Babies and benefits - no good news

 Ten years ago, I wrote the following in a Listener column:

Every year around one in five new-born babies will be reliant on their caregivers benefit by Christmas. This pattern has persisted from at least 1993. For Maori the number jumps to over one in three.   Add to this Treasury's advice to the Ministerial Committee on Child Poverty,

"...around 1 in 5 children will spend more than half of their first 14 years in household supported by main benefit. This group is at the highest risk of material hardship and poor outcomes across a range of dimensions”.

I am reflecting on this as I receive the latest update in an OIA response from MSD.

Of all the babies born in 2023, 20.2 percent were on a benefit by the end of December. For Maori babies the percentage rises to 34.3%.

My news is not really news. It is confirmation of the ‘same-old, same-old.’ Progress had been made when, by 2017, the portion had fallen to 17.1 percent of all children, but we all know what happened next. The Minister for Child Poverty Reduction – Jacinda Ardern – made it her task to lift welfare incomes for beneficiaries with children.

She said in her 2008 maiden speech:

The majority of children living in poverty now are dependants in families where the main means of support is a Government benefit. But if we believe that our welfare State is a necessary safety net and a support for those unable to support themselves—as I do—then the children living in these circumstances should not be living in poverty. These children are not part of an underclass, as I have heard them called; they are part of our community, and we have a responsibility to continue the momentum of the previous Labour Government and to finally rid ourselves of poverty in Aotearoa New Zealand. This is our collective challenge.

She would have responded to Treasury’s evidence (that these children face material hardship and poor outcomes) by arguing, ‘Of course, that’s because they don’t have enough money.’

She had no sympathy for the counter arguments that growing up fatherless (72% of last year’s welfare babies had caregivers on the Sole Parent Support benefit) and in jobless households, is also harmful for children. Ardern was happy to risk more of both in order to claim a poverty reduction.

In 2016 when I wrote a paper demonstrating the strong link between failing family structure and growing child poverty, Ardern responded flippantly in a Sunday Star Times column:

This week I opened the paper to find some astonishing "news" - a lack of marriage is to blame for child poverty.

I've spent the better part of six years reading and researching the issue of child poverty, and what we need to do to resolve this complex problem in New Zealand

And yet here it was, the silver bullet we have all been looking for. Marriage. Getting hitched. Tying the knot. It turns out that we didn't need an Expert Advisory Group on child poverty, or any OECD analysis for that matter - apparently all we really need is a pastor and a party.

No matter that the strongest correlate for child poverty is the sole parent rate. The collapse of the stable two-parent family – particularly for Maori whereby last year 82.5 percent of babies were born to unmarried parents – has had a dramatic effect here and around the western world. Yes, many more parents live together without “tying the knot” but the stability of de facto relationships does not match the stability of marriages, especially with the advent of children. Ardern herself must have eventually felt some regard for the institution or wouldn’t have entered into herself.

But the genie that is unpartnered parenting is not going back in the bottle. The too-frequent accompanying feature - being born and raised on welfare - is now firmly part of the NZ social landscape.

Are there any glimmers of hope for future change?

I had anticipated that the significant reduction in teenage births post 2008 would put a clamp on one of the main feeder mechanisms to long-term dependency. Initially, Sole Parent Support recipients aged 18-24 reduced but for the last six years, the numbers have stuck despite further drops in the relevant birth rates.

National has not included sole parent benefits in its two welfare reform targets. New MSD Minister Louise Upston has been a single mother and called it “the hardest time of my life.” Her approach seems to be a softly, softly plan to help single parents into work. She does not have the bit between her teeth in quite the same way her predecessor Paula Bennett did.

On a brighter note, NZ’s culture may yet be positively influenced by our fastest growing minority – Asians. This group is by and large family-oriented, self-reliant and takes care of its young as evident below:

(Note: When their youngest child turns 14 the parent/caregiver moves onto Jobseeker benefit. They remain on Sole Parent Support if younger children are under 14.)

What these immigrants (and subsequent generations) think about NZ’s lackadaisical benefit system can only be guessed at. But their attitudes will find political expression in the coming years.

NZ may not be willing or able to continue fully subsidising the cost of raising children long-term at the rate of one in every five. While Jacinda Ardern might consider it our “collective challenge” to do so, I prefer the restoration of committed stable partnerships between parents as a far more worthy goal. But to achieve that, damaging incentives have to go.

