The Dim-Post

August 19, 2012

Hopefully final thoughts on the dole fiddler on the roof debacle

Filed under: Politics — danylmc @ 4:13 pm

This thing about the roof-painting sickness beneficiary in Shearer’s speech keeps rumbling on (I’m too lazy to link to the various posts), so just to make one final point.

In New Zealand there used to be a cross-party consensus around work and the welfare system. The government would intervene in the economy to ensure a very low level of unemployment, and provide a welfare system for people transitioning between jobs, or otherwise falling through the cracks. (And if people had mental health issues, like a severe problem with drugs and alcohol they were institutionalised).

That all changed in the 1980s. Mental health facilities were closed and the patients released into the community to live on benefits, and the state sector was scaled back to make it more efficient, which meant the government couldn’t absorb marginal workers during economic downturns. So they all go on welfare instead, and that creates all sorts of problems for Finance Ministers during recessions, when they’re suddenly forced to borrow money to pay for a welfare system with a terrible return on that investment at the same time their tax revenues have fallen.

Now, National plays the benefit-basher card roughly every 72 hours – but there is an intellectual argument behind the populist scape-goating: that paying people to go on welfare sends the wrong economic signals, and that it incentivises people (and then their children) not to work, thus the welfare state perpetuates itself, and we have to discourage this. I think you have to ignore a huge amount of modern history and empirical evidence to buy that, but it’s what some people believe and so they say it, and the public responds to it.

So if Labour wants to reconsider their attitude towards the issue of employment and the welfare system then that’s fine. But I don’t see any evidence of that in David Shearer’s speech the other week. All I see is a politician and his advisers looking at their market research and saying, ‘Hell, the Nats are absolutely killing us on welfare. Let’s say something to shut that down.’ But there’s nothing substantive behind it.

18 Comments »

  1. But there’s nothing substantive behind it.

    Agree with this especially. And the reaction to the reaction has been confused too …

    – “it was just a throwaway line, no biggie, mountains and molehills”

    – “but hey, let’s talk about welfare and the social contract – why won’t you let us talk about this?”

    – “but anyway, we have nothing else to say, let’s move on.”

    That’s been the Pagani/Salmond/Shearer response, thus far. If that’s a strategy, I don’t see it. It’s not “moving to the centre”, it’s just a leaderless muddle.

    Comment by sammy 2.0 — August 19, 2012 @ 4:24 pm

  2. One of the frustrating things is that the Labour leadership seems to be confused about what they want to be. On one hand, they want to appear to be alternatives to National (take any old issue that’s cropped up in the last 6 months and more often than not, you’ll see Shearer saying “Now see, Labour will not accept that sort of behaviour” or “this is what we’d be doing in the government’s position” etc.) and on the other hand, they’re also trying to lure that sweet, sweet centrist vote by appearing to be similar (case in point Dave Parker’s comments on mining or the recent fit of bennie-bashing from Shearer). They’re having an identity crisis and I’d wager that’s one of the key things that’s caused them to stall in the polls.

    Comment by Vagabundo — August 19, 2012 @ 4:38 pm

  3. In New Zealand there used to be a cross-party consensus around work and the welfare system.

    There used to be a cross-party consensus that homsexuality was criminal conduct.

    Mental health facilities were closed and the patients released into the community to live on benefits,

    I’m having a hard time seeing institutionalization of mental patients as either an ideal (for the patients) or cost-effective solution. And I’ve never heard of Alcoholics being institutionalized in a mental health facility before.

    So they all go on welfare instead, and that creates all sorts of problems for Finance Ministers during recessions, when they’re suddenly forced to borrow money to pay for a welfare system with a terrible return on that investment at the same time their tax revenues have fallen.

    If the state sector had a generous surplus of human resources that means that a) the money making portions aren’t returning as much money to the treasury as they could have and b) the non-money making portions are imposing an even greater burden on the taxpayer. I fail to see how given the assumption that everybody let go from the state sector at the time went onto welfare and stayed there (rather dubious) would leave the treasury in a worse off position.

    Moreover you are operating under a rather rosy assumption that it was the state sector that was providing generous employment at the time. The private sector was also rather bloated in human resources at the time (one sector: Meatworks) and Tariffs gave many people jobs at the expense of cursing the country with expensive clothing and craptacular cars.

