Tapu Misa: Full employment still cornerstone of our welfare state

Creating full employment is complicated, but it's not impossible. Photo / Getty Images

Some of the reaction to Labour's promise to raise the age of eligibility for superannuation showed how far we'd strayed from the ideals that created our world-leading social security system.

Those who seemed most outraged cried foul on the grounds of "entitlement". Why should hard-working people be denied their just desserts while good-for-nothings who'd sat on their bums all their lives were able to claim the old age bonus? Deserving people were entitled to get super, some argued, even if they were millionaires.

Which rather missed the point of welfare being a safety net based on need rather than a reward for good behaviour.

Meanwhile, hardly anyone seemed exercised by the news that the Child Poverty Action Group's efforts to get a $60 a week tax credit paid to our poorest children had been defeated in the High Court.

Despite agreeing that the government isn't doing enough to alleviate child poverty, the court found that discriminating against the children of beneficiaries wasn't unlawful because the government was entitled to "incentivise" their parents into work.

The undeserving bludgers theme that dominates welfare debate in this country was reinforced in National's first election TV advertisement last Friday, which starred John Key in a mock town hall meeting.

He told a questioner who complained about people "sitting on benefits" while she toiled to pay her bills that National was working hard to "reorientate the welfare system" and "really encourage people to go to work if they can work".

Which would be a fine thing, if only our recent history hadn't been one of "downplaying the centrality of full employment", as the Lincoln University economics professor Paul Dalziel argued in the Bruce Jesson Memorial Lecture at Auckland University last week.

Dalziel, a member of the Welfare Justice Group that produced an alternative report to the government's Welfare Working Group (WWG), said he agreed with the WWG's core message, that "the government should invest substantially more resources into assisting people into well-paid, quality employment".

But that message was distorted when stripped of its historical context by 'new right' rhetoric. The group's reports "cancelled out history, and so attacked our country's nationhood".

If the WWG's core message is to be properly implemented, said Dalziel, it was critical to understand three pieces of history.

First, it was always appreciated that the cornerstone of New Zealand's welfare state must be a policy commitment to full employment.

As a prominent civil servant, Bill Sutch, observed three years after the passing of the Social Security Act 1938, "The [Social Security Fund] can only meet sustenance payments while there are comparatively few in need of it. This means the continuation of full employment by other means. If it is not provided by private enterprise, it must be provided by the State, either out of other taxation or by financing from the government's Reserve Bank or from public borrowing."

Secondly, "in the late 1980s and early 1990s, appreciation of the centrality of full employment was lost. That blindness was not caused by any collapse in the work ethic of New Zealanders; rather, it was a deliberate policy choice made by politicians and their advisers pursuing the new right agenda".

We're apt to forget just how "brutal" that policy choice was to workers and communities. "This is one of those inconvenient truths from our history that we have pushed into our collective amnesia. Both Labour and National have their own reasons for wanting to forget, of course, but we must be honest about what we did as a country."

The enormity of the damage caused by the reforms is underscored by the Maori unemployment rate, which at its 1992 peak sat just above the peak unemployment rate in the United States during the worst years of the Great Depression (25 per cent in 1933).

"In this country just one generation ago, [Maori] experienced their own Great Depression," said Dalziel.

The third historical fact that escaped the WWG is that it's repeating the same approach that produced the 1991 benefit cuts. That, too, blamed individuals not in paid work, and argued that reform was necessary because the welfare system wasn't sustainable, had created a culture of dependency, and was wasting the state's resources.

And despite the "destructive force" of those reforms, 20 years later "the system faces the same problems as those reforms were explicitly intended to fix. We are nevertheless advised to adopt that same failed approach, but this time with still more force and to a wider group of people".

Dalziel argues that the alternative is an approach that once again accepts full employment as the cornerstone of our welfare state, and the necessity of investing more resources to put more people into well-paid, quality employment.

How do we go about recreating full employment? It's complicated, but certainly not impossible. "On one level, my answer is the same as Bruce Jesson's - through nation building."

"If 'history is the essence of nationhood', to quote Bruce [Jesson]..., then developing the individual abilities of our children is surely its heart and soul, particularly in a country that used to pride itself on being 'a great place to bring up kids'."