Welfare: Reform or Transformation?

The Labour government has promised to deliver transformational change with a positive impact on the lives of New Zealanders. Shortly after being elected three years ago, the Prime Minister named herself as “Minister for Child Poverty Reduction” and convened the Welfare Expert Advisory Group (WEAG) to examine our welfare system and propose reforms.

The government has made some positive changes – lifting some of the sanctions against beneficiaries, including those on women who don’t name the father of their children, and increasing the “abatement threshold” in line with increases to the minimum wage. But these changes fall well short of transformation. Key National-era sanctions remain in place, such as those against beneficiaries who fail or refuse to take drug tests, and benefit levels remain well beneath what is required to live a dignified life.

The Welfare Expert Advisory Group released their report in February, and recommended key changes to the welfare system including an immediate rise in the main benefits of between 12 and 47%; rethinking the obligations and sanctions placed on welfare recipients; allowing single parents to care for children for longer before seeking work; changing the definition of a relationship to enable higher benefit payments; and increasing benefits in line with average wages, the cost of living and accommodation costs.

If the government is genuinely committed to transforming the welfare system and the lives of working people, it would immediately implement all the recommendations of the WEAG report. The Expert Advisory Group estimated that fully implementing its recommendations would cost approximately $5.2 billion a year. This is an increase of approximately 20% on current welfare spending, and could be partially offset by reallocating some of the $4.2 billion budgeted for military spending and implementing a capital gains tax.

But beyond even these recommendations, further change is needed to achieve a real transformation.

The WEAG describe in their report the notion of a “social contract” as a system of “mutual expectations and responsibilities governing interactions between the state and welfare recipients.”

Certainly a rebalancing of the relationship between welfare recipients and the state would represent progress on the current situation, which is characterized by “conditionality and sanctions.” But what any “social contract” cannot overcome is the fundamental tension in society between the owners of wealth (the capitalist class) and working people (including beneficiaries).

A one-sided class war, waged for the past 30 years is precisely what has led to the current situation. Benefits provide a floor beneath which wages cannot ordinarily sink. Since the 1980s and 90s, welfare policy has been a weapon of the capitalist class – by slashing benefits and welfare provision they have not only been able to limit a major portion of state expenditure (and thus lower corporate taxes), but also recover profits lost in economic crises by making workers work harder and longer for less. Similarly, the recent National government introduced the current regime of sanctions against beneficiaries as the economy recovered from the 2008 financial crisis.

A social contract – some kind of agreement between the rich and powerful (represented by the government) and the working class can only ever be a defensive backstop in this ongoing war. If “capitalism has failed New Zealanders” (as both the Prime Minister and Deputy Prime Minister have suggested), then it will be necessary to junk the ideology of the “social contract” that underlies both the approach of both the current government and the Welfare Expert Advisory Group.

What is needed is a more aggressive, interventionist approach. Beneficiaries are members of the working class every bit as much as employed workers and most, if not all workers come into contact with the welfare system at some point in their lives. Unemployment support should therefore be representative of the wages that they would ordinarily receive, and other benefits should be reflective of this also.

New Zealand’s workers have taken the election of the Labour government as an indication that change is possible and are challenging the existing system by striking in numbers unheard of in recent times. Benefits should be opened up to workers on strike, as a way of affirming the worth of struggling workers and giving even more the confidence to fight for real change.

It’s in this struggle that socialists believe the foundation for real, societal transformation is created. In challenging the wealth and property of the capitalists, workers not only win a greater share for the oppressed and exploited, they also lay the foundations for a more generous, co-operative society.

Whilst no reform can by itself achieve this, it can open up new horizons and possibilities for struggle. The Labour government and expert groups convened in every area acknowledge the need for change but are far too timid. To achieve real transformation, a bolder approach is needed.