Financial Review Debate — Ministry of Social Development

If anyone wants to look at the future of the Labour Party—well, we have just seen it! Darien Fenton is one of the hardest working members of the Labour Party and one of the most talented, and that is actually one of the reasons why Labour is doing so well in the polls at the moment!

That speech was just a few notes from the Labour research unit on the ninth floor of the Beehive. It was just the same old rhetoric—everything is wonderful under Labour, they say. Tell that to the member’s constituents who do not have enough money to pay the mortgage and go along to the supermarket wondering whether they can buy the block of cheese they normally get for their kids. We see the increased cost of petrol and everything else, under this Government. That is what we see.

Certainly, this is most relevant to the beneficiaries that the Ministry of Social Development deals with. We are constantly told by the Government that unemployment numbers are down, and we accept that. They are down, but for how long? The world’s economies are in turmoil. We see that right now. Almost every day the front pages of newspapers talk about what is happening with overseas economies and therefore what is happening here.

We have heard a lot about what happened in the 1990s. We have heard a lot about the 300,000 or so jobs that have been created in the last 9 years. Well, I have news for this House. There were 300,000 more jobs created in the 1990s under a National Government, as well. And that was actually when economic times in the world were very, very tough, and New Zealand had to deal with the fact that the National Government inherited a bankrupt economy from a Labour Government that cooked the books and then made out that there was money in the Budget when there was not. That is what the National Government inherited. But the Labour Government inherited from National a good set of books and a good economy, and what has Labour done? In the 9 years Labour has absolutely wasted it. Labour fudged the books—that is the other thing it does.

If we look at the household labour force survey, which is the only official record for unemployment, we find that 25,000 young people are not in work, or training, or education. That number has not changed significantly in the last 9 years. New Zealand has been getting fantastic commodity prices—not due to this Government—and there are opportunities everywhere, but that number of unemployed young people has not changed.

So many children still miss out in life. More children than ever are being referred to Child, Youth and Family. The departments that deal with kids in need are now bigger, and the reason is that more children are in need. The Salvation Army report of last year showed that the gap between the rich and the poor is becoming bigger under this Government. More children are missing out and more children are living in poverty, despite all the opportunities. The reason for that is that this Government is interested only in cooking the books and in making out that everything is fine when it is not.

The Government spends an awful lot of taxpayers’ money, because it cannot trust taxpayers to spend their own earnings. Let us look at the cost of staff recruitment in the Ministry of Social Development. The ministry spent $101,000 in 2002 on recruitment. It is a big department, and one can understand that. But what did it spend in 2006? It spent $608,000—and that was not spent on wages; that was spent just on recruitment.

💬 Craig Foss: On bureaucrats.

Absolutely. If we look at the number of people on the sickness benefit and the invalids benefit we see that 130,000 New Zealanders of working age are now too sick to work. That is after 9 long years of a Labour Government. Huge amounts of money have gone into the health budget, but more people are sick. Huge amounts of money have gone into education, but more students are leaving school unable to read, write, or do basic maths.

More people are failing. Why is that? It is because this Government knows only about wastage. It loves to employ people in all sorts of Government departments, particularly those involved in communications. The spin doctors have had a huge windfall, under this Government. Anybody who looks at these accounts will see that spin-doctoring—the communications outfits—has grown like Topsy. That has happened under this Government because it is interested only in power. We need only look at the beneficiary debt owed to Work and Income to see that this Government is not doing its job.

That last speaker spun spin. That speaker can sit in the Social Services Committee, hear half an hour of a submission, and, before the witness has finished, whip out and issue a press statement that takes out of context one line of the witness’s evidence. She does that without even challenging the witness by saying: “I’m going to report you in this way. What do you say?”. The witness at the select committee leaves the committee, only to hear on the radio that what was said has been taken out of context. Talk about spin! That lady defines it. If that lady spun a web, we would all be fighting for our existence. She spins like any campaign spin doctor.

What she forgets to tell members is that the increase in the Public Service is because by 1999 the previous National Government had run our Public Service so low that this Labour Government could not operate efficiently. Our infrastructure was virtually non-existent. It has taken moderate, and reasonable, growth to bring the Public Service to a level of efficiency.

That same speaker, as the deputy chair of the Social Services Committee, signed off the financial review report of the Ministry of Social Development, which we are debating today, with nary a negative comment. She made not one negative comment, so she endorsed the committee’s review of section 59 of the Crimes Act—the new law. Section 59 gives an example of the slip, slip, slipperiness of the National Party leader. He brought about the compromise on section 59 without telling his caucus. When we listen to the National caucus members, we realise that they do not like it. They talk behind his back about it. They undermine him about it. They do not like the deal he struck, because they know that it is slip, slip, slippery.