The case for cultural connectedness

A recent report generated from a Growing Up in New Zealand (GUiNZ) survey of 1,224 rangatahi Māori aged 11-12 found:

Cultural connectedness was associated with fewer depression symptoms, anxiety symptoms and better quality of life. 

That sounds cut and dry. But further into the report the following appears:

Cultural connectedness is important for mental wellbeing, however it may not support depression and anxiety symptoms and quality of life in exactly the same way.

Meaning?

The group of children was divided into three sub-groups determined by their degree of ‘structural disadvantage’ (material hardship, severe housing deprivation/homelessness, and food insecurity): persistently low, intermittently high and persistently high.

The following chart shows the greater the cultural connectedness is (horizontal axis) the higher the anxiety symptoms are (vertical axis) for the persistently low (yellow) and persistently high (blue) disadvantaged groups.

(Left click on image to enlarge.)

There is no attempt by the authors of the paper to explain why this may be the case. What they do say is, “…the paper makes an important contribution by exploring whether cultural connectedness buffers the harms caused by structural disadvantage on rangatahi mental wellbeing.”

Based on the above finding cultural connectedness exacerbates the harm, at least in respect of anxiety symptoms.  

The relationships between disadvantage and a/depression and b/ quality of life are also explored showing positive correlations BUT:

… none of these relationships were significant, indicating that cultural connectedness did not have a buffering effect on depression symptoms. There was also no significant buffering effect of cultural connectedness on quality of life scores for rangatahi Māori.

Obviously disappointed in what they describe as “mixed evidence” the authors suggest, “this finding is not surprising as it would be unreasonable to expect that having a strong sense of identity and feelings of belonging in early adolescence might undo generations of harm caused by colonialism and racism and the multiple and interacting structural disadvantages that play out in the lives of rangatahi Māori.”

Having established cultural connectedness has no demonstrable usefulness as a buffer against adolescent depression or anxiety the authors then change tack and argue another reason for its importance:

Achieving the government’s vision … requires actions that will enable rangatahi Māori to develop a strong cultural connectedness not as a resilience or coping strategy but rather as part of a broader Treaty-compliant, pro-equity, anti-racist and human rights-based approach. Anti-racism action will require a commitment to invest in strategies that will systematically dismantle the structures that contribute to inequities in rangatahi Māori mental wellbeing (1,21). This paper provides new insights into the powerful potential of policies that address structural disadvantage and enable rangatahi Māori to flourish in their identity as Māori.

The paper provides nothing of the sort.

What it does provide is evidence that the GUiNZ study has been captured by politicised academics pushing their own racist agenda.

The future funding for GUiNZ is currently under a question mark. According to RNZ, “The current uncertainty over funding for the study comes amid wider fears about science funding.”

Science? You be the judge.

Welfare: Just two timid targets from the National government

The National Government has announced just two targets for the Ministry of Social Development. They are:

- to reduce the number of people receiving Jobseeker Support by 50,000 to 140,000 by June 2029, and

- (alongside HUD) to reduce the number of households in emergency housing by 75 percent, by June 2029 – this is fewer than 800 households in emergency housing.

The first of these targets is incredibly timid and disappointing.

A reduction of Jobseekers down to 140,000 by June 2029 is still more than there were in June 2019 (136,233). 

To put the target in context, in the year to January 2024, NZ added 133,800 net migrants. If just a third of these found work (assuming the balance are students or dependents of the primary migrant) that represents 44,600 extra jobs. In one year. How hard can it be to find a job if you really want and need one?

Interviewed by Mike Hosking earlier this week, former WINZ boss Christine Rankin said that the target reduction "can be done in way under the time frame they've put on it". She should know.

To achieve the target the government says there will be, "a stronger focus on helping 18–24-year-olds on Jobseeker Support into jobs." Announcing where a stronger focus will be risks the pressure going off other beneficiaries in the minds of both case managers and clients. Numbers on the Sole Parent Support (ex DPB) have been increasing steadily. Given sole parent households contribute  substantially to inter-generational dependency, they merit no less focus than Jobseekers.

Reaching the reduced goal will happen by, "making it easier for people with work obligations to understand and meet expectations."  How hard can it be to understand an obligation to find work? Isn't this simply an acknowledgement that over the past six years, obligations became fuzzy and weak? So why is a reversal of Labour's soft approach couched in such ... soft language?

And what about those who don't have work obligations?

