Welfare reform has been on the agenda in New Zealand for some time, with both the previous Labour-led and current, more conservative National-led government musing about how to fix a system that many believe is broken. With a general election coming up in just under a month, the National Party has released its welfare platform and is promising a significant shake-up of the welfare system, particularly in its expectations of workforce participation. National is widely expected to win the election, so it can be assumed that at least the structure of this platform announcement will be implemented.
The plan has two key elements:
- combining the Unemployment and Sickness Benefits into a Jobseeker Support Benefit and requiring recipients to undergo work-testing and look for full-time work; and
- replacing the Domestic Purposes Benefit (a benefit to support sole parents) with Sole Parents Support and requiring recipients to undergo work-testing once their youngest child turns one and to work at least part-time once their youngest child turns five.
The proposed changes are expected to result in 46,000 fewer people receiving social assistance. People who receive social assistance are amongst the most vulnerable in society, so reducing access to social assistance will disproportionately affect those who are already disadvantaged. The cost of implementing the changes would be $130,000 per year and would result in cost savings in the welfare budget of $1 billion over four years.
There are several elements of the proposed changes that would have equity impacts, and analyzing the details show that adverse effects would be felt by the most vulnerable:
1. Work-testing is a blunt instrument that doesn’t recognize the episodic nature of disability
Many types of health issues and disabilities are episodic in nature, meaning that periods of acuity are followed by periods of remission. This is particularly true of mental illness. Using a point-in-time work-testing tool cannot accurately determine whether a person with a disability is truly able to make a successful transition into the workforce.
2. Combining the Unemployment and Sickness Benefits doesn’t recognize the different needs of people who are unemployed and people who have disabilities
These two groups have very different needs. People who are disabled often find it difficult to find paid employment that can accommodate their particular needs, even if they are ready and able to participate in the workforce. Thus people with disabilities need supports that allow them to move between paid employment and social assistance as their condition allows. This includes the provision of health supports that continue even when the person is in the workforce.
People who are unemployed, on the other hand, may require different types of support, such as vocational training or re-training and job-seeking support and advice. Health supports are also essential given the low level of income supports this group often receives.
3. Deeming people on social assistance as work-ready may force people into low wage jobs with no benefits
The best way to permanently transition from social assistance to paid employment is to provide supports that allow people to find – and keep – good jobs: jobs that are well-paid, secure, and provide health benefits. Simply deeming a person to be work-ready may force people on social assistance to take the first job that becomes available, regardless of whether this is the best job for them. This creates a situation where people come and go from the welfare system.
4. Requiring sole parents to work must include complementary supports such as subsidized/free child care and transportation
The New Zealand government has suggested that changes to the welfare system will include supports to help people get ready for work, such as child care and transportation supports. This is positive, but they must be flexible enough to ensure that parents are able to rely on these supports while they establish themselves in the workforce. These kinds of supports are more effective when linked to income level rather than welfare status.
If the New Zealand government does not address these policy challenges and chooses to move towards a one-size-fits-all social assistance system that does not reflect individual need or enhance opportunities, the most vulnerable people will be the most severely affected. And if this occurs, savings in the welfare budget may lead to increased costs in the health budget, which has major system implications.
These are lessons that should be learned closer to home as the Commission for the Review of Social Assistance in Ontario completes its deliberations. Wellesley Institute was part of a broad partnership of health sector leaders that came together to ensure that health and health equity are emphasized in the review. Our submission sets out a range of recommendations that would create a health-enabling social assistance system, including the development of a basket of essential supports, providing enhanced opportunities for workforce participation and training that reflect individual need and capacity, and enhanced policy coordination and alignment across government.
I’ll be blogging over the coming weeks about how to make this happen, so stay tuned. Next week’s Wellesley Institute newsletter will also include our submission to the Commission (be sure to sign up for our newsletter to receive a copy as soon as it’s available).