How could kindness infuse welfare and encourage purposeful work?
The cover of the Sunday Star Times last week highlights Mark Tinetti a man who had worked every day of his life until Covid19 took his job as a fishing job manager leaving him with no access to the wage subsidy or welfare because his partner is a teacher earning $70,000. He says that “there’s been nothing said about people in my situation. I don’t get anything . . . hope you can live on what your family earns”. https://www.stuff.co.nz/business/budget/121464421/after-the-lockdown-the-recovery-budget---but-can-it-save-your-job-or-your-home.
He will not be alone. People made redundant in a shrinking economy will discover they are not entitled to most welfare payments if their partner earns more than $36, 504. For anyone without a financial buffer this is an extraordinary reduction on household income to manage, particularly where the person made redundant had been the one on the higher income and paying most of the bills.
There was hope that this would be addressed in the budget announcement this week but this doesn’t seem to have happened. Tinetti is wrong though that no one has been talking about the inequities of welfare. it is just perhaps that those conversations in the past have turned more on whether or not a single mother should lose her benefits if she finds a new partner with a job. The system puts a huge strain on relationships and feels desperately unfair. People on average incomes have spent years paying tax and other people’s welfare but are not entitled themselves unless they meet an incredibly low means test.
This sort of situation is the focus of a case study in a recent Productivity Commission paper that acknowledges how low beneficiary payments are by OECD standards. They suggest and reject a universal basic income very quickly - apparently because there is little risk of disruption in NZ from technology and because NZ cannot afford it (this is all debatable) - but they do argue for reform. In a separate paper Kathy Tinetti explores forms of unemployment insurance.
Tinetti puts forward a few recommended options. One is that everyone is entitled to standard jobseeker support for three months if their own personal income, or lack thereof, shows they are eligible. There would be no meanstesting of partners until after that period had passed. This would be (at current levels not including accommodation supplement or welfare for families) about $300 a week. The second option would be to pay people 50% of their income for three months before returning to meanstesting. They also note that people may also want to consider private redundancy insurance but of course that may be harder to get right now. Financial gurus always recommended a 3-6 month financial buffer. Most people don’t have them.
Tinetti’s suggestions would surely help people manage, and provide a bit of time to find different sources of income, finding a new job, finding a lodger, or selling assets. Is three months enough? On the one hand three months is a time period that focuses the mind, to find another job quickly. The longer one is out of work the harder it is to get back in. On the other hand, as we head into a recession would modest changes like this even touch the sides of family poverty and distress? Should there ever be a case for meanstesting partner income? I would argue that people should be judged by their own merits so people are incentivised to stay or leave relationships for the right reasons rather than the wrong ones. Is this really a policy of supporting families or destabilizing them?
One of the problems with the current system is that ACC is far more generous and easier, bureaucratically, to access than welfare. As people become desperate there will be temptations to play the system simply to survive. Mental injuries are covered by ACC and rightly so. How many people will actually go through nervous breakdowns trying to get food on the table, to feed their families? Is this suffering really necessary before one gets support? And what then? How do you get these broken people back into work? It is a waste of human potential and it is cruel.
Some may justify hard rules because it builds character and disencourages laziness and bludgerism. In New Zealand as in the United States, there is a culture of kindness and community self-sufficiency even if the system is often brutal. If the state steps in will that change things? I would venture that to support people more generously for three months would not make any difference. In fact it may improve culture by making life a little easier and a little more fair. There is a high correlation with domestic violence and financial stress. Even three months would help families transition.
The budget is released. However it may not be too late. This scheme could be paid for from small regular tax contributions in income tax, as per ACC levies. It could be tax neutral. It should be based on average earnings over a period of years so as not to discriminate against contractors. Perhaps it can only be taken for up to three months each year but the weeks don’t have to be sequential. The devil is in the detail and there’s lots of it right here. https://www.productivity.govt.nz/assets/Documents/74b7e80d3a/Unemployment-insurance-what-can-it-offer-NZ-Kathy-Spencer.pdf
The wage subsidy has been a boon to business and an enormous relief to earners across the country. It is no great work of empathy or the imagination to understand the dread of losing one’s job and the fears about how to make ends meet if you did. We all need support sometimes. It may be that this will do as much for mental health as any other support we can give. Money. Food. Hope. Dignity. It will, by giving people a fighting chance to stay in the game, help the economic recovery too.