Speech – Bill English: Outline of welfare reforms

Hon Bill English - Leader of the Opposition

Speech prepared for delivery to Dunedin Business Group

Welfare Speech

This week Labour abolished work testing for people on the DPB. This follows a trend. In 2001, they abolished capacity testing for people on Sickness and Invalids benefits.

Most people are on the DPB because of family breakdown, and they want to get off it. But a significant number started young - it's been their only ever form of income. Labour has just made it a lifetime choice for young women with few prospects. If you have no qualifications and no expectations, you have now been handed an 18-year opportunity to opt out, more if you have more children.

Even if only 5% of DPB recipients take the opportunity, that's over 5000 young women, so at least 5000 children. They deserve better than the soft bigotry of low expectations. It's our collective task to foster their capacities, not to make sure they are wasted. Early this year, National nominated welfare reform as one of the top four issues for a future government. We believe there is a problem. In 1975 there were 37,300 people on benefits. Today there are about 350,000 on the same benefits.

Despite four years of job growth, official projections show the numbers on benefits will keep rising. So the problem is getting worse when times are good - how much worse will it get when times are bad?

Labour had the opportunity of a generation - to reduce welfare dependency when jobs are plentiful. Instead, they encouraged dependency. Jobs go begging, where there are thousands on the dole and the number on long-term benefits keeps going up.

The social welfare chit is back. I hear lots of stories from everyday people. Here's what one woman said:

"My husband has a sports shop, so it's got some fairly expensive items. Often people come in with vouchers from Social Welfare because they say they need a pair of new shoes. They buy $200 sports shoes, shoes I haven't got. We see girls with prams, and their babies in Nike shoes, and they come in to see what else they can buy with their welfare chit."

This is Labour's welfare reform.

That's how it used to be back in the 80's. It's not fair on people, who work full time for low pay, who will never be able to afford $200 sports shoes.

It's as stupid as the State housing policy. There are about 62,000 State houses and 89% of these tenants pay much lower rent than thousands of lower income working people in other accommodation. Some are in desperate need.

There is no way of getting them out again - so the State houses are full and no one is leaving. It's obvious why not. If you are in a State house, you are likely to be better off than thousands of people who are working for low wages and paying market rent.

One result of Labour's policy is that the turnover in State houses has nearly halved. The motivation for these people to move on and their hope for the future will dry up. Labour have assigned them to dependency.

That's why JohnTamihere says Government policy is stupid.

I want to thank John Tamihere for helping us put welfare dependency in the spotlight. For a brief moment, he had the courage of his convictions, before he was made to apologise for them.

While his colourful attack on his Cabinet colleagues attracted wide media attention, his underlying messages were a cry for reform of the welfare system.

He talked about killing people with kindness, about how the Government clears its conscience by paying out more money. He talked about how welfare depresses the dynamic, innate potential in people. He said the people left out of the debate were the welfare dependent.

He's right. But, John, I have a message for you too. If you're serious about helping the people you say you represent, you are in the wrong party. Labour likes them how they are, dependent, grateful, reliable voters. Your party doesn't think people on welfare are up to much - it's nobody's fault, so it's nobody's responsibility.

There is no Third Way, Mr Tamihere. Helen Clark and Steve Maharey are creating more state dependency. But policies you and I agree on can reduce dependency! What's Steve doing about your concerns - another strategy? More Treaty principles?

At least Mr Tamihere is one member of the Labour Government who is not advancing the Treaty of Waitangi as the answer to every problem.

John Tamihere doesn't have a monopoly on concern about the lost potential and low hopes for hundreds of thousands of our citizens. National is not welfare bashing. We believe our principles of enterprise, personal responsibility, mutual obligation, and limited government mark the way out of the dependency trap.

Progress for Maori comes the same as it does for any New Zealander who has aspirations - economic opportunity. There's a deceptively simple recipe - work, education and supportive families.

And that recipe impacts on the welfare debate which I want to take a step further today by proposing three solutions - first, that work works; second, that community-based solutions work best to move people from welfare to work; and third, that families matter.

Work Works

On Monday, Labour's Social Security Amendment Act came into force. Sole parents no longer have to undergo a work test. They can stay on the DPB for 18 years before being compelled to start looking for work. For a young woman with few choices in life, that choice can be a life sentence for her and her children.

At least 18 years because if the sole parent has two, three or more children, it may be a lot longer.

This sends two messages. To the parent - get used to a life of passive dependency on the State, and to the children - work doesn't matter because the State doesn't care whether your parent works or not.

How will we stop, endemic welfare passing from one generation to the next if we say work doesn't matter? How will we teach children that staying at school and studying is the best way to get a job when the government says work doesn't matter?

Reward for effort and hard work are essential for a prosperous nation, so why does the State signal that it doesn't care enough about those on welfare to get them into work?

