services. In 1986 Trevor started the Te Mahi o Waitaki Trust in Oamaru, this kaupapa Māori Trust developed and operated numerous social enterprises and community initiatives. In his community roles Trevor chairs Moeraki Ltd, a marae based charitable company, and Te Ana Whakairo Ltd a social enterprise based on Māori Tourism.

Latayvia Tualasea Tautai

…is a young Pacific leader from Auckland. She is currently a second-year university student, studying on a University of Auckland Pacific Excellence scholarship towards conjoint Law and Arts Degrees, majoring in Pacific Studies and Political Studies. She has lived experience of the welfare system, growing up in a household with her mother receiving main benefits.

Charles Waldegrave…

…is the founder of the Family Centre 1979 and the Family Centre Social Policy Research Unit 1991. Mr. Waldegrave co-leads the New Zealand Poverty Measurement Project. He has led or jointly led research, evaluation, service and teaching contracts with multiple government agencies. He has written many research articles and specialises in social policy regarding youth, ageing people, and poverty, among others.

The challenge will be to advise on what is good reform but presumably without an open chequebook available.

While the Group largely appears to have been selected based on their advocacy for far better systems of providing welfare, there is some risk for the Government.

If the Group makes expensive recommendations the Government may have to prune things back to fit within future budgets with competing pressures from other big budget things like housing, education and health.

I can see no indication of when any reform may be implemented. The Government may try to fit changes in this term, or they may decide to put welfare reform alongside tax reform (another Group is currently working on that) to the electorate for the general election in 2020.

The Nation: welfare, social investment and poverty

This morning on The Nation :

What’s the best way to provide for those who need help? and talk welfare, social investment and child poverty.

These are two MPs not generally to the forefront of election campaigning. Tolley is 11th on National’s list, Sepuloni is 8th on Labour’s. Both are electorate MPs.


Tolley talking about what the Government has been doing to improve help for beneficiaries, and what is planned to happen in April next year through their Families Package.

Sepuloni is doing little more than reciting Labour’s election lines, in line with what Ardern and others recite. Some of them quite are quite misleading.

The main points from al of the panel – Lisa Owen, Patrick Gower, Fran O’Sullivan and Sue Bradford – was the vagueness and stark lack of policy on welfare from a quite likely incoming Government led by Labour. Fairly scathing from all of them.

Spending ‘in real per capita terms’

That chart on it’s own doesn’t say much apart from ‘Boo National’.

If a growing proportion of people are in work rather than on welfare then the per capita spend on welfare will naturally go down.

Far more pertinent would be the per capita spend of people on welfare, not on the overall population.

The Spinoff article: Analysis: contrasting the spending of Key’s National and Clark’s Labour governments

I haven’t got time to read through that and digest it now.

Benefit dependency high but reducing

A Stuff article Future welfare bill ‘cut by $7.5b focusses on reductions in spending but it includes some sobering statistics on inter-generational welfare dependency.

Among some of the most startling statistics, are figures which show the effect of inter-generational welfare dependence.

New methods of data collection have allowed the ministry to track trends of young beneficiary recipients whose parents have also collected welfare.

The limited history of the data means only welfare recipients up to the age of 25 could be tracked.

Notable statistics:

  • 75% of the liability is attributable to clients that first entered benefits under the age of 20.
  • 74% of all beneficiaries up to the age of 25 had a parent on the benefit while they were a child
  • 35% had a parent on benefit throughout their teenage years
  • 88% of Youth Benefit clients came from families where one or more parent was also on a benefit
  • More than half of those had an “intensive beneficiary” as a parent – one who was on a benefit for more than 80 per cent of the time their child was aged 13-18
  • a client whose parent was intensively in the system during ages 13-18 was then 48% more likely to remain on JS-WR (job seeker – work ready) after a year compared to those clients matched to a non-beneficiary parent. Their exits were also less sustainable; on leaving the system, they were 11% more likely to be back on benefits within two years.