In 2012, during Paula Bennett's time as minister, obligations were placed on single parents to return to work earlier if they had an additional child while receiving a benefit. Carmel Sepuloni removed that requirement effectively allowing the birth of more babies to be used to avoid working. 

As it is sole parents have no work obligations until their youngest turns three (and then it is only to seek part-time work.) Three years is inconsistent with the time most working mothers take out of the workforce.

The government's second target appears no less lacking in ambition.  Emergency housing numbers have already been tracking down. Depicting them next to the 2029 target looks like this:

A continuation of whatever policy operated between 2022 and 2024, which saw a 39 percent reduction in emergency housing, would see the target of 750 met much sooner than 2029.

Come on National.

You were elected to be bold. Kids in emergency housing don't have the luxury of time. 

Neither does the rest of country. Our deep-seated, long-standing dependency problem, which is an economic handbrake and social disaster, needs urgent reform - not timid targets.

 

Cuts will only scratch the surface

While this morning’s news heralded 134 job losses at the Ministry of Health, the Ministry of Social Development has just announced their own plan to achieve the 6.5% savings requested by the new government:

We will begin by offering people in some parts of our organisation the choice of voluntary redundancy. People will be able to apply until April 15. At this stage we don’t have a specific target of how many voluntary redundancies we are seeking. Those in frontline roles will not be able to apply for voluntary redundancy.

After this voluntary redundancy process, it is likely there will be a further process targeting role reductions in some areas, mainly within our National Office in Wellington. 

Of course, opposition parties, left-wing media and unions are describing these cuts as cruel and disgraceful.

But has anyone looked at the growth that has preceded these cuts?

In 2018, according to their annual report, MSD had “6,725 full-time-equivalent staff positions”.

By 2023 that had grown to “9,329 full-time-equivalent (FTE) staff positions”. 

That’s a 39 percent growth in full-time staff.

RNZ is reporting that MSD is “calling for mass voluntary redundancies.”  The word “mass” does not appear anywhere in the MSD release. That’s RNZ’s own invention. If it was possible to achieve “mass” redundancies in affected areas, apparently “human resources, policy, strategy and communications” that indicates those departments are well and truly over-staffed anyway.

Looking at MSD’s core responsibilities it is fair to say the extra 39% staff added in the last 5 years has achieved no improvement.

Their key message is, “We help New Zealanders to be safe, strong and independent.”

Yet there are many more people on benefits (including more children in benefit-dependent households) and people are staying dependent longer. And it would be a stretch too far to claim that people are feeling safer.

What is disappointing is that the staff cuts (like those across the whole public service) will not take levels back to where they were in 2017/18 (with possible allowance for population growth). They will merely continue the growth of government in the entrenched 3 steps forward – 1 step back pattern that has become all too familiar over many decades.

  

  

 

  

What media bias looks like

When news media took a pummeling last week at both TVNZ and TV3, a number of critics said part of the reason ratings are poor is the public don't trust them. The public believe that the media is biased.

The print media is similarly suspect. An article in Stuff today (which may feature in the Sunday Star Times) provides a great example of indiscriminate reporting. The headline reads:

Mum: Ex ‘hiding income to avoid child support’

It features a single mother of three complaining about her self-employed ex hiding his income to avoid child support.

    'Full-time single mum-of-three Janet says she is left struggling to get by because one of her children’s fathers is able to conceal how much he is earning ... "I am unable to work as I also have a disability my legs are swollen and I’m still recovering from recent hernia surgery." '

As an unemployed single mum she must be receiving a benefit but nowhere in the article is this spelt out. Her desire for income privacy does not extend to her ex's.

    'She said he was meant to pay just over $1100 a month between January and April but had only paid $473 in February. From May his support will drop to $623 a month.'

This is where it gets interesting. It was only August last year that the new child support pass-on rules kicked in. Prior to that IRD kept child support payments to offset the benefit cost.

It seems the mother has now become concerned about how much the father is earning as she stands to pocket more of it.

If the liable father is artificially reducing his declared income, perhaps this development is a factor? The business editor omits mention of this possibility. 

The mother has a younger son to a subsequent partner who she is not complaining about because he doesn't earn an income. He is on a benefit (which he may be staying on to avoid paying more than the minimum child support ... another unexplored angle.) 

She says the first father hasn't given his sons birthday or Xmas presents for 14 years. So she has raised them alone for some years. Only now, when she stands to receive the child support directly, has life turned into a terrible "struggle" with her children needing support from charity - this despite a benefit-dependent single mother with two or more children receiving on average of around a $1,000 weekly net.

