Social welfare in New Zealand: Where from and where to? A commentary on the history, economics and morality of our social policy.

The issues this conference is considering - social welfare, health, living standards, generate a wide range of views, as these quotations illustrate

New Zealanders' life expectancy, education and living standards have slipped compared to other countries. (At 20th) compared with 19th last year, the ranking is the same as 1990, but seven places down from 1975.

United Nations 2003 Human Development Report in the Dominion Post 9 July

Increasing pakeha advantage in access to and power over socio-economic resources is the primary causes of these health inequalities

Bridget Robson co-author Decades of Disparity study

We believe that by making low cost primary health care more accessible we can make a real difference to improving the overall health of New Zealanders, particularly high need groups such as Maori and Pacific people.

Don Mathieson Deputy Director General of Health in the Dominion Post 10 July

Most New Zealanders think of a 'family' as Mum and Dad, who are married with children. Yet, over the years, Labour - gripped by an influential feminist agenda - has waged war on the family, driving through legislation to destabilise and debase marriage and fatherhood.

Dr Muriel Newman MP's The Column July 2003

Welfare reform is not about saving money but improving the well being of affected citizens.

Katherine Rich MP

Welfare should be a second chance not a way of life.

Bill Clinton

I do believe in the Welfare State, but the current model needs substantial reforms or large numbers of people for whom it is meant to exist will continue to be its victims.

Dr Michael Bassett in North and South Aug 2002

Welfare as presently practiced in this country literally kills us with kindness.

John Tamihere MP

New Zealand has unacceptably high numbers of people receiving public benefits at a level of support insufficient to provide them with an income level sufficient to avoid living in state of poverty.

David Knutson August 1998

By any measure of child poverty, New Zealand remains near the bottom of the league of comparable countries.

Child Poverty Action Group 2003

Introduction

This conference is timely. The current government is putting much greater emphasis on social policy and on the social sector than previous governments, and there is also a good deal of unease about the quality, quantity and outcomes of our social services.

The Social Policy, Research and Evaluation Conference, held for the first time in April this year, brought together 800 researchers, policy advisers, and academics from the public, private and tertiary sectors. The conference, sponsored by the Ministry of Social Development, is now to be held every two years.

There is also the Social Report - a comprehensive collection of data across the various areas that make up the social sector. It's now published each year either in print or electronic form.

A debate on social welfare is starting with comments from people like John Tamihere and Katherine Rich in the political area, but an array of other commentators are also taking part. The quotations at the start of this paper tell me that we have a problem, that there is no real agreement about what the problem is, and what we should do about it.

I am going to argue today that our welfare systems have reflected the values of the people in the country at the time, and that there is a real issue that is much bigger than the welfare system or social policy.

Outline

I am going to give a brief historical overview of the development of social security in New Zealand because our welfare system has some unique and interesting features. Secondly I'll draw on some recent experiences in the United States to make work pay. Finally I'll ask some questions about our welfare system to try and liberate our minds from the constraints of present thinking and partisanship.

To understand where we are it is helpful to look back at where we came from, and I want to take a brief canter through the history of social welfare in New Zealand.

I am indebted to the work of Emeritus Professor Erik Olssen from the University of Otago who presented a very useful paper to a conference of officials late last year.1 I have drawn on his work, but the conclusions and commentary are mine.

I am also grateful to political writer and commentator, Colin James, who reviewed a draft of this paper and made many helpful comments and sage observations.

History

Olssen argues that social welfare did not really begin as many of us suppose with the Social Security Act of 1938 or with the Liberal Government's moves in the 1890's but rather with the Destitute Persons Ordinance of 1846, which subsequently became the Destitute Persons Act of 1877. This Act made "near relatives" responsible for the destitute and near destitute. By 1910, this liability extended to brothers, stepfathers and stepmothers, grandchildren, daughters and sisters. The original ordinance also enabled JPs to levy the fathers of illegitimate children to provide for their upkeep.

He quotes Thomson as seeing this Act as "indicative of the colonists' desire to construct a world without welfare, a world without the English Poor House, a world of opportunities for individual advancement, a world we might add, designed for a youthful, healthy and energetic population." 2

It is ironic in the light of current arguments about immigration to read about the colonists' fervent attempts to restrict immigration by aliens and other "undesirables".

"Immigration policy tried to ensure that 'no hopers' could not get here; land policies tried to ensure that any industrious family could achieve self sufficiency, and ....public works [were used] to provide employment and wages for men who were temporarily out of work or developing farms." 3

In 1885 the Hospitable and Charitable Aid Act made New Zealand's twelve district boards responsible for administering the country's hospitals and for dispending charitable relief.

"Over the next 20 years the central government's contributions to education and hospitals increased dramatically, although the principle of subsidy remained; the state would only assist communities that were willing to assist themselves." 4

The state did not have any significant role in relieving unemployment and most ideas about addressing this question quickly foundered on the widespread anxiety that above all else "loafers" were not to be helped.