However these figures are dropping, with Jobseekers down by 8% overall since new initiatives were implemented in 2012 (and the economy improved).

Reforms have helped slash the forecast cost of New Zealand’s total welfare bill by $7.5 billion within the past year, a report says.

The estimated liability of the welfare system is now $69b, down from $76.5b in 2013, according to the latest valuation of the future costs faced by the Ministry of Social Development.

Based on New Zealand’s current situation – which includes rates of employment, inflation and trends of decreasing welfare dependence – that is forecast to drop a further $5.3b by 2019, according to independent consultants Taylor Fry.

From the Key Findings:

Welfare Reforms and Future Focus Impacts included in the Valuation

  • Impact from Welfare Reform changes that occurred from July 2013 onwards, including:
    – Simplification of the benefit structure in July 2013
  • Continuing Impact from Welfare Reform changes that occurred from July/August 2012 onwards, including:
    – implementation of the Youth Service in August 2012
    – introduction of Job Streams in July 2012
    – Bill 1 changes to work expectations for sole parents, partners of main beneficiaries, widows, and women alone effective October 2012
    – A new service delivery model, with the level of case management tailored to clients’ likelihood of long-term benefit receipt
  • Continuing impact from Future Focus changes from September 2010 onwards:
    – a new requirement for Unemployment Benefit (UB) recipients to reapply for the benefit and complete a comprehensive work assessment interview every 52 weeks;
    – introduction of part-time work obligations for parents with youngest child 6 or older
    – new budgeting obligations for clients who repeatedly apply for hardship assistance
  • Additional Future Focus changes from May 2011 to:
    – require Sickness Benefit (SB) recipients to attend a reassessment interview with a case manager after 52 weeks
    – require new SB recipients to undergo additional medical assessment after 8 weeks

Stuff reports that about 30% of the reduction is due to Government/Ministry initiatives:

Of the $7.5 billion reduction, $2.2 billion was directly attributed to reforms within the ministry – both legislative and policy changes, as well as operational changes.

The rest was down to factors outside the ministry’s control, which included the falling rate of unemployment that accounted for a further $2.2b drop. It was forecast that more people would come off benefits and there would be less people applying for them.

Labour’s fraudulent claim

Labour are attacking National on welfare fraud and tax dodging. This image is being promoted on Facebook and Twitter, labeled “National priorities”:

Tax dodging

 

Leader David Cunliffe has joined in:

Welfare fraud, $23 million = National obsession. Tax dodging, $6 BILLION = National doing nothing.

National has not done nothing on tax dodging. The current (and previous) Government put a lot of resources into trying to reduce tax avoidance and the prevent tax evasion and identify evasion and take action against those who break the law.

From the IRD Annual report 2013:

Improving Compliance

  • The Court of Appeal unanimously held that the Optional Convertible Notes (OCN) arrangement entered into by Alesco and 12 other taxpayers, involved tax avoidance. The total amount at issue in all OCN cases is over $300 million.
  • We released Inland Revenue’s Interpretation Statement on tax avoidance which gives greater certainty to our customers.
  • This year, we collected tax revenue of $53.8 billion and $1.2 billion of other revenue. This is a 10.0% increase from the previous year.
  • Our information sharing has enabled the Ministry of Social Development to cancel more than 3,000 benefits being paid to people who were not entitled to them.
  • This year, total overdue debt increased by 1% compared to an increase of 7% in each of the previous two years.
  • We had a 3.5% decrease in the number of outstanding returns. This is the first time we have seen a year-on-year
  • reduction in ten years.

On avoidance:

Avoidance
Avoidance is where taxpayers seek to reduce or even eliminate their obligation to pay tax. This often involves structures with complex financial arrangements between companies, trusts, or charities, sometimes with international links. Our approach to countering avoidance has been to:

  •  gather intelligence and conduct research on inappropriate use of these structures
  •  assist and educate taxpayers if they are unsure of their obligations
  •  investigate their tax affairs and take legal action where there is deliberate non-compliance.

