The Child Poverty Action Group rethinking welfare in the 21st century speech

Ngā mihi o te ata

On behalf of CPAG I am pleased to welcome everyone here today. Our grateful thanks to Green party co-leader Marama Davidson for her excellent presentation in her busy schedule. Her humility and humanity and lived experiences give us hope.  

First a little a background to how we have got to this day.

In 2008, Caritas Aotearoa New Zealand commissioned the Beneficiary Advocacy Federation of New Zealand to examine and document changes to the welfare state since 1991.  Their report, The Unravelling of the Welfare Safety Net, painted a picture of cumulative attacks that by 2008 had seriously undermined the welfare state’s original purpose:

Caritas believes many people are unaware of changes that have occurred in recent years. More disturbingly, it appears to us that, despite overall increased social spending, many of the changes are fundamentally at odds with the concept of meeting need. (McGurk, 2008)  

CPAG updated this in 2017. Our report Further fraying of the welfare state documents the further erosion, and deliberate undermining of the welfare system from 2008-2017. These changes carried on the momentum of cuts and neglect identified by Caritas to create a country that is now almost unrecognisable to those who grew up here in the 1950s, 1960s and 1970s.

This is CPAG’s fifth major summit on the welfare state. It has been very sobering to review these events and alarming to see so very little progress.

Our first summit was held in 2010- the year of the first welfare working group led by Paula Rebstock.  Ambitiously, we also called that summit Rethinking welfare for the 21st century. The more things change….

We welcomed Paula herself to speak along with a number of speakers from Australia to the summit in the hope we could learn something from them. At that time Australia seemed to be a beacon of light. Multiple Prime Ministers later it is not so clear.

Our best efforts at the 2010 summit, along with the Alternative Welfare Working Group chaired by Mike O’Brien, who with others wrote an alternative report, Welfare Justice for All, came to naught. The problem was that momentum for change was already accelerating in a direction to take us even further away from what would work in the 21st century. Reducing welfare dependency became the catch-cry, drowning out any efforts to question the archaic and damaging assumptions behind the welfare policies themselves. Children were all but invisible and the poverty mess deepened.

In 2015 CPAG held a 2nd summit wistfully called Welfare fit for families, and then, to put a more positive spin on things, a third in 2016 called Investing in children. We were trying to counter the narrow focus of the social investment approach of the new reforms.  The 4th summit held last year was somewhat despairingly called Beyond Social Investment. It was a plea for a new way of thinking.

Paul Smyth, Professor of Social Policy at Melbourne University and the director of the Brotherhood of St Laurence, spoke at the 2010 summit and observed

Working for social policy change can often seem like watching the grass grow.

Perhaps in 2018 he might observe it has been like seeing the grass slowly die.
The signs of collapse of the welfare state have been all around us:

• Homelessness, not just in Queen St, on a scale never seen since the 1930s.
• Working poor- who cannot feed their children after devastating housing costs, if they are lucky enough to have a house.
• Foodbanks and social services and private charities such as KidsCan overwhelmed with demand from families for the necessities of life.
• Stories about harsh treatment from Work and Income that have echoes of the UK film I Daniel Blake.
• Worrying poor social indicators around suicide/incarceration and diseases of poverty.

At the same time, the wealth divide grows ever more pronounced. Corporate bonuses, stratospheric pay packets and obscene compounding of unearned property and share market wealth at the top end, sit alongside an unfolding social disaster of extreme and widespread need at the other end.

After nearly 30 years there can be no quick fix.  Yes, it is good to have some extra spending in the Families Package but restoring the devasted balance sheets of families who have seen their assets disappear and their debt and disadvantage compound will take our very best efforts for decades to come.

This year we return again to the 2010 theme: Rethinking the welfare system for the 21st century.   But this time more optimistically. This time it really could be different. Let’s take a look at the government’s 2018 vision:

The Government’s vision is for a welfare system that ensures people have an adequate income and standard of living, are treated with, and can live in dignity and are able to participate meaningfully in their communities.  Welfare Expert Advisory group’s Terms of Reference.

A lot of care has gone into framing that and it stands in sharp contrast to the mealy-mouthed purposes and principles set out in the current Act:

The current Purposes section says that welfare is to help alleviate hardship: with requirement people use resources available to them first, before seeking financial support.

What does that mean? Such a vague statement, but one that appears to have been increasingly interpreted that people must run down their balance sheets and if they get loans, they can be offset as if they were income against any benefit entitlement.

The recent High Court decision that loans are not income was hard won. An eight and half year battle in the courts. We had been heading in a direction dangerously close to reinventing the poor laws of the 19th century. Has the tide actually turned?  

