Greens see red despite benefit increases – but Michael Cullen could tell them (and the Ardern government) what safety nets are all about

The Ardern  government has  made  “well-being”  such  a  focus  of  its  policies  that many  New  Zealanders  think  it  is   now  the  way  forward.

Labour’s ally, the  Green Party, is so enamoured  with  the  “well- being”  philosophy  it  sharply criticised   the  government for raising the  level of  main  benefits  “by less than $8 a week” from April 1.

“We have a poverty crisis in NZ, and we must go further and faster to deliver income support that enables everyone to live with dignity,” says Green Party spokesperson for Social Development & Employment Ricardo Menéndez March.

“The government currently expects a single person over 25 years old to be able to get by on just $250.74 a week, and they’re supposed to celebrate that rising to $258.51. That extra eight dollars isn’t even enough to buy a block of cheese.”

Menendez  March  says it is  “disingenuous”  of  the  government to continue to say indexing benefits to wages is the best thing they could have done, and 

” … even the Children’s Commissioner said they need to be bold and courageous, and actually lift benefits.

“Indexation of benefits to wages means little without a substantive lift in core benefits to close the gap which has continued for decades.”

The Green  Party’s  expert  on  poverty rubs it  in  still  harder  by  arguing on behalf of the one-third of New Zealanders who rent their dwellings and spend, on average, more of their income on housing costs than those who own a home.  Tinkering around the edges (he says) is not enough to help families who were already struggling to get by, especially in the last 12 months since COVID-19 hit.

“And when we have Auckland median house prices rising by $100,000 in February alone, we need to do more.”

He  points  out the Welfare Expert Advisory Group said the current welfare system is “no longer fit for purpose and needs fundamental change”.

So  what’s  the answer  for those  suffering  grinding poverty in these modern-day  circumstances?

Adopt  the  Green  Party  plan  to institute  a Guaranteed Minimum Income of at least $325 per week?

“If there is anything we have learned from COVID-19, is that bold, urgent action to change the system for our collective wellbeing is possible”, says the Green Party.

However  much  the  Greens may expect  the  Finance  Minister  to   jump  to  attention  and rewrite   the budget to incorporate these ideas, Point  of  Order suspects   beneficiaries  may have to wait  a   bit  longer  to  pull out benefits of the magnitude that would satisfy them.  

To  our  knowledge, Robertson  has  not yet  been subsumed   by    the  well-being   theorists  to the  extent that  he  can  ignore this  hard   economic  truth:   keeping  the Reserve Bank’s printing  machine running non-stop  rapidly undermines  the  value of the  dollar.

As NZ  has  learned  the  hard  way   during  the  Covid-19 pandemic, GDP  growth is  important.

This  week  the  NZ Herald  carried  an  article  from an Otago  University  academic,  Dr Dennis Wesselbaum,  arguing that  the  Covid recession has  been tough  for  NZ  and  shown  how  it  has brought GDP back to the front page ahead  of  so-called  well-being.

Wesselbaum  says  the  problem  is that  less  GDP does not  mean  less inequality.

“The  fact  that the  economy  has not  taken more damage is  due to  large scale debt-financed government spending programmes. However governments have only limited  abilities to continue  with these  policies  and  they  are  not  sustainable”.

He  says  the  pandemic  has  offered  an  opportunity  to find out whether  New  Zealanders  subscribe to  the  “degrowth theory”  and  whether  they  care  about income, employment and consumption  or  rather  focus  on well-being.

Dr  Wesselbaum concludes that  not  much  is  left of “degrowth theory”.

“Even here in NZ, the  country  that publicly moved to well-being,  GDP  is  back”.

But  will  the  Greens  accept  the Wesselbaum  message?

Don’t  count on it.

Oh – and while we are the topic of indexation, we have had our attention drawn to a post on Lindsay Mitchell’s blog in February last year.  It cautioned that Indexing benefits to wages is setting a precedent.

They’ve been indexed to inflation since 2001 but this move has always been resisted. 

For many people the margin between income from a benefit and income from work is a cost they are prepared to pay. Fix that margin and they will always be prepared to pay it. Increase the margin and work becomes attractive. 

The previous Labour government understood this.  

Mitchell’s authority was former Finance Minister Michael Cullen: 

 “…it is desirable to create a margin between being dependent on a benefit and being in employment….

“The Labour Party isn’t the party that says living on a benefit is a preferred lifestyle. Its position has always been that the benefit system is a safety net for those who are unavoidably unable to participate in employment. From its history, the Labour Party has always been about people in employment.”     

Michael Cullen, 2008

 

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