Guest Post – Douglas wrong about National

A guest post from Lindsay Mitchell.


Making some otherwise sound recommendations to his old party, Labour, Sir Roger Douglas made this statement:

 “National’s do-nothing, status-quo approach to economic and social policy provides Labour with a real opportunity to get back up on its feet.”

In the last six years National has done more to address working-age welfare dependence than Labour did in the prior nine.

A Labour supporter would reject my claim on the basis that numbers on the unemployment benefit took a nosedive over their incumbency. That’s true. Work and Income put enormous effort into those on an unemployment benefit, and Labour luckily oversaw an economic boom (giving them full credit for which is as questionable as blaming National for the GFC.)

But chronic welfare dependence, a crippling social and economic issue for New Zealand, lies in the other main benefits:  pre-reform they were the DPB  and Sickness/Invalid benefits combined.

In 2009, National set up the Welfare Working Group, and from there, commissioned the Taylor Fry actuarial work which exposed where long-term reliance is concentrated. The revelation that teen parents and other young beneficiaries entering the system at 16 or 17 would stay there the longest was no surprise.

Through the early 2000s, while only 2-3 percent of the DPB total at any given time was teenagers, between a third and a half of all recipients had begun on welfare aged under twenty. Throughout Labour’s administration I argued that average stays on welfare were much longer than government issued figures. Point-in-time data produces much longer averages than data collected over a period of time, but it suited Labour politically to use the latter data to minimise average stays and downplay dependence.

To understand this statistical phenomena imagine a hospital ward with 10 beds. Nine are occupied year around by chronically ill patients; one is occupied on a weekly basis. At any point-in-time 9 patients have an average stay of 12 months and one, an average stay of one week. But calculated over the year, 85 percent of total patients had an average stay of just 1 week. Equate this to spells on welfare and you can see how long-term dependence can be disguised.

Here is the huge difference between National and Labour.

National looked for what Labour had denied.  

Their discovery has led to a radically different approach to youth and young parents. Intensive mentoring and income management have seen the numbers of young people on welfare plummet. The teenage birth rate has been falling since 2008, and as almost all single teen parents go on welfare, benefit dependency levels have fallen. The reforms must be playing some part. How much is probably unquantifiable.

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With the inflow into the benefit system stemmed, future reductions in every associated negative outcome should ensue. That means less child poverty; fewer childhood health and educational non-achievement problems; fewer youth criminal apprehensions and convictions; and lower prison populations.

It is especially telling that during the election campaign there were no promises from Labour  to undo this new regime.

In fact their 2014 ‘Social Development’ policy paper proposed, “…allow[ing] income management to be used as a tool by social agencies where there are known child protection issues and it is considered in the best interests of the child, especially where there are gambling, drug and alcohol issues involved.”

In his recent auto biography, Don Brash described National’s welfare reforms as “a useful start”. Roger Douglas calls National’s social policy a “status-quo, do-nothing” approach.

They can’t both be right.


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