Thomas Coughlan
The Welfare Expert Advisory Group (WEAG) report was dead to begin with. There is no doubt whatsoever about that – or at least there shouldn’t have been. The Government’s landmark report into fixing New Zealand’s welfare system reported in February and published recommendations in May.
The Government accepted changes worth $285.8 million over four years, roughly 1 per cent of what the group recommended, which worked out to be $5.2 billion a year.
The report appears to have been quietly shown the door, with a long-awaited Cabinet paper from November promising some mid and long-term goals, but no funding beyond that $285.8m to plug gaps in the short-term.
Dr Susan St John described the paper as quietly interring the WEAG report after months of Government prevarication. Bah humbug.
While the Government was busy burying the report, the end of 2019 delivered up the usual host of grim headlines about the state of New Zealand’s poorest.
The public housing waitlist hit a record high in September as nearly 14,000 households waited for a home.
That month, the number of people receiving hardship grants for energy bills skyrocketed by 46 per cent on the year before.
The Ministry of Social Development paid out 572,588 hardship grants in the three months to September, worth some $167m. That’s a massive increase on the year before when 344,731 grants were paid, worth $100m.
Most of these grants (267,000) were for food assistance. Auckland City Mission estimates thousands of Auckland households could afford only $7 on each meal over winter.
Ahead of her last caucus meeting of the year, Social Development Minister Carmel Sepuloni said all she wanted for Christmas was her Budget bids approved. One can hardly blame her.
But there simply isn’t enough money to do even half of the things the WEAG report recommends, especially big ticket items like increasing core benefits by between 12 and 47 per cent.
The Budget Policy Statement, released in December, showed the Government has an operating allowance of $3b for the next Budget. In 2021 and 2022 it reckons it will have $2.4b. And each ministry demands its share to deal with its own funding shortfalls.
The bigger problem for the Government isn’t its ministers squabbling over scraps, it’s where the money is coming from and how much it pledges to tax. Its Budget Responsibility Rules forbid it from allowing spending to breach 30 per cent of GDP, it’s promised not to revive the capital gains tax under Jacinda Ardern’s leadership, and any other transformative tax reform looks unlikely.
New Zealand has a very lean Government. State spending is expected to stay just above 28 per cent of GDP for the foreseeable future, which is well below Australia’s 36 per cent and the UK’s 41 per cent. In fact, in the OECD, only Chile and Ireland spend less on state services than we do.
But boosting that spend isn’t as easy as simply borrowing more. Welfare spending means taxing enough to balance the budget each year.
With Labour in no apparent mood to do that, it looks like the WEAG report is destined to be little more than bedside reading for the ghost of Christmas yet to come.
Social Development Minister Carmel Sepuloni said all she wanted for Christmas was her Budget bids approved.