Without proof, the report creates an impression that self-employed fathers are hiding income to avoid paying child support. This  despite the income difference between self-employed fathers with liabilities versus all taxpayers being just two percent.

The only sensible comment in the entire piece is from a tax partner at Deloittes who points out that self-employed fathers with child support liabilities may have lower incomes because they often share care of their children and work fewer hours.

This is a biased piece of journalism. It's uncritically sympathetic to the mother and accusatory of the father. Note the reporter does not say he was approached for comment.

Ultimately the piece raises far more questions than it answers. An attempt to answer the questions might have provided some balance.

Is real change on the cards?

Sometimes the gems are buried. My ears pricked up when the following statement was reported on a news programme playing in the background:

"MSD staff assessing anyone applying for emergency housing will increase their scrutiny of whether they have unreasonably contributed to their immediate emergency housing need ..."

I googled Minister for Social Development Louise Upston's press releases to confirm that's what she actually said. Indeed she had.

If the government means it, this is hugely significant.

It has been clear for decades that NZ's approach to welfare has gone awry. The late Roger Kerr, of the NZ Business Roundtable, once said to me, "The only way forward is to go back to the concept of 'deserving' and 'undeserving'."

To be honest, at the time I thought this was slightly draconian. But the passage of the years has only brought me further around to his view. By protecting people from the consequences of their own foolish actions NZ has only created more 'need'. In other words, the 'undeserving' have been rewarded.

This is a direct offshoot from the philosophy of 'non-judgementalism' which is absolutely rife through the social services and charity sectors, and even health and education. It is formally taught. Every needy individual is a 'victim' of circumstances, never their own poor decision-making.

I am personally a great believer in second chances and the right to redeem oneself, and have certainly had occasion to avail myself of these principles (or lived with the consequences of not being forgiven or excused.) But like many pendulums, the one called 'tolerance' has swung too far.

The welfare system is now the lifeblood of criminals. People who trash other people's property, who threaten and abuse neighbours, who keep aggressive dogs as status symbols, who have not a skerrick of regard for others, turn up at WINZ demanding to be placed in emergency housing. And they are.

(Not to mention the tens of thousands of other people who took no responsibility for their own education, go on to produce children recklessly and, in turn, take no responsibility for theirs.)

Between the passage of the Social Security Act in 1938 and the early 1970s the percentage of working-age people on a benefit never exceeded two. Today it stands at almost twelve, with the time people stay dependent growing every year.

As a society we have created this level of reliance by believing and acting on a bad idea. That we must not judge others. We must not mention their faults and shortcomings. We must bend over backwards to not blame the person responsible for their own troubles. That's the kindness and compassion we are taught to aspire to.

Until Louise Upston said something quite contrary but actually terribly sensible.

In assessing applicants for emergency housing case managers must take into account whether they have "unreasonably contributed" to their need.

One assumes that if the answer is positive, there will be no emergency housing offered.

Quite right too.

My theory is that the emergency housing crisis - putting people into motels, lodges and motor camps - came about because the Labour government created an expectation that anyone who showed up at the newly-generous WINZ department asking for a house would get one (or something akin). If people had been turned away they would have found their own solutions. Living with friends or family usually. If friends and family wouldn't have them - presumably because they were undeserving - why should the taxpayer fork out to put them into place where they can wreak anti-social havoc on nearby neighbours?

It's the individual who should experience the consequences of their own unwise actions - not everybody else.

So let's support Upston and encourage her to take this new approach further. I would vouch that the majority of New Zealanders want to help people who, through no fault of their own, need a benefit and public housing. But that willingness does not extend to people who chronically cause their own misfortune.

Child poverty - complex or simple?

Question: Do you understand how the child poverty statistics are derived?

Clearly some people do not.

Last week the latest child poverty statistics were all over the media. But there are a number of misunderstandings that need addressing. Like this one from NewstalkZB’s John MacDonald who wrote:

"Living in households that get-by on less than half the median income, before basic living costs are taken into account. 

Now I’ve looked-up online to find out what the median income is in New Zealand and there seems to be all sorts of numbers available, but one figure I’ve seen is $91,400. So, let’s go with that one, for the purposes of today’s discussion. 

Half of that is $45,700. So, it’s kids living in households where less than $45k is coming in the door annually.  

With tax, that takes it down to about $38,000. Or about $730-a-week to live off."

