Ideas@TheCentre
Reforming Welfare in a Recession
New Zealand’s recently-elected government made election promises to reform welfare. The government looks to have its work cut out as international experience suggests that New Zealand lags far behind. As more examples of welfare fraud surface we shall see if Prime Minister John Key and Minister of Social Development, Paula Bennett, are serious about helping people into work.
In the decades of unemployment in the 1980s and ’90s, New Zealand, like other countries, allowed people to fall into long periods of unemployment, and losing skills and confidence in a rapidly changing labour market. In the United Kingdom, this created great tranches of intergenerational welfare dependency, joblessness, and the sense of disempowerment that arises from this. This is despite a decade of economic growth. In New Zealand, we can see the beginning of this trend, so now is the time to reform and prevent it from happening here.
Advanced economies around the world have introduced work-first approaches to welfare provision. The methods used overseas now include time-limiting of benefits; asking single parents to return to the workforce part-time once their youngest child starts school; and obligations to accept employment as long as you aren’t away from home for 12 hours. Workfare schemes are also part of obligations to keep up work habits, learn new skills, and be involved in projects that benefit the community. This is even happening in the ‘universal welfare state’ Scandinavian countries. In Germany, workfare policies reduced welfare rolls in Germany from 5 million to 3.5 million in two years from 2006–08. These reforms were enacted in the midst of recession and sluggish growth.
As New Zealand and Australia head deeper into recession, it is more important than ever that governments get their welfare policy right. Reform is important because allowing people to languish on welfare rolls and lose touch with the world of work is a failure of government, and by extension, a failure of society.
Luke Malpass is a Policy Analyst in the New Zealand Policy Unit at CIS. His paper Ending No.8 Wire Welfare: Why New Zealand is Lagging Behind was released by CIS yesterday.
