Ruth Richardson rewarded for destroying welfare state

For Ruth Richardson to receive the Companion of the New Zealand Order of Merit for services as a Member of Parliament and to governance should not sit well with millions of New Zealanders who have been negatively impacted by her 1991 Mother of All Budgets. 

Richardson slashed benefits by 12.7% and the impact on child poverty was almost instant. Before her brutal budget around 25% of children living in beneficiary households experienced poverty and this leapt to 75% shortly afterwards. Rogernomic's began New Zealand's neoliberal journey, but it was Richardson who cut huge holes in the 50 year old social welfare safety net established by the First Labour Government. No government since has restored benefits to the same level and 17.7% of our children in Aotearoa are currently living in poverty with 13.3% suffering from material hardship.

Conservative and libertarian parties like to create the impression that benefit payments should be kept low to encourage people into work and be independent of the state. 'Beneficiary bashing' became more common during Richardson's tenure and has continued to this day. We have all heard the anecdotes:

• The school leaver playing computer games all day, refusing to get a job, while living on the jobseeker allowance
• The sole parent mother who just has babies so that she can live off the state
• The sickness beneficiary who fabricates an injury so that they don't have to work
• The beneficiaries who lie about their circumstances and deliberately commit fraud over many years

These stories, representing a tiny percentage of beneficiaries, are used to damn them all. Rather than a hand up for people in desperate or difficult situations, benefits have been described as an often abused handout. The reality is that most beneficiaries do not abuse the system and are deserving of support. We do have people who suffer serious disabilities and poor health who need support; sole parents end up in that position for many reasons; unemployment can have multiple causes beyond a person's control.

New Zealand's unemployment level has just risen to 5% and generally sits around the OECD average. Our rising unemployment statistics are largely caused by the government's austerity policies which have also cut almost 10,000 jobs from the public sector. There is an economic view that some unemployment is necessary to create job competition and limit wage growth, but this only benefits employers. While at the same time the government demonises the unemployed, it actively ensures that they exist.   

It is estimated that benefit fraud may cost the government around $1billion a year, but this needs to be seen in context, as what is considered as fraud can include non deliberate acts where over payments have occurred and not recognised, or through misunderstandings around entitlements. There could also be an equal amount of money that could have been paid out, but potential recipients were not informed of their entitlements. The level of benefit fraud is dwarfed by the amount the government loses in tax fraud, which has been estimated at around $20 billion annually, and yet more money is spent investigating benefit fraud.

Nothing exemplifies the moral duplicity more than the treatment of Green Party co-leader Metiria Turei compared to Sir Bill English. Turei openly revealed her struggles as a 21 year old single mother after Ruth Richardson's benefit slash. She had lied about those sharing her house to continue receiving the full, but reduced benefit. Many sole parents struggled at the time and some even resorted to prostitution to keep food on the table for their children. It was estimated that the total amount Turei gained from her deception amounted to around $7,000. Many years later English, a parliamentary veteran, falsely claimed his official residence was in Dipton, rather than his Karori mansion, to claim a $32,000 a year accommodation allowance. Turei was labeled as an unrepentant Māori bludger and forced out of Parliament while English received a Knighthood. 

Keeping benefit payments well below the living wage does not have the intended consequence of shifting beneficiaries into work and financial independence. Not only do many beneficiaries have few options if their circumstances are genuine, but being forced into poverty further reduces options and unnecessarily increases suffering. For those on the Job Seeker benefit the fact that they have a highly restricted budget impacts on their ability to find work. For many who manage to get a part-time job, the bureaucratic complications of balancing extra income to comply with their benefit is almost impossible to manage. Recently imposed sanctions will further impact on those beneficiaries struggling to survive. 

For a further perspective, the total spend on social welfare benefits is dwarfed in comparison to the annual cost of Superannuation. This benefit is not means tested and is a universal payment to all those 65 years or over.  

Since the 1980's there has a substantial shift in thinking about the functions and purpose of a welfare state. The idea that all New Zealanders should be able to earn a liveable income, live in a decent home, receive a good education at minimal cost and have free and accessible healthcare has long been abandoned. Rather than seeing our economy as something that should serves us all, we have become servants of the economy. Despite being constantly disproved, the trickle down theory of economic growth continues to be championed. 

The idea that corporate welfare will lift the incomes of our poorest is nonsense. Some of our most profitable companies pay their workers the least. Supermarkets employ most workers on the minimum wage and many are on the $18.80 an hour starting out wage. Some of our biggest export earners (timber, fruit) rely on low wage workers. Despite productivity being reliant on the workers in any business, more and more of the profits are being pocketed by shareholders and not shared equitably. New Zealand has experienced one of the fastest growing rates of inequality in the OECD. The richest 10% of New Zealanders have now captured 50% of our nation's wealth while the bottom 50% share only 2%. 

Conservative governments are not good economic managers as many claim. A well managed economy is one that delivers to all people, not just a privileged few. There is actually a cost for not providing an effective safety net to struggling families and individuals that seriously impacts on our economic potential and productivity. It has been estimated that the annual cost of child poverty could be as much as $17.7 billion a year. In The Spirit Level and the sequel The Inner Level, Wilson and Pickett's research provides comprehensive data and analysis that shows how more equal societies do much better than unequal ones. While the libertarian Act Party claims that less government and regulation, greater privatisation of services and less taxes will benefit our society and economy, these have never proven to be successful anywhere. The United States should be viewed as a failed libertarian experiment. 

around 2.5 million US children experience homelessness each year 

Twelve years ago Russel Norman, as the Green Party co-leader, explained that what was necessary to support a sustainable economy. It involved careful stewardship of our nation's capital assets, environmental capital and our social capital. Ensuring that our people are well-educated and healthy and are able to contribute as much as they are able in our economy and communities should be considered priorities for any government. 

The Green Party's alternative budget is the most comprehensive attempt at creating an equitable economy and addressing the substantial damage that Richardson and following governments inflicted on our nation. Labeled "marxist", "madness" and "populist" by the government parties, the Green Budget has more credibility and evidence behind it than the current regressive regime that wants to further punish the poor and reward the rich.

Bizarrely Richardson has been rewarded and celebrated for ripping apart our social fabric based on failed ideology and the Green Party is being ridiculed for an evidence based reset to what we essentially had before. 

POSTSCRIPT:

Max Rashbrooke's excellent opinion piece provides more detail about the human impacts of Richardson's budget:

"Richardson is among a select few who can claim to have doubled poverty overnight.

The effects of this stark rise, quite apart from the pain and misery inflicted on families, have spread right throughout New Zealand. Food banks used to be virtually unknown in this country; in the 1990s they became commonplace.

Unable to afford to heat their homes, or indeed pay the rent, multiple families began living under one roof, enduring the cold or huddling together for warmth. Mould and damp proliferated.

Diseases like rheumatic fever, long since eliminated in other developed nations, flourished in these conditions, wrecking childhoods and ending lives prematurely. A sharp uptick in the hospitalisations of children for medical conditions – from 50 per 1,000 to 70 per 1,000 – began in 1992, just after Richardson’s budget."