But the median income Stats NZ produces isn’t actual – it’s equivalised. In the past I have attempted to explain how this process works, probably unsuccessfully. But now Stats NZ has helpfully produced a pictorial explaining the process:

 (Left click on image to enlarge.)

The first household becomes relatively rich compared to the third household. But in reality, their household incomes are identical.

Similarly RNZ demonstrated their misunderstanding reporting:

"One in six children (or 17.5 percent) lived in households with less than half of the median household disposable income after household costs - that was up 3 percentage points on last year."

In this case the median household income has been described as “disposable”. That’s wrong too.

The disposable income of a household is all income ‘earned’ by members aged 15 or older after taxes and transfers. Disposable income then undergoes equivalisation for the purposes of creating official child poverty statistics.

Teresa Tepenia-Ashton of Unicef said:

“It’s unacceptable for a single child to be in poverty in this country. With 1 in 8 children experiencing material hardship, we need Government to prioritise the interests of children in any decisions relating to welfare changes, so we can bring this number down to zero.”

A target of zero children in poverty is an impossibility because of the way poverty is measured. It is relative.  Zero poverty could only occur if every single household in NZ had the same equivalised income. It’s pure nonsense (similar to other ludicrous loony-tune ideas like Road to Zero 2030, Predator Free 2050 and Smoke Free Aotearoa 2025.)

There’s also been a great deal of handwringing over the higher poverty rates for Māori and Pasifika children.  But that is at least partly a facet of the equivalisation process. Pacific households in particular tend to be large, include children and are often inter-generational. It follows that their equivalised incomes will therefore be lower than households with fewer members.

The complexity inherent in the multiple measures of child poverty does nothing to instil confidence in their veracity. What the complexity does do is create a bias towards overstating poverty – a useful tool for proponents of greater wealth redistribution.

I tend towards a simple view. One which rarely rates a mention. The strongest correlate for child poverty is the rate of single parenthood. In New Zealand it is high. Among Māori it is very high.

Fixing that – an outcome largely in the hands of individuals – will go a long way towards reducing childhood hardship and deprivation.

 

 

 

 

 

National needs to go further

In today's State of the Nation speech Christopher Luxon talked repeatedly about getting young people off welfare. It seems that National has devised a traffic light system which will use increasing levels of sanctions - welfare deductions - when beneficiaries fail to meet their obligations. He uses the word 'tough' a lot.

In his speech he made the following observation:

"Kids born this year will be turning 16 in 2040."

Well, because I can tell you something about them,  let's look at the children born in 2022 who will be turning 18 in 2040.

By the end of their birth year 12,639 of them were dependent on a benefit provided to their parent or parents. That's 21.5% of all babies born that year. Over one in five.

Then consider that the link between a child's early entry into the benefit system and later benefit dependence in their own right, is strong.

MSD's own commissioned research showed:

 - Nearly three quarters (74%) of all beneficiaries up to age 25 had a parent on benefit while they were a child, and just over a third (35%) had a parent on benefit throughout their teenage years.

 - The greater the family benefit history the longer the client tended to stay on a benefit, particularly for the Jobseeker benefit.1

It's laudable to talk about getting 18 year-olds off welfare. Better still though to discourage their entry into the welfare system in the first place.

The focus of reforms must be two-fold. Dealing with 40,000 young people on Jobseeker right now is critical. But so is looking to the future and turning off the tap that feeds inter-generational dependence.

Labour's soft-on-sole-parents approach has to go. That means ending the nonsense of not naming fathers and reintroducing work obligations for parents who add children to an existing benefit.

But more broadly, the cash-for-kids scheme has to stop. The assistance provided to unemployed parents who refuse jobs  should be through 'money management' - a system used for youth beneficiaries. The rules are:

    -your rent or board and things like your power bill and any debts will be paid straight from your payment. You won't get this money yourself.

    -you will get paid a weekly allowance of up to $50 into your personal bank account.

    -any money left over will be put onto your personal payment card. This is like a debit card that you can use to buy your food and groceries at approved stores.2

Until cash incentives that equal incomes from work are removed, the inter-generational problem will continue to plague New Zealand. Yes, there will be downsides to money management. But will they be any worse than the devastating social outcomes that come from unconditional welfare?

1/ https://www.msd.govt.nz/documents/about-msd-and-our-work/newsroom/media-releases/2015/taylor-fry-key-findings.pdf

2/ https://www.workandincome.govt.nz/on-a-benefit/payments/money-management-youth.html