Maxim Institute - real issues - No 243

08 Mar 2007

Maxim Institute - real issues - No 243 8 March 2007 www.maxim.org.nz

Lower taxes promote social mobility "Radical" welfare reform mooted in UK Marriage still in vogue Maxim Institute Forum 2007 – Pursuing Social Justice in New Zealand

IN THE NEWS Most admired companies Lack of men in early childhood education

Lower Taxes Promote Social Mobility

Budget 2007 looms in just a few short weeks, and New Zealand taxpayers will be casting anxious eyes at the Minister of Finance to see whether recent large surpluses will translate into relief for taxpayers. In the meantime, a new report from Britain ahead of their next budget suggests that taxpayers are right to think there is a strong case for lower taxes.

The report, produced by British think tank Reform, identifies policy responses to the key trends of the next decade, such as globalisation and increased competition, technological developments and demographic change. High on the list of priorities is a new balance between taxation and public spending and, in particular, lower taxes. The authors say that low taxes are essential if a country is to remain attractive in a global economy, where people and money are increasingly mobile. By allowing people to keep more of what they earn, lower taxes also encourage efficient and productive work and allow people to invest in services that they choose and value. This permits greater scope for investment, meaning that growth can be increased.

As the report points out, low taxes and growth are important in giving individuals, at all levels, the resources to improve their lot in life. When individuals do not have the means of improvement and must rely on state provision, it is more likely that they will remain disadvantaged and dependent. Thus the report notes that a consequence of higher taxes and slower growth is decreased "social mobility". In response, one policy that the report recommends is a move towards a tax-free exemption for income up to £10,000.

The New Zealand government has clearly identified the importance of growth; it aims to return per capita incomes in New Zealand to the top half of the OECD and to foster "an environment that enables New Zealand businesses to grow and compete in a global economy". Taxpayers will therefore expect the Minister of Finance to act accordingly.

Read the report, UK Growth and Opportunity: the need for a fundamental reassessment

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"RADICAL" WELFARE REFORM MOOTED IN UK

A new review of welfare policy in the United Kingdom has commended the British Labour Party's programme of reform aimed at getting people off welfare and into work, but suggests a more radical approach is needed to tackle the problem of welfare dependency.

The review, completed for the Labour Government by David Freud, has been welcomed by politicians, including British Prime Minister, Tony Blair. It commends Labour's progress on welfare reform and reducing benefit numbers, but suggests a number of more radical proposals for the future. They include: the simplification of the benefit system; a greater role for community and private sector organisations in the delivery of services; long-term mentoring of repeat benefit claimants; greater tailoring of support, particularly for those "hardest to help"; and "rebalancing" rights and responsibilities so that a greater measure of support also imposes an obligation on clients to look for work.

Of particular interest is the more central role envisaged for private and community organisations, particularly in dealing with those beneficiaries who may have complex and interconnected problems. The report suggests a more flexible approach to service delivery, with government paying community organisations, businesses and other groups based on their results, and not being overly prescriptive about processes. It also suggests there should be greater financial incentives for organisations to take on the hardest-to-help, and more personalisation of support and mentoring to tackle barriers to work, such as debt or addiction.

The United Kingdom, like New Zealand, has a strong employment market, and confronts many of the same issues when dealing with those "furthest from the labour market", that is, those who are caught in long-term dependency and may face a complex group of interconnected problems which keep them there. The Freud review has a number of controversial recommendations for continuing reform and actual policy is some time away. But it is pleasing that debate on how best to address the engrained problems of welfare dependency is underway in the UK. The questions of the Freud review such as, "How can we help?" and "Who delivers help best and most effectively?" are the questions New Zealand must also start to answer if we are to develop a more community conscious approach to welfare.

Read the report, Reducing dependency, increasing opportunity: options for the future of welfare to work

Read the press release, Radical review of welfare could help thousands more into work

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MARRIAGE STILL IN VOGUE

According to new figures released by A C Nielsen this week, New Zealanders still value marriage. The survey looked at 500 participants from New Zealand, as part of an international study on marriage and relationships, and found that there is still a strong appreciation for marriage in New Zealand, with 58 percent of participants considering marriage as one of their lifetime ambitions. It was also found that a large amount of support exists for cohabitation, as 64 percent of New Zealanders surveyed were of the opinion that a "stable, long-term relationship" was of equal value to a marriage.

There is a danger in placing this kind of faith in cohabiting relationships. A number of studies exist on the substantial differences between marriage and cohabitating relationships. The commitment to marriage offers far greater family stability, even after taking into account socio-economic factors. This research tends to show that those in cohabiting relationships are generally less committed, and therefore the relationships have a tendency to break down more often, regardless of how 'stable' they appear to be. Some studies suggest that a connection exists between commitment and levels of depression, with lower levels of depression found in those who are married, due to the committed and permanent nature of their relationship.

It is promising that within our society, respect can still be found for the value of marriage. This report shows that stability and commitment are still considered to be of high worth, a fact that should persuade us that marriage needs to be sought after and encouraged.

Read the A C Nielsen release

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MAXIM INSTITUTE FORUM 2007 – PURSUING SOCIAL JUSTICE IN NEW ZEALAND

On Friday 30 March, many of New Zealand's leaders -- from the community to business and academia to politics -- will gather in Auckland for the Maxim Institute Forum 2007 - Pursuing Social Justice in New Zealand.

Delegates will hear from a top line-up of keynote speakers including leading social scientist, Professor David Fergusson; Principal Youth Court Judge, Andrew Becroft; Professor Peter Saunders from the Centre for Independent Studies in Australia; and Families Commissioner, Lyn Campbell. A panel of MPs will debate how government can respond to the challenge of reinvigorating civil society in New Zealand, and at 6pm, His Excellency Anand Satyanand, the Governor-General of New Zealand will officially launch a new book from Maxim Institute entitled: Pursuing Social Justice in New Zealand: 14 New Zealanders share their stories of communities helping people in ways government cannot.

The Forum is an invitation only event. To enquire about receiving an invitation please contact Maxim Institute today. Registrations close on Tuesday 20 March and places are limited.

Read more about Pursuing Social Justice in New Zealand

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IN THE NEWS

MOST ADMIRED COMPANIES

The results of a Fortune 500 survey of businesses were released this week showing who America's most admired companies are. The results were interesting and varied; General Electric took the top spot, followed surprisingly by Starbucks. Voters were asked to consider eight key factors, which included not only financial soundness and long-term investment, but also innovation, people management and social responsibility.

View the full list of most admired companies

LACK OF MEN IN EARLY CHILDHOOD EDUCATION

The Childforum Research and Education Network has released a new policy paper highlighting the very small number of men involved in early childhood education. Just one percent of early childhood teachers are men, compared to just over two percent in 1992. According to the paper's "head count", in 2005, there were 13,609 women in the sector, and only 132 men.

Read the policy paper to find out more

TALKING POINT

"It is a general popular error to suppose the loudest complainers for the public to be the most anxious for its welfare."

Edmund Burke

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ENDS

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