While we are experiencing what seems like significant changes to welfare in New Zealand, far more radical change is occurring on the other side of the world.
The House of Lords in the UK has just passed a fundamentally altered welfare system.
New Zealand has the opportunity to adjust our welfare system to prevent a crisis in the future. But such change requires more than policy tweaks.
Growth in welfare has become an increasingly critical issue in New Zealand and UK over the last decade.
While it is the largest area of spending for both countries, it takes up a third of New Zealand’s GDP, compared to almost half of the GDP UK.
Since 2001, welfare spending has risen by 4% in New Zealand to $21.2 billion.
It rose four times as fast in UK, and now sits at £111 billion (about $213 billion).
That translates to an astonishing number of people out of work.
In the UK, five million people receive some kind of benefit. Rather than providing a temporary support for those facing difficulty, welfare has increasingly become a way of life for people who cannot find a way to move from welfare into work.
The complete renovation of the UK system sees the introduction of a Universal Credit replacing a matrix of benefits, with an annual cap on the amount that can be received.
Tougher sanctions are coming in. There will also be new supports for jobseekers, helping them gain the training and “work-ready” skills that are required to find employment.
New Zealand’s changes are tweaks in comparison.
The Jobseekers Allowance will replace the main benefits and there are increased incentives for people to move into work. There will be increased expectation on lone parents to find work after teir children reach five years of age.
Tough decisions
We have the opportunity to get things right before more drastic changes are needed. This means making some tough decisions, but more critically, it will mean looking at the underlying causes of welfare dependency.
Tweaking benefits alone would not provide a solution.
As Iain Duncan Smith, the man behind the UK’s reforms said, “We have to look at the root causes of our broken society rather than treat the symptoms alone. For too long we have behaved as though it is easier to maintain people on benefits than to help them back into work. We have behaved as though these people are beyond redemption.”
This requires more than government fiat.
It requires employers to provide opportunities to young workers and it requires us teaching one another the habits and skills that make a working life possible.
Systemic changes are critical; we need an economy that is leading to job growth and we need to ensure the system incentivises people into work instead of the benefit. But alongside this, we need to work with those other factors that can perpetuate long-term unemployment, such as educational underachievement, addiction and hopelessness.
We must hold onto the mind-set that says we will not give up on people, but will commit to seeing them build aspiration and hope.
This will be critical for the tide to turn.