The report we are confirming today, which was signed off by the deputy chair of the select committee, tells us: “The new law has not resulted in an increase in notifications to CYF.” The committee also indicates that it is pleased with the increased funding for the SKIP programme. We know, because the committee has endorsed it, that the increase in the SKIP funding goes in well with the section 59 amendment—which was foisted upon the last speaker by her leader, with his deceit of his own caucus members in that slip, slip, slippery method of his of getting it done without telling them—and there have been no increases in notifications to Child, Youth and Family.

That takes me to the endorsement by the National Party, including the last speaker, of the moves to reduce the level of violence in this community. The select committee reported on the moves to reduce violence, and the previous speaker endorsed the committee’s appreciation of the increased awareness in the community of family violence. That speaker endorsed the work of the Ministry of Social Development to bring about a less violent community. The report states: “We are pleased to learn that the case conference method has fostered inter-agency co-operation, producing better outcomes for families.” What that speaker was saying, when she put her pen to paper to endorse the report, was that the Government departments are working very, very well. Those public servants that her slippery leader is attacking anonymously and without specific detail are working well, and that was endorsed by the National members of the Social Services Committee, which noted that inter-agency cooperation is bringing about a reduction in violent offending in our community. That is the reality; those are the specifics of what we talk about.

I want to take that last speaker and her colleagues to what has happened with youth on the unemployment benefit. In 1999 there were 17,000-odd youths on the unemployment benefit. These days the figure is about 300. That is a reduction of over 90 percent. More significant, the number of people receiving the independent youth benefit for more than 13 weeks is so small that it is barely worth mentioning. But did the last speaker dwell upon that? Of course she did not, because she would not want to recognise the huge successes of this Government in the realm of unemployment—particularly in regard to the independent youth benefit. But the report, which was signed off by the National Party members, acknowledged the great success of this Government and the Public Service in that area. We are working well to reduce youth unemployment. We have to accept that our unemployed youth are a danger to the future safety of our society. If we can keep the youth unemployment rate down and have our youth working, we will build a strong and healthy society. The select committee, in the review we are discussing, effectively endorsed that.

I thank the deputy chair of the committee for her cooperation. When the rubber hit the road, she had to front up and agree that those were the results. It is easy for her to stand here and spin away, as she does with the media, by misquoting what goes on in the committee, but when push comes to shove she knows that we are doing a very good job.

Although there is no question that the administration of our benefit system has improved in a number of ways over the three terms of this Labour-led Government, there are still significant problems, especially for those most impacted by Work and Income—beneficiaries themselves and their families.

One of the issues once again highlighted by the 2006-07 financial review of the Ministry of Social Development is that of beneficiary debt. The department told the Social Services Committee that although the number of people on benefits is dropping, beneficiary debt has increased, with over $755 million owed in both recoverable assistance and overpayments. As far as I am aware, this level of debt is still rising.

Although some might condemn this level of debt as an example of the imprudent financial habits of people on income support, the Green Party views it instead as a symptom of several fundamental political and systemic failures. The first of those is that the benefit cuts made by National in 1991 have never been restored. Sadly, Labour has been content to continue with the damage inflicted in the 1990s, requiring people to live on benefits that in many cases are simply not enough to provide even the essentials of existence. There continues to exist what appears to be a large-party consensus that anyone on a benefit must expect to simply endure substantial levels of deprivation and hardship, even when this affects another generation as well—their children.

Roughly speaking, 20 percent of our country’s children still live in poverty, according to the Ministry of Social Development itself. Many of them are the children of beneficiaries—particularly sole parents—and many of them are tangata whenua. According to the Child Poverty Action Group, the incomes of superannuitants have risen by 8.5 percent in real terms since 1999. The action group says that “between 2000 and 2004 the percentage of New Zealand children in severe to significant hardship rose from 18 percent to 26 percent, while during the same period the percentage of those over 65 in these categories remained steady at about 4 percent.” Although, thankfully, the percentage of children in poverty has decreased since the first half of this decade, at 20 percent the figure is still far too high, and the yawning gap between the way we as a society treat the children of beneficiaries and the way we treat old-age pensioners continues. They are all dependent on our welfare system, but one group has its pensions inflation adjusted each year while the other is left out and left behind in all sorts of cumulative ways. Beneficiary debt of any sort, whether to the Government itself or to private lenders, would be vastly lower if the benefit system itself paid people enough money to live on in the first place.

