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Herald on Sunday editorial: Card scheme playing politics

Social Development Minister Paula Bennett holding the new payment card during a press conference with Prime Minister John Key. Photo / Mark Mitchel
Social Development Minister Paula Bennett holding the new payment card during a press conference with Prime Minister John Key. Photo / Mark Mitchel

When Prime Minister John Key told the National Party conference last weekend about plans to stop beneficiaries aged 16 and 17 spending their benefits on drink and drugs, you could almost hear, beneath the roar of adulation, the hissing that always greets the entrance of the villain in a vaudeville show.

Later, speaking to journalists, Key characterised the move as one in which the state was encircling the woebegone youngsters of the nation with a protective arm (that of a kindly uncle, of course, not a nanny). "Somebody walking alongside them," was how he described it, not a metaphor that would immediately occur to the beneficiaries themselves, perhaps.

But you did not have to scratch the PM's utterances hard to detect the vote-grabbing cynicism beneath the veneer of concern.

Beneficiary-bashing is the go-to tactic for any re-election campaign. And beneficiaries are easy to depict as people who, like criminals, take from the rest of us what we have worked hard to earn.

If implemented, the proposal would require certain fixed expenses to be paid direct to, say, landlords and utility companies; the remainder of a benefit would be stored on a smart card which could only be used to buy food and clothes from approved stores.

Anyone who has organised a raffle will see the obvious problem: the implementation and administration costs of such a scheme, to say nothing of the compliance costs for the "approved" stores. And how many of them will there be?

But it's worth asking what the scale of the problem is. The Independent Youth Benefit is $176 a week. The Government's own figures show that last month 1600 youngsters were on that benefit. So the entire amount of money that this bold proposal seeks to seize control of is $281,000 a week or $14.5 million annually.

And since, in fact, it is only the discretionary spending, once rent and other fixed costs have been deducted at source, that will come under the control of the card system, the annual wild and wanton spending in the Government's sights is likely to be somewhere between $5 million and nothing at all.

Several youngsters interviewed this week said they pay their entire benefit as board and never see a dollar of it.

The economic effectiveness of such a strategy is hard to discern, to say the least.

But it was not designed to be economically effective; it was designed to get votes at the expense of a group just young enough not to vote.

It would require an unusually rose-tinted view of humanity not to conclude that there are some beneficiaries who spend money intended for the support of their families on drinking, smoking and gambling. (Plenty of non-beneficiaries do so, too, but the cost to the taxpayer of their dereliction is indirect and long-term). But they are not, in the main, just out of school and still too young to vote.

If the Government wants to control beneficiaries' spending by a programme similar to the 55-year-old Food Stamp programme in the US, let them say so. Let them cost the proposal - applied to the entire sector - and present it to the electorate as soundly constructed policy rather than a succession of vote-grabbing soundbites.

At the same time - or perhaps instead - let them devote their energies to creating the jobs that so many New Zealanders ache to do. That is the only enduring way to deal to the sense of hopelessness that underlies almost all of this undesirable behaviour.

Better to fence more robustly the top of the cliff than to strip the cushioning from the ambulance at the bottom.

- Herald on Sunday

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