Editorial: Report sets scene for welfare reform

OPINION: The Government has been quick to dismiss the recommendations of two high-powered think tanks during the first half of its term.

The Don Brash-led taskforce on superannuation has been ignored, primarily because its recommendations were too politically charged, even for a government that seems to be riding an unstoppable tsunami of support.

Dr Brash was also charged with closing the income gap with Australia. Even though the gap demonstrably has grown under National, Dr Key's conservative cure was equally unpalatable.

However, the latest working group report does contain a message that Prime Minister John Key is more comfortable with.

It dismisses New Zealand's once world-leading welfare system as "unsustainable, outdated and fragmented", setting a framework for National and its partners to introduce sweeping reform.

The ensuing debate is likely to again highlight the difference between National's main support parties, ACT and the Maori Party, and offer the opportunity for another point of difference for Labour to attempt to exploit.

The working group was led by a former Commerce Commission head, and it predictably finds significant fault, both with the current system and the attitude of many beneficiaries.

It says that "most" people on a benefit have little or no focus on paid work, and a growing number are "locked in" to the system for years, and often across generations.

It goes so far as to suggest that unless the system is changed, the 356,000 working age adults on a benefit will eventually cost the country $50 billion, nine times the present $6.5b.

There will be questions around how this figure was arrived at. It is based on a period in which unemployment is comparatively high, with the economy still sluggish after a sustained recession.

Does it assume that the Government's employment initiatives such as the 90-day new worker trial will achieve nothing, or that the economic doldrums will continue indefinitely?

It will be seen as unnecessarily alarmist and included simply to play into a reform-eager government's hands, or a clear and unequivocal call for action, depending on political viewpoint.

John Key will be aware of the dangers in moving too quickly, or introducing radical change that can be portrayed as unfair.

He will also, however, be aware of a groundswell of public opinion against those beneficiaries seen as milking the system more or less permanently, exploiting the goodwill of long-suffering taxpayers.

Yes, being repeatedly knocked back in genuine attempts to find work can be soul-destroying. And long-term dependence on a benefit can be equally debilitating, both for individuals and their dependents.

However, the other side of the limiting-the-dole argument is that people cannot work unless there are suitable jobs for them.

Whatever reform the Government considers following the end of the working group process, it will need to be mindful that the system must be fair regardless of the economic climate, and should not penalise those who would work if only that were possible.

One of the incoming Government's first acts was to host a job summit. Stronger policies in that area are needed just as much as welfare reform.

- © Fairfax NZ News