The second reason that so many beneficiaries continue to subsist within an endless cycle of debt is that in April 2006 the special benefit was abolished and replaced with temporary additional support—colloquially known as TAS. Up until that point the special benefit had provided a third-tier level of last ditch discretionary assistance for people in the situation where the gap between their actual income and the necessities of life was too high to bridge by any other means. With benefits remaining low and even some low-wage workers requiring assistance from Work and Income, the special benefit played a key role in allowing case managers a way of topping up people’s benefits to liveable levels.

However, for 2 years now the new system has been in place, with only people fortunate enough to have been on the special benefit at the time of the changeover being lucky enough to have their entitlements grandparented. Of course, the number of people in this situation is dropping all the time, while people new to a benefit, or people whose circumstances have changed, find themselves totally at the mercy of the new system. When we asked questions during the financial review process about the impact of the change from the special benefit to temporary additional support and about the rise of recoverable assistance, the department responded that it was largely because of the higher prices of essential goods, like fridges and school uniforms. I suggest that if these items are such an important component in the rise of debt, then perhaps the core benefit levels themselves should be increased to take account of higher prices—not to mention the ever-increasing price of things like accommodation, petrol, and food.

There simply continues to be a large number of beneficiaries who cannot survive on what they are allotted by the department, even when their entitlements are maxed out under current law. This is the fundamental reason why so many beneficiaries spend their lives going deeper and deeper into debt to everyone around them, including the Government, and why some people find themselves in particularly difficult—if not impossible—circumstances, because of the removal of that third-tier discretionary benefit.

Related to all of this is the Government’s ongoing pledge to bring in what it calls a single core benefit. In every financial review of the Ministry of Social Development for the last 5 years or so we have been asking where the Government is going on this issue and when this benefit will be brought in. The latest answer this time around is that the new Minister expects to ask Cabinet to consider the proposal in 2008—although which part of 2008 remains unspecified. Although I accept that the ministry has, in fact, as it says, implemented 80 percent of its original single core benefit concept revolving around the whole drive towards work first, the really hard part, which relates to income support, remains totally unknown and up in the air. A single core benefit could be a really good thing for beneficiaries, if it brought benefits up to genuinely survivable levels and was part of a reform that made our welfare system simpler, fairer, and easier to administer. However, without details both the Green Party and other interested people, like beneficiary and disability advocacy groups and beneficiaries themselves, will continue to be fearful of what a single core benefit might actually mean—for example, if it leads to a reduction in income levels and an even greater loss of any discretion in the system. I am not expecting any particularly good news on where this is going in the near future, although we could all be pleasantly surprised.

The ministry’s financial review also deals with the question of young people receiving the unemployment benefit. I genuinely welcome much of the sterling work that has been done in this area over the last 8½ years—particularly by the Government and the Mayors Task Force for Jobs. However, I hope that the reduction in the number of 18 and 19-year-olds on the dole is not done—and will not be done—at the expense of any young person’s right to receive a benefit. I noted with interest the outcome of a recent case in Rotorua, where in 2007 the local Work and Income office unlawfully denied access to the unemployment benefit to a number of out-of-work 18 and 19-year-olds. In August, five of the young people filed proceedings in the High Court against the Ministry of Social Development, claiming that they were being discriminated against because of their ages. They had been told at Work and Income seminars that they were not entitled to the dole until they were 20. In fact, of course, they were eligible for the unemployment benefit, given that they met all relevant criteria, and an out-of-court settlement was subsequently reached in favour of the young people.

As part of that settlement, the Ministry of Social Development gave an assurance that it accepted as fundamental that the New Zealand Bill of Rights Act applies to people applying for the unemployment benefit. This means that Work and Income offices—not just in Rotorua but all around the country—must give applicants a fair hearing, and that natural justice and due process apply at the interface between the applicant and the department. I hope that the outcome of this case has sent a message to Work and Income offices everywhere that not only should applicants for benefits not be lied to in a bid to keep beneficiary numbers down but also people must be treated fairly and well, and not denied entitlements at the whim of a particular case manager or office.

In the Gisborne Herald of 1 December last year, a trainee social work student, Jeanette Schullerquist, from Sweden, talked about her experiences during a few days of frontline beneficiary casework in Gisborne. She said that she was shocked by how some case managers talked to their clients, and: “The benefit rate in New Zealand is so low, that it is hard for most people to survive the week. Then when they come in to see their case manager, it is like they are being kept down and made to feel really small. … these case workers were being very judgmental and making the beneficiaries feel really small.” This is not a quote from something that happened in 1991 or 1998; this was going on in one of the Tairāwhiti Work and Income offices in November 2007. Sometimes it takes an international guest to see things more clearly than a lot of local people. I know that the local commissioner, Lindsay Scott, responded quite well to Ms Schullerquist’s observations—well, at least in the media—and I just hope that services on the East Coast are improving accordingly.