Recent judgments have generally upheld our position on avoidance and we have a firm legal basis that supports our view.

Tax avoidance interpretation statement

On 1 July 2013, we issued Inland Revenue’s interpretation statement about tax avoidance following a public consultation period which opened in December 2011. The statement now gives both Inland Revenue and the tax community greater certainty on the principles that Inland Revenue will apply in reaching a view on whether an arrangement is tax avoidance or not.

The report details a number of cases and business categories where they are addressing avoidance issues.

A large proportion of the core outstanding debt is not from ‘dodging’ or avoidance, it is from penalties and interest:

IRD core debt

It could legitimately be argued whether National puts too much emphasis on welfare fraud, or too little effort into tax ‘dodging’ .

But claiming the total overdue debt of $6 billion is all due to tax dodging and claiming that National is ‘doing nothing’ could amount to political fraud.

Overstating things and making false claims detracts from the point Labour is trying to make – and it’s dishonest.

Update: Chester Borrows (Minister for Courts, Associate Minister of Justice) has tweeted:

Welfare fraud budget flat after 40% up under Lab, tax fraud budget up 40% under Nats. Actions speak louder than words mate.

Green education policy – deliver welfare from schools

The big Green education announcement – deliver welfare and healthcare from low decile schools.

Green Party announces education policy

Party co-leader Metiria Turei announced the “Schools at the Heart” policy in Wellington today.

“Education is the best route out of poverty but poverty creates an educational dead end. There is growing evidence that poorer kids aren’t getting the most out of school because the symptoms of low income get in the way of their learning,” says Ms Turei.

The party also wants to establish ‘hub co-ordinators’ in schools, who are dedicated to improving the school and community.

“Our school hubs proposal will ensure food, health care, social services, early childhood education and out of school sporting and cultural opportunities are available to kids who might otherwise miss out,” she says.

  • School Hub Coordinators ($28.5 million per annum)
  • Free afterschool and holiday care programmes ($10 million per annum)
  • This will apply to every child at decile 1 to 4 schools
  • National school lunch fund ($40 million per annum)
  • Dedicated school nurses in decile 1-4 schools ($11.6 million per annum)
  • Build at least 20 new Early Childhood Education centres at low decile primary schools ($25 million)
  • Low income subsidies to children at decile 5-10 schools
  • Establish a community hub resource centre
  • Work with Secondary Schools to devise a hubs plan

I have reservations about delivering welfare from schools but it’s worth debating this.

This comes back closer to the source of some education problems, but the problems originate in homes. The Green policy isn’t addressing the root cause, it bypasses it.

Where are the parents? Do Greens want nanny state to take over?

Now on the Green Party website:

Green Party launch major policy to tackle impact of growing inequality on education

The Green Party has announced a major policy proposal today to tackle the effects of growing inequality on children’s educational achievement by establishing on-site community hubs in low decile schools.

The policy, entitled Schools at the Heart, will cluster health, welfare and other support services in decile 1-4 schools in order to mitigate the impact of poverty and inequality on a child’s learning.

“The evidence shows that if kids are fed, are healthy and have the support services they need then they do better at school. Our policy will make sure kids have the basics so they can learn.

“This announcement represents a significant commitment to eradicating inequality in New Zealand and its effects. Inequality will be a specific focus for the Green Party this election year.”

View the policy document

Hand-ups versus hand-outs

There is a lot of debate about whether social welfare should be no questions asked right to state funded support, or if it should be seen for most people as temporary assistance during hard times until you can become self-reliant again.

Extreme sides of the arguments range from wanting no state welfare to insisting that anyone who wants a comfortable living income and guaranteed quality housing for life should be free to choose state support.

Today’s ODT editorial looks at the hand-up versus handout arguments in the US and here, I have edited out the US references.

