Dr Bryce Edwards
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by Dr Bryce Edwards

Dr Bryce Edwards

Have the political left and supporters of the Labour-led Government been conned again? Big changes were promised in welfare reform, but with the response to the just-released working group report on the welfare system, it looks like very little is actually going to be delivered.

Of course, the left has already been feeling shocked and disillusioned by Jacinda Ardern’s capitulation over the capital gains tax proposals, which is raising serious questions about the Government’s promised “Year of Delivery”. And now the weak response to the Welfare Experts Advisory Group report is essentially “Capitulation Number Two”.

Once again, the Government has opted for caution and conservatism instead of making bold reforms recommended by experts. Leftwing supporters and those who care about a properly functioning welfare system are outraged.

The report released on Friday was radical, with a solid critique of the state of the welfare system, and 42 recommendations for fixing it. But the Government response has fallen vastly short. The Minister of Social Development, Carmel Sepuloni, has come out to say that only three of those recommendations will be taken up. Of course, she’s suggesting that more reforms might happen in the future, but few observers appear to have confidence in that eventuating.

One of the best explanations of the Government’s response is Henry Cooke’s column yesterday Greens fail to win major change with welfare review.

In terms of the three working group proposals chosen by the Government, Cooke explains these are hardily bold: “Given the sweep of the report, these changes seem pretty small. Labour and the Greens have been campaigning on removing the sanction since before the election, and have delayed doing it until this report has come back. The change won’t go into effect until April 1, 2020. The sensible abatement rate changes track with minimum wage hikes and are so non-controversial that National agree with them. New staff are hired all of the time. You can even quantify the smallness. The changes as a whole will cost $286.8m over four years. The working group estimated its full suite of changes would cost $5.2b a year – more than the Government’s entire operating allowance.”

Activist and former Green Party MP, Sue Bradford isn’t mincing her words, saying the Government’s “dismal” response to the report recommendations indicates it’s “neoliberal”, by which she means economically-rightwing and still clinging to Establishment and punitive approaches of the last few decades – see: No hope for progressive welfare reform from this government.

Bradford includes the Green Party in this critique. She says the Greens are good at saying the right thing on welfare but, when it counts, the party is wedded to neoliberal practice. Bradford concludes that for the political left, this latest capitulation proves that a new leftwing political party is necessary.

Other commentators are also acknowledging the Greens’ failure to secure welfare reform. Henry Cooke points out that the party had increased its reputation with the left and the poor on the basis of their 2017 election campaign on reforming the welfare system, but says “The Greens are not living up to Metiria Turei’s promise of transformation.” Given that they promised so much, but are delivering so little, he suggests they now “need to be asking questions of themselves”.

Disappointment with the Greens on this appears widespread amongst activists. Leftwing blogger Steve Cowan says that it’s a failure of Green Party leadership, and especially of co-leader Marama Davidson, who he says “has proven to be yet another routine establishment politician betraying the interests of the very people she claims to represent” – see: Why is Marama Davidson in Parliament?

His disillusionment is clear: “We’ve been shafted again. Watching Marama Davidson blandly smiling as Sepuloni denied beneficiaries and the poor a better and more secure future reminded me that in 2017 Davidson was making speeches at South Auckland rallies, lambasting the National Government’s failure to address growing poverty and inequality. All that passion has faded away to bland smiles and empty words trotted out about she knows about the hardship that many people are enduring and that she will continue to work hard for them.”

And for Cowan it’s not just a case of Davidson and her caucus lacking courage, but that they have essentially revealed their true colours now that they are in power: “But her ‘radicalism’, if it was ever there in the first place, has gone missing in the impenetrable centrist fog that now clings to the Green Party like a wet blanket. She displays exactly the same kind of reverence for ‘politics as usual’ centrist politics displayed by the Labour-led government and her fellow Green MPs”.

On the report and the Government response in general, Cowan is highly sceptical, suggesting there’s been an attempt to bury this embarrassing capitulation: “Was it just a coincidence that Jacinda Ardern’s engagement to Clarke Gayford was announced on the very same day that the Labour-led government announced its shocking response to the Whakamana Tangata: Restoring Dignity to Social Security in New Zealand report? If the motive really was to deflect attention that Jacinda Ardern and her government have shafted ordinary people once again, it kinda worked. The engagement news was the leading item on one of the six o’clock news bulletins (TV3’s Newshub) while it was trending number one on Twitter for most of the day, with the welfare report nowhere to be seen” – see: Government response to welfare report is a shocker.

Others have also expressed scepticism about the Government’s handling of the release of the report. Some have noted that the timing for the release and response from the Government was late on a Friday, and at a similar time to the long-anticipated (but thwarted) Pike River Mine re-entry attempt.