For those of us who believe in a fairer society for everybody, not just for some, it is really important that as we face the prospect of quite a significant recession in the medium term, we get our welfare system into as good a shape as possible.

As we are reviewing the Ministry of Social Development, which is the largest Government department, and which deals with the support of people in New Zealand society who are often very vulnerable, I think that it is very important—although not intending to be deliberately negative—to focus on those areas where the ministry’s performance can improve.

I remember that in the last parliamentary term it was United Future that brought to the attention of the House that although the numbers of people on the unemployment benefit were dropping at a very pleasing rate, at the same time the numbers of people on sickness and invalids benefits were skyrocketing. When we looked and did a bit of pathology on those figures, we discovered that 50 percent of those who had transferred from one benefit to another had done so because of the condition of stress. We expressed at that time our concern about what was happening with those particular benefits. There is still a measurable increase in the numbers of people on sickness and invalids benefits but, as our review showed, that pace has slowed down considerably. We are very pleased about that and about the initiatives the Government has put in place with wrap-around services to try to help people on sickness and invalids benefits to come to a place of health and return to some form of employment.

One of the other things I heard other speakers mention is that we uncovered in this review the fact that the amount of debt owed by beneficiaries is considerable. Of that debt, $150 million is due to benefit over-payment, and the ministry described to us the reasons why the other sizable lump of benefit debt was around the issue of cost of living. Essential goods are currently at the stage where there are questions whether the current core benefit is at a high enough level. It is very interesting to be having this review in an election year, because it begs the challenge to all parties in this House to be upfront about what they will do with benefit levels, and whether they will embark on and support any review into the future of those levels.

It would appear that work on a single core benefit is largely complete. Although a less complex benefit system holds some appeal, it is unclear what the status of secondary entitlements, like the accommodation supplement, will be under this single core benefit system. It is also unclear what discretionary funding will be available to Work and Income workers to deal with cases as they come in with the extraordinary needs that crop up from time to time, and how, if there is any discretionary funding, that will be administered and by whom.

United Future has an additional concern that we would like to challenge the Ministry of Social Development to consider, and that is the fact that many of their clients, whether Work and Income clients, Child, Youth and Family Services clients, or Housing New Zealand Corporation clients, lack advocacy services. This includes disability clients; we include disability clients under the Ministry of Social Development, even though they are technically under the Ministry of Health, because the Disability Strategy is clear about the fact that those with disabilities in New Zealand need to be included and need to be able to participate. That is a social need, not a health need, so United Future would love to see disability issues removed from the Ministry of Health and put under the Ministry of Social Development, because we believe that that is the appropriate ministry to be managing the overall needs of those in the disability sector. But it is really apparent with many of the clients of this ministry that they lack proper advocacy services as they approach the ministry with their various needs. It is a very daunting thing to approach a department that has the power to determine people’s incomes, the power of whether people get to see their children and under what circumstances, and the power to determine how much autonomy people should have over their benefit needs. For those in the disability sector, there is the experience of knowing that they will have an ongoing reliance on the people they are appealing to for help, and they have to be sure that they have the ability and skill set to make an appropriate appeal that will see a result that is fair and equitable.

United Future would love to have the Government investigate further what could be done to establish an advocacy service for all clients of the Ministry of Social Development, because we believe from our experience at an electorate level that that is needed. Many of the people who come into my office with complaints have a very similar status. They are often poorly educated and not often skilled at articulating their needs, so they need someone to articulate those needs for them.

In the couple of minutes that I might have, I am very privileged to speak in this financial review debate. I will begin by acknowledging all the members of the Social Services Committee, particularly those who have spoken today. That committee is extraordinarily ably chaired by Russell Fairbrother. I also acknowledge members of other parties who have contributed very constructively in areas where we put party politics aside and work for the best interests, particularly, of children and young people. So I acknowledge that.

I will respond in particular to a point that Judy Turner just made in her contribution, where she wished for the Office for Disability Issues to be established within the Ministry of Social Development as opposed to the Ministry of Health. I can tell the member that her wish has been granted. It was established there, and it will remain there. As the Minister for Disability Issues, I give her that commitment. The advocacy, the oversight—the whole-of-Government office—is within the Ministry of Social Development, and the member is absolutely right: it is the best place for the Office for Disability Issues.

I will talk about a number of issues in relation to this financial review, and the first is the Pathways to Partnership new funding model and new funding level to which our Government has made a commitment with our non-governmental organisations, as recently announced by the Prime Minister. That involved a substantial amount of new money, so that contracted essential services will now be fully funded for the first time ever. This is a huge investment in early intervention and family support, for better support to be given particularly to children and young people but also to their families.

Report noted.

Clauses 1 to 9, and schedules