Media Release

Labour Promises Built on Faulty Premises
Sunday, October 17, 2010

Addressing this weekend's Labour Party Conference, Deputy Leader and Welfare Spokesperson, Annette King, singled out the domestic purposes benefit as a policy that would change under their new 'putting children first' philosophy.

"Unfortunately Ms King doesn't properly understand the dimensions of existing DPB dependence and its effect on children, "said welfare commentator Lindsay Mitchell.

"Ms King claimed that, 'Around 70% of people on the DPB move off the benefit in 4 years, it's used as a family transition.'

In striking contrast recent Ministry of Social Development research found that:
On average, sole parents receiving main benefits had more disadvantaged backgrounds than might have been expected:
· just over half had spent at least 80% of the history period observed (the previous 10 years in most cases) supported by main benefits[1]

Ms King went on to criticise National for cutting training support for sole parents yet a Treasury Report to the Welfare Working Group found that the Training Incentive Allowance may have actually resulted in beneficiaries staying on welfare for longer;

Fifty-one percent of DPB recipients participating in an intervention took the Training Incentive Allowance, which MSD found to have no effect on the time a beneficiary was likely to spend off benefit - in fact the study found there was a chance TIA slightly increased the average time spent on benefit. MSD did note there was a chance that TIA may have an unobserved long-term impact (after seven years) on time spent off benefit.[2]

The speech also claims that the DPB does not provide an adequate income. Yet a typical DPB recipient with two children living in Auckland receives $580 per week [3], significantly more than someone working full-time on the minimum wage earns. Hence the incentive to move off a benefit is reduced. International research shows that the higher benefit payments are, the more workless households result."

Mitchell says that starting from so many faulty premises does not bode well for the potential of Labour's promises to improve the prospects of children on welfare.

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

[1] <http://www.msd.govt.nz/documents/about-msd-and-our-work/publications-resources/research/sole-parenting/understanding-sub-groups-of-sole-parents-receiving-main-benefits.doc>

[2] <http://ips.ac.nz/WelfareWorkingGroup/Downloads/Working%20papers/Treasury_Report_WWG_Sept2010.pdf>

[3]http://www.msd.govt.nz/about-msd-and-our-work/newsroom/factsheets/future-focus/domestic-purposes-benefit.html#ImportantstatisticsaboutDPB7 <http://www.msd.govt.nz/about-msd-and-our-work/newsroom/factsheets/future-focus/domestic-purposes-benefit.html>