    Comment by Peter Metcalfe — August 19, 2012 @ 5:44 pm

  4. @3: gave many people jobs at the expense of cursing the country with expensive clothing and craptacular cars.

    Gosh, jobs for New Zealanders, how absolutely awful. And you couldn’t buy the rubbish on weekends, either.

    Course there was a time, now hazy in my memory, when I think gummint didn’t actually consider that social spending required a ‘return on ..investment,’ Danyl.

    Comment by paritutu — August 19, 2012 @ 8:45 pm

  5. Now we import pre-used cars and consumer goods from Asia, use vehicles and appliances till they break, and export the crushed metal back to Asia alongside the agricultural products we haven’t added meaningful value to. No infrastructure exists to economically repair or develop the imported technologies. We often can’t even repair high technology items, with overseas support and module swapping the preferred mechanism. Second world heading towards third…

    Comment by Bruce Hamilton — August 19, 2012 @ 9:30 pm

  6. C’mon, be fair. Shearer has established that he disapproves of beneficiaries maintaining their dwellings.

    This is an interesting clue to where Labour is heading towards.

    Imagine a future with no beneficiaries, because there are no benefits. Problem solved (and Paula Bennet neutralised).

    This Labour Party is sure well voting for.

    Comment by peterlepaysan — August 19, 2012 @ 9:40 pm

  7. Shearer can turn this around in seconds. Clark / Cullen introduced 39% tax on rich pricks earning $60Kplus and the base crapped themselves in excitement.

    Slap down a capital gains tax as a core election issue and the base will literally drag those who didnt vote last time to the polls. The base wont notice a few benes thrown under the bus for the middle.

    Comment by Simon — August 20, 2012 @ 6:52 am

  8. Someone left italics open.

    Comment by Chris Bull — August 20, 2012 @ 10:07 am

  9. “Slap down a capital gains tax as a core election issue”

    Didn’t they do that last election?

    Comment by Daedalus — August 20, 2012 @ 11:58 am

  10. Your just pissed because Labour had the temerity to agree with National on something.

    Comment by Ross — August 21, 2012 @ 2:08 pm

  11. Danyl, you are quite wrong that this should be the final thought on this matter. Far more analysis and discussion of the roof-painting benny is needed. What we have seen in the last week should be just the start. Let a hundred flowers bloom and a hundred schools of thought within the Labour Party contend.

    Comment by Matthew Hooton — August 21, 2012 @ 3:53 pm

  12. Yes. If the DimPost is microcosm reflective of the Labour Party it could be a fun lead-up to the next GE. Popcorn and Beer please.

    Comment by merv — August 21, 2012 @ 3:57 pm

  13. Sell the old buildings to developers from foreign countries and bring in low company taxation (25% at its highest) for five years for these foreign developers in which to develop and then on-sell these old buildings. That will make the Government over a billion dollars and would be particularly effective if we relaxed our immigration policy during that time. Get more people living here and working here and buying homes here (old mental institutions converted into apartments), so that we can continue to fund superannuation for those coming up to retirement.

    Comment by Dan — August 21, 2012 @ 4:21 pm

  14. …schools of thought within the Labour party contend.

    That’s a pretty bold presumption that thought exists.

    Comment by Gregor W — August 21, 2012 @ 4:22 pm

  15. When he says schools he means special needs.

    Comment by merv — August 21, 2012 @ 4:43 pm

  16. @ Dan – “…bring in low company taxation (25% at its highest)”, huh? You mean a whole 3% lower than our current 28% company tax rate?

    And which old buildings were you planning on selling? The ones you don’t own? All the old mental institutions were either sold off or returned to the Maori owners of the land they were on as part-compensation for the use of their land for decades.

    But no worries, you’re going to “relax our immigration policy” eh? You are aware our immigration is so lax the UN define it as diarrhoea, right? NZ has grown our population by about 1 million people in the last 20 years, mostly through immigration. We peaked at roughly 50,000 net extra people in one year, before the bubble burst.

    Glad to have your intellectual contribution, Dan.

    Comment by bob — August 22, 2012 @ 4:58 am

  17. “old mental institutions converted into apartments”
    I didn’t watch that last night, but I have series linked it.

    Comment by Clunking Fist — August 22, 2012 @ 1:31 pm

  18. Welcome there, Bob. No problem.

    Comment by Dan — August 22, 2012 @ 4:16 pm


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