When a journal as influential as “The Listener” flags the great divide between the “haves” and the “have nots” as the legacy of the Covid pandemic, it’s an issue which should be consuming the attention of every politician — especially the politicians in a government with ministers who see themselves wearing the mantle of Michael Joseph Savage.
The Ardern government has not hesitated to throw money at the problem, as other governments have done, and massive stimulus from the Reserve Bank has helped get the economy back on track.
But, as economist Cameron Bagrie points out in “The Listener’s” study, not everyone has been a winner. He says the K-shaped recovery has exposed pre-existing tension points such as race and gender and who bears the brunt of a lift in unemployment.
“There’s the perceived gap between the haves and the have-nots, with soaring house prices at the epicentre. And at the very time we are dealing with that, the financial cost of our ageing population is rising rapidly. By 2035, a massive two-thirds of welfare benefit spending is projected to be spent on NZ Superannuation—and that’s not counting the growing health costs”, says Bagrie.
Covid has exacerbated inequality and driven holes in the social welfare safety net.
The government has tried to plug one of the holes by spending $80m on finding beds for the homeless in motels. Yet the queues at the foodbanks of city missions and other welfare groups have lengthened.
The government has lifted the minimum wage—but that is not of much help to casual workers who may have only 20 hours of work a week.
NZ doesn’t have these problems on its own. The pandemic has seen the old rules on social spending ripped up. Governments have re-written the texts on applying stimulus to keep their economies from becoming sclerotic.
Clearly the social safety net in many countries was frail before Covid-19 struck. Now the problem is how to make a social safety net for the post-Covid world.
Britain’s prestigious “The Economist” recently explored this issue: it noted that for years social spending has favoured the elderly and the beneficiaries of an outdated safety net.
It should be rebuilt, says “The Economist”, around active labour-market policies that use technology to help everyone from shop workers who are victims of disruption to mothers whose skills are atrophied and those whose jobs are replaced by machines.
“Governments cannot eliminate risk, but they can help ensure that if calamity strikes, people bounce back”.
So is this the moment when the Ardern government should be creating new social-welfare policies that are affordable and which help workers thrive in an economy facing technological disruption? There is plenty of evidence that programmes like the accommodation supplement and Working for Families need an overhaul.
Or has the time come to think of a totally new approach, given the evidence that under the current regime inequalities in society are cementing themselves in?
Is this the moment the Labour government should introduce a universal basic income, an unconditional recurring payment to all adults?
At first sight the idea of universality appears unreal. Why make the payment available to a millionaire as well as to those who need it?
Again, turning to “The Economist”, it reports that where a UBI has been tried, well-being was substantially higher, recipients registered less depression and stress, a higher degree of confidence in their abilities and more social trust.
Perhaps a UBI is too bold and far-reaching an idea for the Ardern government which seems preoccupied with keeping all the one-time National votes it won in the recent election onside.
But the budget this year will have to produce at least a refreshed social welfare programme if the Ardern government is to fulfill its well-being promises.