Auckland University economist and welfare expert Susan St John declared her suspicion: “Releasing the Welfare Expert Advisory Group report at 2pm Friday (3rd May) just before the weekend at a far-flung West Auckland venue miles from the train station was a masterstroke of political strategy”, and she complained that the actual launch that she attended was strangely uninformative – see: I am not a conspiracy theorist but….

St John suggests that the whole working group approach lacked transparency and public engagement: “For 11 months no one breathed a whisper of what the WEAG was concocting. All consultation was one way to the WEAG with no outsider trusted to respond to any of the development of ideas. In stark contrast with the Tax Working Group process, no background papers and no interim report were released. There were no public forums preceding the report, and no interviews were given”.

She reports from the launch that the audience were less than impressed with the proposals being adopted, and the timeframes involved: “The Minister’s pre-Budget announcements were breath-taking in their superficiality. There were audible gasps of disbelief when she announced that the sanction applied to sole parents who do not name the father of their children would not come in until 2020.  Another lowlight was very minor changes to the abatement thresholds that are to be phased in over 4 years.”

St John is also highly critical of the “lost opportunity” to fix many different elements of the welfare system such as Working For Families. And she suggests Labour is incapable of facing these problems with the welfare system because the party is complicit in creating many of them.

There are so many important recommendations in the report that the Government appear to be ignoring, but the biggest is benefit levels. Henry Cooke explains this best: “The report presents a coherent argument for greatly increasing benefit rates, indexing them to inflation, and reforming the way relationships are treated by the Ministry of Social Development (MSD). It makes the point that relative to wages, benefit rates have fallen an extremely long way since reforms in the 1980s and 1990s. If implemented, this report would truly represent an ‘overhaul’ of the benefit system, and this Government could make a pretty good claim to being ‘transformational’.”

The issue of benefit levels is discussed by Tim Watkin in his excellent column, Another chance to be transformational rejected… Labour’s cautious welfare response. He says the report “recommended a massive 47 percent increase in current benefit levels. Those would be hugely controversial reforms… or, you could say, transformational. Because the report says if its recommendations were adopted it would lift 40 percent of children in poverty out of that plight. And that it could be done in two years.”

Watkin explains one of the reasons for the proposed increase is the increasing gap between beneficiary incomes and others: “What people seldom consider though is that since then wages and salaries have continued to grow. Super, linked to wages, has grown to. But other benefits – with any increases linked to inflation, not wage growth – have not been increased nearly as much. Until, that is, John Key and Bill English famously raised them in 2015. So the gap between work and welfare has grown since the 1990s”.

Therefore, on this rejected recommendation and many others, Watkin says Labour and the Greens are showing their real colours: “Sepuloni agrees the welfare system is not working. Greens co-leader Marama Davidson agrees the welfare system is not working. And then they commit to ignore the report’s big recommendations. They say no to up to 47 percent benefit increases, preferring ‘a staged implementation’. The call for ‘urgent change’ is rejected. Remarkably, Davidson has put her quotes into the same press release with Sepuloni, tying the Greens to this approach when they could have been dissenting from the rafters. The political and institutional reality is that no government can make these changes overnight. But the cold water thrown on this report underlines what we’ve learnt about this government in its handling of tax, its debt level, labour reform and more. It is not just incremental, it looks timid. There is certainly no sign of it being transformational.”

Once again, therefore, as with other potentially-transformative change in key areas for the political left, the Government has lost its political values and courage: “Ardern has political capital to burn after the Christchurch attacks and twice in three weeks she has chosen not to spend it. She has the political cover of National having increased benefits under Key (so just how critical could Bridges be?)… Yet Labour has chosen not to go to the wall for something it believes in. Again.”

But not all is lost. The report is going to have an ongoing impact. Max Rashbrooke writes about how the report represents a major change in thinking about beneficiaries. Previous and existing models saw “welfare recipients as akin to naughty children, needing a harsh overseer”, whereas “the experts’ report is an attempt to put a nurturing, caring assistant at the heart of the welfare system” which sees beneficiaries as needing support – see: At last welfare emphasis will move from punishment to support.

Also, although Chris Trotter bemoans that the fiscal conservatism of Finance Minister Grant Robertson is behind the Government’s rejection of progressive welfare reforms, he thinks there is still a good chance that Robertson and Sepuloni might yet be able to create a new world “of ‘active’ labour market management and planning” – see: The State and welfare: Opportunity or cost?

Finally, for a first-hand account of how well the welfare system works (or doesn’t), and how life on a benefit could be improved, see Hannah McGowan’s The dehumanising reality of life on a benefit in New Zealand.