A we lfa re sta te fit for the 21st c e ntury T he 2008 L inc oln E fford Me moria l L e c ture WE A Christc hurc h Susa n St John
Re turn of Rog e r- re run 1991?
� Just how uncertain we have yet to see, but it with a sense of foreboding that I see the return of Roper Douglas to parliament and his clone Rodney likely to be appointed to a ministerial post. � I suggest that his 1993 Unfinished Business which is the Douglas vision of where we should be in 2020 hold portents of where we may be going: � In the foreword of that book he quotes the former Czech Minister of Finance Vaclav Klaus � “We need an unconstrained unrestricted, full- fledged unspoiled market economy and we need it now.” � I will return to his vision of the welfare state in which self responsibility with low tax is stressed and contrast that with an alternative vision
Shades of the Great Depression?
� Perhaps shades of the depression is an exaggeration, but I am fearful that we are like the man whose house was built on sand. The affluent times have not been used well to provide a basic floor to living standards for everyone and just as we need it most the welfare state lies battered and worn- full of holes and crumbling framework. � Even in the academic world it is not a fashionable topic except perhaps in sociology depts. Yet in the extraordinary times we live in we may yet rediscover that the market can turn on us and be a very bad master. Perhaps this is the wakeup call for the welfare state and hopefully now the election is over we can put aside all the policies that have been made on the hoof and agree to go back to some fundamental principles
Welfare State wake-up call
Va lue s of soc ia l justic e • The equal worth of all citizens • Equal right to meet basic needs • Wide opportunities for all to participate and belong especially access to education • Elimination of unjustified discrimination especially that which causes material disadvantage
• Moderation of income and wealth inequalities: it is not just about the poor, but about the rich, how they got rich and what is an appropriate reward • The Market is servant not master: • Under the policies of the new right we have become enslaved to the concept of growth, more stuff is good, more shopping is good, more hours at work is good, marketised child care is good. And critically only paid work has value
The role of the welfare state • Alleviate poverty • Prevent poverty • Provide insurance • Certainty • Security • Economic stability • Promote social justice
T wo vie ws of the we lfa re sta te � 1. Welfare state causes poverty Should be “Only for the poor ” Work is the way out of poverty � 2. Welfare state provides security “for all citizens” Security encourages flowering of human potential in paid and unpaid work
We lfa re sta te 1: T he ROGE R DOUGL AS a pproa c h People need sticks and carrots- Choice and competition drive growth � Low flat tax � Self reliance • Private insurance • Private saving � Targeted welfare • High effective marginal taxes on the poor • Creation of the Gap • Use of guaranteed minimum income
Wha t do we le a rn from History? T he la st 20 ye a rs: Turmoil of the late 1980s Rapid rise in unemployment Sharemarket crash Deep recession early 1990s
E le c tion 1990s – Re turn to the de c e nt soc ie ty? • Ma rke t libe ra lism • Individua lism a nd c hoic e • Moving ‘be yond de pe nde nc y’
rom the c ra dle to the g ra ve 1991 budg e t: F
T he 1990s - Na tiona l • Benefit cuts • Tight targeting and flat tax • User- pays • Market rents • Attacks on the New Zealand pension • Labour market reform Employment Contracts Act • 1996 tax cuts • 1998 Privatisation ACC 15 • Cuts NZS
T he fifth L a bour Gove rnme nt � Reverses some of the excesses � Labour market � Renationalises ACC � 80% owner of Air NZ � Buys back Railways � Income related rents � Restores Pensions � Changes from hard to soft workfare 16
Influe nc e d by the ‘T hird Wa y’ Follows the Third Way � “We are the government of labour” � 2002 promises to eliminate child poverty
1999- 2008 T he fifth L a bour g ove rnme nt: T he booming e c onomy 18
9 ye a rs of T he T hird Wa y: T he 2000s � The Calvinistic enabling state � Social inclusion is through work � Paid work is the way out of poverty � Making work pay � Antipathy to benefits � Working for Families � Fear of losing power � Fear of consultation and lack of academic debate � Loss of hard won principle � Loss of simplicity
Changes in income inequality in NZ, 1982-2007 (GINI) 40 Fastest increase in OECD 36 Gini coefficient x 100 32 28 AHC BHC 24 20 Source: OECD 1980 82 84 86 88 90 92 94 96 98 00 02 04 06 2008 20 (Perry, 2008) HES year
Rise of poverty in the 1990s % pop below CV and Rel 50 and 60% AHC poverty lines 35% Constant value thresholds are based HH 60% 98CV on the 1998 median and adjusted P roportion of population below thresholds HH 60% RE forward and back with the CPI. 30% HH 50% 98CV HH 50% RE 25% 20% 60% 15% 50% 10% 5% 0% 21 1980 82 84 86 88 90 92 94 96 98 00 02 04 06 2008 HES year (Perry, 2008, fig f2)
Poverty today � Foodbank organisers say they are under increased pressure with rising demand for assistance as government agencies struggle to help low income families. That is despite the government's highly publicised working for Families package.
