Lindsay Mitchell looks at Social Welfare Reform
in New Zealand and Overseas
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Lindsay Mitchell: Welfare reforms to help children
Monday, March 5, 2012

Susan St John, spokesperson for the Child Poverty Action Group, used John Key's response to a parliamentary question, to attack the complex Family Tax Credit system. She is right to point out the inherent negative incentives to both worker and employer - the worker gets penalised for extra effort and the employer can keep her wages low by treating the tax credits as a wage subsidy.

But the question put to the Prime Minister by Green MP Metiria Turei , asked why was the government "intent on forcing single parents with little babies as young as 12 months" into work? The answer is to discourage women from adding babies to their benefit. They are being told that they cannot avoid working simply by growing their families.

St John uses the question to open her column, yet never returns to address it. Instead she recommends that, to avoid the complexity of the Family Tax Credit system, sole parents should be allowed to stay on the DPB and keep more of any earned income. But if they continue to add children to their benefit the chance of them earning any extra income is remote.


The new policy of requiring a mother to be available for part-time work when an additional child turns one represents the first attempt by a New Zealand government to stop beneficiaries exploiting the DPB (and other main benefits). Each year around 5,000 children are added. At any given time this results in almost a quarter of the DPB population having had extra children on welfare.

In 2006 deputy chairman of the NZ Medical Association Don Simmers told a conference that too many women were contemplating pregnancy on a benefit. More recently I spoke with the head of an organisation working with beneficiary families who was in no doubt that women plan a pregnancy as the prospect of pressure to work looms (there was a work-testing regime in place in the late 1990s). She believes the new policy will make a difference.

Some American states attempted to deal with the same problem by introducing 'family caps' which limited cash assistance to a fixed number of children and no more. The results were mixed and such a move here would be met with objections about depriving additional children, especially from the Child Poverty Action Group.

So the government went with the one year exemption option. Metiria Turei describes this as "forcing" mothers into work but that claim doesn't stand up under scrutiny. Nobody is forced to have a baby on a benefit - a benefit provided, incidentally, because she is already unable to independently support her children. Never before have women been better able to control their fertility. If she chooses to get pregnant and have the baby she will be doing so fully aware that if a part-time job is available when that baby turns one, she will be expected to accept it (along with the childcare assistance needed to do so.) The choice is ultimately hers.

Freedom of choice is what the reforms are essentially about re-balancing. True freedom of choice can't encroach on someone else's. Most voters are behind the reforms because they feel unfairly treated when one group is allowed to make a choice that they are denied. Why is it fair for single parents to be supported to stay at home indefinitely when most partnered parents go back to work quite quickly? It becomes especially gruelling for working mothers to then hear that putting their young children into daycare is a form of "child abuse", an argument advanced by the opposition to reject the reforms.

Children who spend many years on the DPB generally have much poorer outcomes. This is well-documented. To knowingly exacerbate this situation by adding more children to a workless household can't be defended at any level. In the interests of children the government is entirely justified in trying to break this habit.


Lindsay Mitchell
Welfare Commentator
ph/fx 04 562 7944
021 132 5968