Hence the widespread refusal to give relief to able-bodied men without jobs. Although there was unemployment in the 1920's and at other times, it took the mass depression of the 1930's to blow away the idea that being unemployed was a result of some failing in the person, and that their poverty was therefore their own fault.

However we do seem to have reversed that position today where it is widely argued that many poor outcomes are the result of socio-economic factors rather than the unwillingness or inability of individuals to take responsibility for their own condition or to better themselves.

There was an interesting example of this just recently which neatly illustrates my point. This was reported in the Dominion Post of 10 July.

The Decades of Disparity study by Otago University's Wellington School of Medicine and Health Sciences and the Ministry of Health found that cancer death rates had increased for Maori and Pacific people but had fallen for European New Zealanders.

Study co-author Bridget Robson blamed big social and economic changes in the 1980's including market rents for state houses, user charges in health and education and targeted income support.

"Increasing pakeha advantage in access to and power over socio-economic resources is the primary causes of these health inequalities."

Both the Minister and Ministry of Health replied in similar terms.

"We believe that by making low cost primary health care more accessible we can make a real difference to improving the overall health of New Zealanders, particularly high need groups such as Maori and Pacific people."

Don Mathieson Deputy Director General of Health Dominion Post 10 July

However ACT leader Richard Prebble drew a quite different conclusion.

"It is time for someone in the Government to say there is not enough money in the whole country to pay for a health system needed when people are overweight, smoke and refuse to exercise."

Richard Prebble MP in the Dominion Post 11 July

I don't quote either person to attack or laud their views; rather to make the point that the debate about what the individual should do for themselves versus what society should do for them is very much at the heart of many of the issues we will be discussing over the next two days.

In fact I would go so far as to say that the debate over the state's obligations to its citizens and about what it can reasonably expect in return - including what citizens will do for themselves - will be one of the defining political issues of this decade.

To continue.

In the 1890's the Liberal-Labour government believed in creating opportunities that would separate the industrious from the 'loafers' and 'no hopers'.

"Although the government enacted legislation to regulate conditions in factories, being mainly concerned at first with the conditions and hours that women and children could work, its major policy thrust was to expand opportunities for men to find farms or obtain jobs. Financial aid to the jobless was considered undesirable. Turning tramps into taxpayers...was a major goal of Liberal policy." 5

By the 1920's New Zealand had what Francis Castle called "the wage workers' welfare state." 6

"Its central features, controlling immigration and tariff protection for local industries made sense only in a colony about as far from the Old World and the Americas as you could get, a colony few workingmen could get to without public assistance." 7

There was a lot of energy devoted to policing the racial-ethnic frontiers, and the main motive was to protect the standard of living. Central to that standard of living was the conciliation and arbitration system.

"The key to the arbitration system's social policy implications lay in the fact that wage levels ceased to be determined by free contracts between employers and employees but on criteria determined by human need." 8 The idea that 'men would have to go without wages if there were no profits' was unacceptable from early last century.

I wonder how many people would argue for that proposition today. Redundancy agreements are common when businesses wind up, and there is debate about where wage earners stand in the pecking order on the break up of a failed business, but the idea that a company's first duty was to its staff rather than its creditors or shareholders would certainly be contested today.

In the 1920's the Arbitration Court was dealing with another issue - the living wage. This was set at a level that allowed a man to maintain a wife and family in comfort and decency.

This meant that men without families were overpaid, and women in general were underpaid. It disadvantaged a lot of women, particularly adult female breadwinners with dependent parents, siblings or children. This was a very male, gendered view of the way the world should be. But the welfare state embodied the country's belief that it was New Zealand's destiny to lead the world.

In 1938 Labour introduced "applied Christianity". It's worth repeating some of the preamble to the Social Security Act 1938.

An Act to provide for the payment of superannuation benefits and other benefits designed to safeguard the people of New Zealand from disabilities arising from age, sickness, widowhood, orphanhood, unemployment or other exceptional circumstances; to provide a system whereby medical and hospital treatment will be made available to persons requiring such treatment; and, further, to provide such other benefits as may be necessary to maintain and promote the health and general wellbeing of the community.

There were some important underlying assumptions, characteristic of the optimistic reformer:

  • that people were born good and decent, and that, if well provided for would be virtuous and industrious citizens
  • the more the state did, the fewer evils there would be in society
  • the patriarchal nuclear family, the male breadwinner wage and raising the nation's fertility rate were all important.

As one pair of historians put it, Labour came to power 'as idealists with a vision of harmony focused on the secure family unit as the nation's heart and on mothers as its future citizens." 9 Certainly they believed in the conjugal and patriarchal family unit, the importance of the male breadwinner wage, and these beliefs were entrenched in the practices of the welfare state. A motherhood payment was eventually introduced in 1945.

Even the most ardent reformer understood that the new system had to be paid for and a new tax was levied. This was the Social Security Tax. It was struck at one schilling and 6 pence in the pound - that's 7