Ending No. 8 Wire Welfare: Why New Zealand is Lagging Behind

  • In the lead up to the last election, the National Party released its new welfare policy. The work-first policy received unwarranted criticism from many quarters despite New Zealand still lagging behind international best practice in welfare policy. The National Party now leads the government.
  • Policies proposed by the government include a renewed focus on reducing the growth in Invalids Benefits, Sickness Benefits, and the long-term unemployed. Single parents on the Domestic Purposes Benefit will be compelled to take up part-time work when their youngest child turns six. This includes having meaningful reciprocal obligations and imposing penalties on those bucking the rules.
  • The policies are important because work is important. It helps give us a sense of self-respect, helps increase self-reliance, and helps develop healthy habits, relationships and skills. Paradoxically in the developed world, as affluence increases and modern well-being improves, more people rely on the government for all sorts of assistance.
  • New Zealand has a relatively ‘soft’ approach to welfare that is work-first in essence but not necessarily in practice. Overseas experience suggests that work-first approaches to welfare, time-limiting of benefits, workfare systems, and meaningful sanctions for non-compliance help get people back into the workforce. Even the often-cited and supposedly social democratic Nordic and Scandinavian countries have far tougher laws and requirements than New Zealand.
  • The overseas experience suggests that, combined with appropriate training and assistance, these schemes receive cross-party support. This is because high levels of welfare dependency have highly detrimental effects on society. A large welfare state costs money but, more importantly, can create new social problems.
  • The last great recession and adjustment in the 1980s left many people out of work and languishing on welfare rolls for a decade or so. This was the case around the world. Many people no longer felt they had the confidence and skills to participate in a rapidly changing labour market.
  • Introducing more rigorous work-first policies is important in a recession so that if unemployment does rise substantially, people do not lose touch with the world of work. Although by no means coherent and complete, the government’s welfare policy is moving in the right direction.

Luke Malpass is a Policy Analyst with The New Zealand Policy Unit of the Centre for Independent Studies.