We need a step change to transform the welfare state
Our most vulnerable citizens deserve better, writes Professor Jonathan Boston.
The recently published Child Poverty Monitor, prepared by Otago University's Child and Youth Epidemiology Service for the Children's Commissioner, highlights that all is not well with New Zealand's welfare state.
Eighty years ago, our social policies were the envy of reformers globally. Today, however, there is much to lament – and much that needs repair.
Admittedly, the Labour-led government, formed two years ago, has embarked upon some important social reforms. It has embraced a "wellbeing" approach for determining Budget priorities, increased family tax-credits and housing subsidies, set ambitious targets to reduce child poverty, boosted investment in social housing, and indexed the main welfare benefits to average wages. The last of these changes, if durable, will substantially reduce the extent to which the incomes of welfare beneficiaries fall behind those in employment.
But the policy challenges facing the Government are formidable. Modest adjustments to current policy settings, however welcome, will be insufficient. Transformative change is needed. In effect, a new social contract must be forged.
The problems afflicting our welfare state are manifold. There are significant rates of material hardship and financial stress. Many children go to school hungry. There is an acute housing crisis, especially in Auckland, with unprecedented levels of homelessness. Begging has become commonplace.
Home ownership has fallen to its lowest rate in almost three generations. Ethnic disparities and gender inequalities continue to run deep. Rates of mental ill-health and substance abuse have escalated. And both income and wealth inequality, much exacerbated by the neo-liberal revolution of the late 1980s and early 1990s, remain pronounced.
For the most vulnerable people, the welfare state is not delivering an adequate income, accessible public services or even a safe place to sleep. To quote the report of the Welfare Expert Advisory Group published earlier this year, "many New Zealanders are living in desperate situations" with existing income support arrangements failing "to cover even basic costs for many people".
Compounding matters, many Millennials face a more indebted and less secure future than their Baby Boomer parents. Climate change and ecological degradation will further exacerbate these intergenerational conundrums.
Reforming the welfare state, and in particular achieving significant and sustained reductions in poverty, is complicated by at least three factors.
First, most of the required policy responses are fiscally expensive. Yet raising taxes is rarely popular.
Second, tackling the chronic shortage of good quality housing will take a generation.
Third, and perhaps more fundamental politically, survey evidence since the 1980s shows steep falls in support for egalitarian and communitarian values, and the related solidaristic policies, such as progressive income taxes and transfer payments, that underpin a modern welfare state.
For instance, in 2009 barely 40 per cent of voters favoured measures to reduce income differences between the rich and poor, and only half supported progressive income taxes. Similarly, only 45 per cent strongly agreed or agreed that the government should provide a decent standard of living for the unemployed. Among advanced democracies, only the citizens of Flanders, Belgium, recorded a lower percentage.
There are doubtless many reasons for such results. But part of the explanation almost certainly lies in the highly targeted nature of social assistance in New Zealand and the limited reliance on social insurance.
In effect, many middle-class citizens are rendered ineligible for public support in their times of need, whether in the form of housing assistance, child assistance, unemployment benefits or sickness benefits. For instance, because of tight means-testing, most of those with partners in employment are unable to access state assistance if they lose their job or cannot work because of a debilitating illness.
Unsurprisingly, taxpayers value reciprocity and mutuality. Exclusion invariably breeds discontent and overrides compassion.
Accordingly, if public support for the welfare state is to be rekindled, two critical policy changes appear necessary. First, the extent to which social provision is means-tested must be eased, with a greater reliance on universally funded programmes (eg, in areas such as primary healthcare, childcare, and family assistance).
Second, the contributory principle, which currently applies only to accident compensation, may need extending to several other forms of assistance. The funding of sickness and unemployment are the most obvious candidates.
Such changes imply a fundamental rethink of current welfare institutions and funding arrangements. Realistically, they require a new political settlement based not only on solidarity but also greater reciprocity.
In other words, to protect the poor, greater buy-in from the non-poor is essential. This, in turn, requires a refreshed vision of the welfare state, decisive political leadership, rigorous analysis, and powerful advocacy.
Without a renewed social contract and changed public attitudes, some of the current reforms to the welfare state are unlikely to endure and the quest for a fairer society seems bound to falter. Our most vulnerable citizens deserve better.
Read the original article on Stuff.