The current principles section mentions paid work 9 times. For example:

• work in paid employment offers the best opportunity for people to achieve social and economic wellbeing;
• the priority for people of working age should be to find and retain work;
• people for whom work may not currently be an appropriate outcome should be assisted to plan for work …

There is no acknowledgement of unpaid caring as work and no framing around concepts of dignity and participation.

You will recall John Key’s famous line: ‘paid work is the way out of poverty’...

I have been reading commentary in the New York Times this month where top intellectuals, in articles like one titled ‘The Metamorphosis of the Western Soul’, have claimed that hearts and minds of a generation were fundamentally changed by neoliberalism. Over 30 years ago in the UK and US, Maggie Thatcher and Ronald Regan set in train a new seemingly unstoppable ideology around self-reliance and small state. In NZ, in 1991, Ruth Richardson and Jenny Shipley unashamedly went after hearts and minds of New Zealanders. In unleashing Ruthanasia and Jennicide they were our most successful politicians because they and their likeminded acolytes utterly changed the thinking of a whole generation.

The post-war flowering of the welfare state where the other is my neighbour, and broad based social insurance schemes meant we looked after each other, was overtaken by the new ethos: winner takes all; individualism; self-responsibility; stand on your own two feet, don’t breed them if you can’t feed them and paid work is the only way to acheive social inclusion.

There has been little understanding of the hard-won victories of the original welfare state- or even why a welfare state is needed. Any redistribution to the worst off has been regarded with suspicion. Recently, grown men have even been debating at length that children tax credits are at best corporate welfare or at worst communism by stealth!  Of course, Working for Families is actually a vital redistributive package that supports the young and should be understood and supported with the same vigour as our redistribution to the old with NZ Superannuation.

Fundamental misunderstandings of why we have a welfare state stem from a profound lack of education, even in our universities. Few economists are exposed to issues of the welfare state and while public economics used to be a core subject it is now marginalised. This has allowed the narrative around welfare to become about the ‘othering’ of ‘those’ people who are not like us.  

Nicolas Barr, a famous UK economist is an exception. In his textbook ‘Economics of the welfare state’ he argues that the purpose of the welfare state is not just poverty relief but also to enhance efficiency in the use of resources. Many of the needs for protection cannot be provided by private insurance markets. This fact lies at the heart of much of the welfare state: health, justice, education; loss of income: sickness unemployment, costs of children, accidents and old age.

Barr claims the insurance role of the welfare state is the most significant and least understood role. We actually can’t have a decent welfare state without it also being about the middle class.  

Nearly 30 years ago, NZ adopted a low tax, flattish tax structure and user pays for much social provision, with tightly targeted assistance for low income people. Sadly the strain of confining welfare to low income groups has proved both destructive and counterproductive. Ruth Richardson’s mantra that ‘welfare is only for the poor’ has been very, very dangerous, producing suffocating poverty traps for low income working families.  

Neither the Tax Working Group nor the Welfare Expert Advisory Group are resourced to grapple with the tax/welfare interface where abatements of social provision like Working for Families, the Accommodation Supplement and Best Start interact with high tax rates and student loan repayments.   

Perhaps we can learn from Australia after all. In spite of their much more progressive tax structure and low 10% GST with protections on basics, their redistribution policies (with one or two exceptions) are more inclusive and generous. They do not seem to have the sharp edge of NZ’s policies.  

For example, their tax credits for families go far further up the income scale than Working for Families and reduce more slowly—the loans repayments for students start at a much higher income and the rate of repayment is lower than here.  They seem to understand the importance of income support for children and I have never heard of anyone there saying that their family tax credits are ‘just a subsidy to employers’.

Nicholas Barr concludes we have more need of the welfare state in the 21st century not less. The 21st century is full of uncertainty that is uninsurable. Are we up to rethinking our deeply embedded conditioning? It is time to take a hard look at some of the assumptions of last century that have never been challenged.

We first need to work on the underlying philosophy and have a clear vision of the values we want to become embedded in the NZ psyche. We need to respect and understand the scale of the problem. Strategic framing, effective lobbying and activism must ensure this year of Welfare Expert Advisory Group review is not a rerun of 2010. I look forward to Jess Berentson-Shaw’s thoughts on narrative framing.   

CPAG’s focus is children, but we locate the concern for child poverty in the context of the overall welfare system, the tax system and labour market. That context must be sound for children to thrive. We will hear more about that context during today.

Finally, let us acknowledge that it has been a long harsh winter for far too many children. The Families Package was too slow coming, and for the 140,000+ children below the very lowest 40% poverty line it has been a drop in the bucket.  Without a longer-term goal of systemic reform, short term improvements can seem like tinkering and band aids.  Or even worse, they may create the illusion the problems are solved.