NZ Herald, 12 June 1999

After a year of radical reform to the social welfare bureaucracies, the Government can detect the first fruits of its changes.

The numbers on some benefits have reversed their long upward march, and cuts to the long-term unemployed have been bedded in.

Now the Government hopes that a flat economy in 1998-99, which kept the lid on employment growth, will spawn sustainable growth of 3 per cent. That is what will be needed to absorb those joining the workforce.

But data for the year to March show the reforms may be recycling, rather than improving, the benefit statistics.

And critics are quick to label work for the dole, and stricter work tests for solo parents and sickness beneficiaries, as punitive measures doing little more than turn over existing beneficiaries.

In the 12 months to March, the number in work has been relatively static, a fact that comes as no surprise to Work and Income Minister Roger Sowry and his associate, Peter McCardle.

For Mr McCardle, the aim of the reforms is to reduce the number of long- term unemployed and create job-ready workers with a better work ethic.

It is the job of the finance ministers to grow the pie; it is Work and Income's job to prepare the workforce for the growth when it comes.

But that approach is not good enough, according to Labour's Steve Maharey.

"We are just not growing the pie, and McCardle is left churning the unemployed … in the expectation that they will be more work-ready when the economy improves. He is churning the jobless, waiting for jobs that aren't coming."

To some extent, the two sides are talking past each other.

Mr McCardle acknowledges that the static market delivers no new jobs, but sees social benefits in reducing long-term unemployment - those out of a job for 10 years or more - from 14,800 to just under 10,000 since 1997.

"But if you haven't got economic growth, you are really pushing it uphill," he says. "If you haven't got growth of 3 per cent a year to provide 20,000-plus jobs a year, which is what the workforce grows by, then enough places are not being created."

Mr McCardle is also proud of the new trend in DPB and sickness benefit numbers, which had ballooned in recent years.

Over the year to March, DPB numbers fell from 114,000 to 111,000, and have continued to slide.

Invalid beneficiaries have risen from 48,700 in March 1998 to 50,500 this year.

But sickness benefit numbers have fallen from 35,000 to 33,000 ahead of its alignment with the unemployment benefit - now called the community wage - from last April 1.

Mr McCardle and Mr Sowry point to individual case management by WINZ as partly responsible for falling benefit numbers.

Long-term DPB recipients can now come to a WINZ office for a benefit and leave with a job referral and with help in writing a CV.

Work testing for the DPB when the youngest child is 7 has also been a factor, as was the campaign against benefit crime, according to Mr Sowry.

But statistics suggest that the fall may not be all it appears.

Even as some benefit numbers have declined, those on the community wage have risen from 148,600 to 159,000, suggesting that many have been reclassified.

At the same time, the official measure of employment and unemployment, the quarterly household labour force survey, unveils a trend to part-time work.

In the year to March, there was a decline of 20,000 in full-time work and an increase of 30,000 in part-time when the working-age population rose by about 20,000. The number officially unemployed was relatively stable, year on year, despite a sharp peak during the Asian crisis late last year.

At the heart of the reforms are the community wage and the work-for-the- dole scheme, set up in October. So far almost 25,000 have been through Community Work (for the dole), and at any one time about 9000 are on the scheme.

Mr McCardle says he expects the scheme will exceed the 25,000 target set by the Government for the year to September.

In all, 70,000 are expected to be in some sort of organised activity this year, including job clubs and those preparing a CV.

More than 4000 organisations offered to provide work.

But Mr Maharey questions what workers on work for the dole are doing, pointing to high rates in the education sector. About 45 per cent are in schools and other educational institutions, doing everything from caretaking to teacher aiding to reading recovery work.

Mr McCardle insists there is no job displacement and that schools are enthusiastic about the help, but Mr Maharey says this is just the Government subsidising education spending through cheap labour. He says unemployed teachers are being channelled into work-for-the-dole schemes as teacher aides.

But Mr Sowry challenges Labour to dump a scheme that he says is enthusiastically supported by many schools and communities.

Labour counters by saying it would make the scheme voluntary, a measure which it thinks would increase a lukewarm response from some community groups to the notion of "compulsory voluntary work."

But if the work-for-the-dole scheme is meeting and exceeding its targets, the Government has struggled to explain a decline in other, more expensive work programmes.

Numbers on non-work-for- the-dole schemes fell from 13,354 to 9833 over the past year, raising the charge that the Government is penny-pinching on job schemes.

WINZ missed its internal targets for such schemes by between 40 and 60 per cent in its 13 regions, but these have been described as internal targets which were not expected to be met.

In the runup to the election, Mr Maharey seems uncertain whether to criticise the work-for-the-dole scheme for being cruel or a flop. He opts for both.

"McCardle has ended up with the worst of both worlds - he stopped short of the time-limited benefits and so on that are part of the tough Wisconsin welfare model, but we still criticise him for a morally bankrupt scheme. And it has partly flopped because it is just recycling people."

National, on the other hand, is enthusiastic about the reforms, some of which it rejected when Mr McCardle was in National and then roundly condemned when he switched to NZ First.

Now National sees the whole welfare and work issue as a political opportunity.

Mr McCardle says: "Labour will be softer on benefit fraud and work testing and softer on requirements on people on benefits. Some people will like that, but I have to say the bulk of New Zealanders expect a reciprocal obligation.

"No. There isn't anything we would change."

Work and Income New Zealand (WINZ) figures