Prime Minister John Key recently announced plans to introduce a form of what is known in the world of welfare as Income Management.
The hands-on approach, targeting ‘disengaged’ 16 and 17 year-olds and teen sole parents would put oversight of their benefits into the hands of private sector social service organisations.
A ‘competent adult’ would provide intensive mentoring in life skills such as budgeting and parenting, manage the young person’s bill payments and rent, and ensure they were in education, training or work-based learning.
Money for basic living costs would be loaded to a payment card that could be used only on food and other necessities and not cigarettes and alcohol.
While the move is undoubtedly paternalistic, the State is in effect being asked to be father and mother to these teenagers anyway.
And who could argue that it makes sense to hand a bundle of money over to an at-risk young person already in difficulties and with few positive role models in their lives, and expect them to manage it well?
As it turns out, only one non-politician tried to argue the case; Felicity Perry, a 27-year-old student, all-round activist and a former Independent Youth Beneficiary with a lengthy record of espousing a wide array of causes.
Ms Perry, who is currently writing her PhD thesis on An Analysis of the Normative Subject Positions Offered by Fashion Discourse, was “horrified” by the “highly patronising” proposal.
Beneficiary Deal
But as Mr Key pointed out, there is a deal involved here.
In return for taxpayers’ support, young people receiving these payments will have clear obligations.
The move is a win for the Welfare Working Group, although it falls somewhat short of their recommendation.
They proposed that teen beneficiaries be required to live with a ‘responsible adult’, a move that could strengthen support and more closely resemble the kind of home environment teenagers could otherwise expect to inhabit.
It might also further reduce the appeal of moving onto welfare and make families and teenagers take greater responsibility and work harder at resolving problems at home and school.
That is not to say that life should be made even harder for already disadvantaged young people. However, an important element in any welfare payment, other than those for the seriously disabled should have clear and strong signals about the purpose and temporary nature of the support, obligations and conditions involved.
While some argue that there are not enough jobs for people trying to move off welfare, leaving aside the ups and downs of economic cycles, a well-managed, flexible economy is capable of generating full employment.
Across the Tasman
Forms of Income Management are in place in a number of countries, including Australia. Former Prime Minister John Howard introduced it in 2007 as part of a major emergency intervention into 77 Northern Territory Indigenous communities, bringing national attention to the rampant child sexual abuse, neglect, substance abuse, gambling and other anti-social behaviours in these communities.
The move was controversial, but was supported by the subsequent Kevin Rudd and Julia Gillard Governments.
Last year, it was extended to non-indigenous welfare recipients in the Territory, where more than 16,000 people are now subject to income management.
While debate continues about the merits of income management, and many regard it as discriminatory and demeaning, a recent Australian Government evaluation produced generally positive findings.
Well over half of those surveyed reported buying more and better quality food, said their children were healthier, there was less gambling, alcohol abuse and, ’humbugging’ (harassment for money by relatives), less violence and better family relationships.
Conditional Welfare
Widely respected Aboriginal leader Noel Pearson, who delivered the Business Roundtable’s Sir Ronald Trotter Lecture last year on Pathways to Prosperity for Indigenous People, has supported Income Management as the start of a fundamental shift from passive to conditional welfare.
His Cape York Institute introduced its own Aboriginal-initiated version of the scheme into Cape York communities.
The problems in Australia’s Indigenous communities clearly far outweigh ours.
But their experience has plenty of lessons for New Zealand.
For example, enabling Maori leaders and organisations to initiate and implement solutions to help Maori move off welfare is at the heart of Whanau Ora and is to be strongly encouraged.
As the Welfare Working Group recommended, income management could also be used in cases where adult welfare recipients with children repeatedly fail to nurture and provide for them.
The Government’s plan for teenage beneficiaries is the first in a suite of reforms and is an excellent place to start.
Income Management is one of many useful tools to help disadvantaged people avoid or move out of benefit dependency and go on to lead productive, responsible and satisfying lives.
There are many sensible proposals in the Group’s report and I hope that that the Government will have the courage and resolve to make use of them.
Roger Kerr is Executive Director of Business Round Table based in Wellington.
