Key’s welfare reform

John Key’s speech over the weekend to his party’s conference makes for interesting reading, from both a political and substantive perspective. You can read it here.

First, the political …

Noteworthy in itself is that Key focused almost his entire speech on the subject, after the de riguer listing of his Goverment’s achievements over the last three years.

By contrast, you should read Bill English’s speech if you want National’s big picture assessment of New Zealand’s future economic prospects in the global meltdown context, and National’s strategy for bringing prosperity to the nation. Yes, he’s the Finance Minister after all, but nevertheless, his broad sweep, touching many facets of our daily life, stands in sharp contrast to the PM’s laser focus on what he honestly regards as a hugely significant societal challenge.

Key’s speech and his role regarding welfare reform reminds me of Bill Clinton’s pivotal determination to reform welfare in the US. Given the partisan stridency around the issue, only a centrist President from the ‘party of welfare’ could have pulled off a reform of the system that was sufficiently tough in curbing costs and re-aligning incentives, but fully committed to maintaining the critical safety net needed by many.

Reading Key’s rhetoric, one gets the same sense of ‘right man for the assignment’. “I believe very strongly in the welfare state,” he began. With his mother for a time on the Widows Benefit and raised in a state house, he seems to empathize genuinely with the plight of New Zealand’s poorest and to grasp that circumstances can overwhelm even those who would strive mightily to uplift themselves.

But he ‘sells’ his program to the hard core, his own conservative party supporters, from a different perspective — the monumental economic cost imposed over their lifetime by failed youth. This includes an immediate wallet cost in the sense of the taxpayer burden required to sustain these individuals for decades; but also an opportunity cost in the sense of wasted productivity and wealth creation for the nation. These are terms crusty conservatives can understand and even count; he doesn’t require them to empathize.

Focusing on youth, Key notes: “Research tells us that young people who go onto an adult benefit that early [age 18] will stay on it longer and the lifetime cost of that benefit receipt will be very high. More importantly, there is the human cost of wasted potential and poor social outcomes.

“It is therefore worth investing money up front, when these kids are young, to get them back on track. That principle is at the heart of the Government’s approach to welfare reform.

“National Party members, the way the government works with this group of vulnerable young New Zealanders is going to change.”

And what will these changes entail? Now to the substance …

The first element, which Key announced, focuses tightly on young people — aged 16, 17 and 18. He speaks of “young people who have recently left school but who are not in education, training or work. These are kids who are already watching their lives slip away.

“Over the past year, there were between 8,500 and 13,500 young people aged 16 or 17 who were not in education, training or work. What we know is that when these young people turn 18, 90 per cent of them will go onto a fully-fledged adult benefit, unless we do something to intervene.”

And ‘intervene’ Key’s Government will! With careful tracking and engaging of kids who leave school, required mentoring as a condition of benefits, outcomes-oriented transition programs, more training places, parenting programmes, personal money management guidance, and even direct payment of necessities like rent (as opposed to cash to kids).

If one didn’t know they were reading John Key’s remarks, they might be mistaken for those of some ‘nanny state’ Labour spokesperson! As Key says:

“So the three parts of this new benefit policy – which will apply to all young people the government supports financially – are intensive support and mentoring; money management; and new obligations, including to continue with education or training.

“If all this sounds a bit hands-on, I make no apologies.

“These are kids as young as 16 we are talking about, many of whom have difficult backgrounds. We simply cannot continue to give them money and trust they will do the right things with it.

“That approach has not worked.”

What is there here to object to?

Obviously there are many ways this strategy could fail in its execution. For example, how — and how well — will the mentoring that is so critical to this programme, and so desperately needed by disadvantaged youth, be provided … and will the targeted youth engage and respond to it?

And the biggest question … assuming that straying kids are located and drawn into the improved education and training programs, where are the jobs suitable for them, and meaningful to them, going to be in a country whose unemployment rate is presently 27 percent for those aged 15-19, a cohort comprising 7 percent of NZ’s would-be workforce? A bigger share of the unemployed than any other developed nation, according to this report.

Bringing us back to Bill English and his speech, which promised plenty of hope for the middle class and better-off, but offered no clue as to where the nation’s youth — once trained — might find actual jobs.

Hopefully that comes later in the campaign!

For now though, John Key deserves credit for associating himself personally — and apparently progressively — with a vexing problem New Zealand must overcome. He states:

“I’ve often said that you measure a society by how it looks after its most vulnerable. But you also measure a society by how many vulnerable people it creates. At the moment it is creating too many, so we are going to make changes.”

If given another term, hopefully his commitment to this group will not waver.

Tom Belford