Inc re a sing F oodba nk use : Auc kla nd City Mission Auckland City Mission 23
Third world diseases Professor Innes Asher Starship hospital
Serious skin infections hospital admissions1990-2006 Craig E, et al. NZCYES: Indicator Handbook. 2007.
Hospitalisation for serious bacterial infections and respiratory diseases risk by ‘deprivation’ 0-14 yr 2002-2006 Cause of hospital admission Least deprived Most deprived (NZDep1) (NZDep10) Meningococcal disease# 1 4.93 Rheumatic fever 1 28.65* Serious skin infection 1 5.16 Tuberculosis 1 5.06* Gastroenteritis 1 2.00 Bronchiolitis## 1 6.18 Pertussis 1 3.70* Pneumonia 1 4.47 Bronchiectasis 1 15.58 Asthma 1 3.35 #0-24yr ##<1yr *NZDep9-10 Craig E, et al. NZCYES: Indicator Handbook. 2007 .
Living standards 2004: families with dependent children by family type and income source 35 33 32 31 30 28 26 25 24 25 21 19 20 17 17 17 15 16 15 15 11 10 9 10 Population percentage 7 6 6 6 5 5 2 2 1 0 0 0 Sole-parent beneficaries Sole-parent market Two-parent beneficaries Two-parent market incomes incomes Family type and income source Left to right: severe hardship to very good living standards S o urc e : Ministry o f S o c ial De ve lo pme nt 2006
Ne w ma ntra : work is the wa y out of pove rty 28
Re writing the na tion’s va lue s Social Security Amendment Bill 2006 “Work in paid employment offers the best opportunity for people to achieve social and economic well-being” The Social Security Amendment Bill wipes away any notion that our social security system is about ensuring everyone can participate as citizens. Instead, it makes getting people into a job, any job, the fundamental duty of citizenship. 29
Be ne fits a re simply to a lle via te ha rdship. The Bill fails to acknowledge that many undertake unpaid work looking after children, the sick and the elderly or doing other community activities. This work is crucial to the running of our society but receives no value in the Bill. Nor does the proposed legislation do anything to ensure that meaningful, adequately paid, secure employment is available. � Instead it punishes those who can’t find work. The Bill allows for a new pre-benefit activity to be completed before anyone is even allowed to apply for the Unemployment Benefit. Under a new government, this activity could include work-for-the- dole.
� Being sick or disabled is no longer an excuse not to work. Sickness and Invalid’s beneficiaries will be subject to new ‘planning and activity’ requirements which means that if they don’t start for planning for work, they could risk having their benefit suspended or reduced. Spouses are also expected to get paid work even though they may be caring for their sick spouse and/or have young children. � The rationale for these new requirements is that Sickness and Invalid’s benefit numbers are increasing at a time of low unemployment. But rather than an epidemic of ‘dole-bludgers’ shifting to these benefits, we are largely seeing the effects of an ageing population who due to improvements in technology are living longer than ever but nonetheless may suffer from ill health that stops them working the last few years before retirement.
� As if in hindsight, the Bill does provide some social security “to help alleviate hardship”. But this phrase is far more limiting that the goals of eliminating poverty and ensuring participation and belonging for all citizens .
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