Welfare reform

The Prime Minster has announced some benefit reforms to ensure that the benefit is a safety net, not a lifestyle – and to get people back to work as soon as possible, even if it is only part time.

The reforms:

As expected, beneficiaries will be able to earn $100.00 each week without benefit abatement – up from $80.00. Unemployment beneficiaries will have to reapply for their benefit if they receive that benefit for a year – affecting up to 16% of those on the dole.

Those on the sickness benefit will have medical certificates, in the first two instances, for four weeks only, and along with those on the DPB whose youngest child is six or more will have part-time work obligations. Which, as you can see may not be the best idea, particularly in the school holidays when childcare will cost more than the work itself. Furthermore if they don’t comply they’ll be work tested. Currently a beneficiary who doesn’t meet the work test can have their benefit suspended, then cancelled. The difference with the current work testing is that beneficiaries can lose half their benefit immediately if they don’t comply – and if they still don’t comply the benefit will be cancelled. The exception is if they have kids – the maximum reduction will be half the benefit and they`ll always be able to keep their full accommodation supplement and any other add-ons.

In other words, those on the DPB with, say two kids, will always be receiving way more than half the minimum wage even with the maximum work test – and if they earn $100 a week they`ll get $416.00 a week – that’s $13.80 per hour for a 30 hour week. On 1 April that will increase further. John Key's cleaner doesn't even get $13.80 an hour - and she's just got a pay rise.

Apparently those on the invalids benefit who can work part-time will instead receive a sickness benefit. This is not reform – that is current policy.

This whole thing is to cost $88 million over four years. That's $60,272 a day,or the cost of paying the benefit for 1385 people. It`ll cost nothing extra to work test every eligible beneficiary after six months of continuously receiving a benefit and is much better than making people reapply for a benefit after a year. The $88m can instead be channeled into getting people jobs.

Beneficiaries are expected to work if the work is there. If it is not there, worktesting and work obligations are merely windowdressing, and can be punitive for no reason if letters are sent out to incorrect addresses and benefits suspended or reduced – as will no doubt happen.

I’ll be surprised if this reform will change the rate that beneficiaries find meaningful full-time work.