Tragedy and welfare

From the rubble of Christchurch there are many tragic stories yet to emerge, and I have no doubt that we all want to share our sympathies with the people affected, many of whose families will be in foreign countries and awaiting news.

The earthquake has also 'buried' the news about the recommendations of the Welfare Working Group (WWG), a coincidence that must be pleasing to the PM, and so I'll comment on some of those recommendations.

A pre-funded and actuarially-valued welfare-benefit system, according to the WWG, would have the in-built incentives to more actively manage entry to and exit from income-support.

Such proposals would represent a substantial shift in New Zealand’s approach to the welfare state, if realized in practice. The logic of fully-funding ACC has already been shown to be faulty, however (by Michael Littlewood, PensionCommentary 2009-1).

It makes no sense for government to amass savings on one hand, while borrowing to fund deficits on the other. And, if the welfare system were actuarially valued, the estimate of this massive contingent liability would end up on the government’s balance-sheet, thus increasing the political pressure for higher taxes and/or radical benefit cuts. Furthermore, the provision of welfare rights and local employment services would be controlled by artificial accounting and auditing constructs, and the lives of beneficiaries would become more complicated as a range of contracted agencies – including iwi authorities ¬– intrude into their lives to perform various State-mandated requirements, which could encompass matters normally considered ‘private’ such as contraception and alcohol consumption.

More single mothers and more of those with a history of sickness and disability – those at least who can work – are expected to get into employment, even if on a last-resort basis in any low-skilled job at all. Relevant to this are the suggestions of using work-capacity assessments, possibly based upon the ACC model. The latter has used a consulting-room assessment of work-capacity (for any job that the person can do), but its purpose is to assess (and often terminate) eligibility for weekly compensation. The emphasis is on how many hours per week people can perform in any occupations for which they may have skills and can work safely, and not on restoring or raising their income and skill levels or long-term employment prospects.

Once embedded into law, the concerns about the technical validity of work-capacity assessment can be over-ridden, and the agents of the State can determine who is ready to return to work, rather than the beneficiary and his/her personal physician. Work-capacity assessment of beneficiaries in the UK has been extremely controversial recently, due to the technical difficulties inherent in such processes. The UK system has had to be critically reviewed, and it is reported that tribunals overturn about 40 per cent of the assessments that are brought before them for review (see guardian.co.uk). While work-capacity assessment sounds like a logical idea, policy-makers tend to have too much confidence in its supposed objectivity. (My views on work-capacity assessment in SPJNZ issue no. 12 still apply.)

And then there is this remarkable recommendation (no 10): that "a person who fails or is likely to fail a drug or alcohol test due to drug or alcohol dependence, be offered the option of voluntarily agreeing to drug and alcohol treatment. Refusal to accept this offer would be a failure to meet job search obligations."

Note the totally unsubtle shift from the words 'option' and 'voluntarily' to 'obligations'. A failure to meet job search obligations means, of course, that one's benefit may be cut or cancelled. Some option!