Here in New Zealand, our Government has been actively working to reduce the number of people on benefits, encouraging them to find work – even if critics say there are no jobs available.Social Development Minister Paula Bennett says there are 29,000 fewer New Zealanders receiving benefits since the last quarter, the lowest number at this time of the year since 2009. She ”takes her hat off” to the more than 17,600 people who went off the unemployment, domestic purposes and sickness benefits and into work in the last quarter.

And the Ministry of Social Development cancelled 525 benefits in the last quarter after it implemented an improved information sharing arrangement with Inland Revenue. According to Associate Social Development Minister Chester Borrows, those who had their benefits cancelled are part of a larger group of 3500 people apparently working and earning above the threshold for welfare support, and the ministry is in the process of contacting them.

With expanded information sharing possible now, major savings are being achieved. Those 525 people were receiving benefits costing $5.6 million a year. That is money they were not entitled to, and Mr Borrows is glad it has been stopped. Confirmed cases are now being processed by the ministry to establish how much money has been overpaid so it can take action to recover it.

Even so, there are still 310,146 people on benefits, including 92,550 sole parents on the domestic purposes benefit, 58,208 on sickness benefits and 48,756 on unemployment benefits. And social welfare remains the largest expenditure item on the Government’s balance sheet.

And the country cannot afford an open cheque book for welfare.

In the next three months, Work and Income staff will be trained on new welfare reforms. New Zealanders have a ”fair go” attitude and the reduction of benefit fraud will be welcome in many quarters. The loudest complaints are coming from New Zealand liberal groups saying beneficiaries will become ”cannon fodder” for politicians.

New Zealand has grasped the seriousness of a growing welfare class, and is mostly composed about changes being made to encourage a hand-up, not a hand-out.

There are some who jump on any attempt at encouraging and helping people off welfare as bennie bashing.

And there are some who want no welfare (and the same people tend to push for low or no tax).

But most will be comfortable with the concept of a reasonable level of state assistance, as long as those who are  able see it as temporary help until they can find a way to support themselves and their families.

Long term or permanent state support is essential for some people, but it should not be a choice for those who expect others to support a life style provided by those who pay taxes.

Salad, fatty and a minimum wage

Apart from an amusing juxtaposition of pseudonyms this from  Affordable housing at The Standard suggests a lack of appreciation of an affordable state of welfare.

Salad

$15 is NOT a “living wage”.

 fatty

True…but it could be if it was introduced alongside a more ethical tax system, such as the first $27000 earned is tax free, and abolish GST.

Also need free healthcare, free education, food in schools, universal child supplement, state housing etc.

‘Fatty’ could do with considering who is going to provide all the muscle – or maybe they have bought Russel Norman’s money printing proposal.

Hide: How high is the budget?

Rodney Hide  makes the point in  in the NZ Herald that it’s very difficult to visualise how much money is involved, for example in the budget. It’s just a bunch of billions with eye glazing lines of zeroes.

One billion dollars is impossible to get your head around. It’s a number of dollars that we never concern ourselves with day-to-day.

I worked out back then that only stories involving hundreds or thousands of dollars were reported. They were the stories that we could easily grasp. The stories involving millions or billions of dollars didn’t rate a mention. They don’t fire the public imagination.

He worked out a system for trying to explain how much a bunch of billions is.

“Imagine a $100 bill,” I began. “Now imagine a wad of them from the bank wrapped up tight. There’s a hundred of them. That’s $10,000.

“A hundred wads and you have a metre. That’s a million dollars.

“So how high is a billion dollars? It’s a kilometre!”

And now to the current budget:

Government spending this year is $100 bills stacked 95km high. That’s a lot of money.

The deficit is a stack of $100 bills packed tight and stacked 10km high.

Welfare spending is 22km.

Still hard to visualise? This might help.

Next time you’re flying in a jet imagine the current budget deficit is a stack of $100 notes stacked up to cruising height, the spend on Super is just under that, and the spend on welfare is overhead.