National believes work matters.

Work restores pride and self-esteem that dependency destroys. Children respond positively when their parents, their role models, feel good about themselves.

So, work has value beyond increased income. Work gives those on benefits a taste of success too, an opportunity to get into better paying work, to ease the grinding pressure of living from one benefit payment to the next.

Now, more than ever, New Zealand needs workers. Unemployment is at its lowest level since the late 1980s. Beneficiaries now have the best opportunity in a generation to move into work.

And while unemployment numbers are at a low level, the government's own forecasts show that the numbers on sickness and invalids benefits will rise sharply over the next few years. Why?

Are New Zealanders getting sicker? Or is it that people are migrating to other benefits because they are an even softer touch?

Another explanation some people subscribe to is that the toxic mix of welfare dependency and substance or drug abuse is attracting young new Zealanders onto sickness benefits.

Welfare is not a lifestyle choice or entitlement, but temporary assistance on the way back to independence.

We are looking at a range of measures. The idea is to get the people who can move moving, and apply more support to people whose needs now get lost in the large numbers welfare have to deal with.

National makes no apologies for advocating work for the dole. We go further. We will penalise those who do not actively seek work, or deliberately flunk work interviews.

What might those sanctions be? We will look at placing time limits on receipt of the dole and one option for those who abuse the system may be to place them on a lower level of social assistance, putting them on firm notice that the only acceptable outcome for them is work.

Nor should the DPB be considered a career choice.

We'll reinstate the work test so that those on the DPB are required to consider part-time work once the youngest child is six, with the intention of preparing them for full-time work once the child is 14, unless there are special circumstances, such as behavioural or psychiatric problems, sole parents should return to full-time work.

There are already some schemes that work. Family Start supports high-risk young sole parents through the early years of parenthood - support from an experienced, older person. It works - the Government refuses to use it.

Schools for teenage mothers work - they should be expanded. Teenage mothers who leave school early also need to finish their education if the expectation is that they find employment once their child is at school. We should therefore promote ongoing education as a requirement for receipt of the DPB.

My welfare spokesman, Katherine Rich, is developing a policy paper, which will be released in the next few weeks, which will discuss these and other issues further.

She is going to do a good job on welfare. Not just because she is very capable, but also because she has had personal experience of how demotivating it can be on welfare, and she also knows how parenting is one of the toughest jobs around.

That's why she is going to make one of the finest Welfare Ministers this country has seen. Dunedin will be proud of her.

Community based solutions work best

While sanctions have their place in moving people from welfare to work, they are not the full answer. And nor are the dozen or more government agencies that are often involved with one family.

Greater use of voluntary organisations that are active in the community are best placed to make welfare work. These organisations play key roles that government agencies fail to do.

The voluntary sector are part of the community. They see beneficiaries who are hard to place in work as their natural constituency, and the beneficiaries feel comfortable receiving assistance from them.

The Labour Government has viciously attacked privately owned training organisations who have successfully attracted thousands of beneficiaries to their courses. They have succeeded where polytechs, universities and schools have failed. Most bureaucracies just don't have the same commitment and trust

National is looking at the Australian system where work placement is largely carried out by private and community organisations on a pay for performance basis. There is no State monopoly.

Beyond the inclusion of private agencies in service provision, a work-based safety net must also include the business community as part of the solution in moving people from welfare to work. After all, they are the ones providing the jobs and it is they and their employees who have seen their taxes spent on a failed welfare system.

Only by handing over welfare issues to those in the community with a real stake in solutions will we make progress.

Families Matter

A recent study from Science magazine shows positive links between sole parents returning to work and the way their children performed and felt about themselves. It found:

* Anxiety went down for children between the ages of 10 and 14 when their mothers were working - even for as little as an hour a day * Adolescents' reading skills and mental outlook improved, and * Their reliance on drugs and alcohol waned, but increased when their mothers left jobs and went back on welfare.

If we believe that strong and supportive families are vital, and if children are to get the best start, then government policies must seek to achieve better outcome too. It won't be easy given the fluid family structures for people on benefits and in work. But the evidence cannot be ignored

Today, the welfare system fails everyone by encouraging family structures that will disadvantage the next generation of New Zealanders. Their opportunities matter as much as our freedom.

There is plenty of evidence to show that a family with a mortgage and the goal of homeownership will be more committed to work and ongoing stable employment.

We need to shift the focus from entitlement to eligibility, to establish a gap so no family is better off on welfare than in work, and to encourage home ownership.

Whatever else Labour does to family assistance with its cash handout, it must preserve this gap.

Talk to anybody who has made the transition from welfare to work, and he or she will say that a dollar earned from work brings greater satisfaction than any dollar than can be given by the State. That is why National is looking at new solutions for the welfare system and why it is a priority for us this year.

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