The $78 billion

A new study out today (Stuff, Herald), which cost you and I $1,000,000 or so, shows what we already knew: that if everyone on a benefit stayed on it forever, it would cost us all a pile of cash.

The pile would be of a size neither you nor I can understand: $78,000,000,000 or so. It shows those on the DPB or sickness or invalids benefits cost more than those on the dole.

Wow. What a novelty.

Except it isn't a novelty. You can work that out by simply applying a bit of logic. The longer you are on a benefit, and the higher the rate of that benefit, the higher the cost.

Let me put aside for a moment my cynical conviction that the only reason National released this number today was to further try and pick political fights with weak victims. That the reason they would want to do this now is the growing evidence of economic and social failure their policies are generating in this post-GFC world. That Labour's initiative on education has given them unwelcome pause for thought. That picking on the weak is John Key's favourite sport in shoring up a sagging majority.

So put that aside and wonder what such a study could be useful for.

Does Key, does National have an agenda to force the social security system into an insurance model?

We all know how well that's worked with ACC: insane levy hikes, rampant additions to budget surpluses or deficits depending on global stockmarket results, a constant vicious pressure on claimants to get off the scheme, administrative ineptitude as costs are pruned at every turn beyond what competence permits.

Full funding of ACC has been a disaster and it needs to go. It sees every single one of us paying too much for too little.

What on earth would you want to extend the model to social security for?

To give you arguments to pick on the most vulnerable even further?

(After all, the highest cost ones could be victimised/pushed off, in order to ""Save Billions!"".)

To make the system able to be privatised?

(Nobody would buy pay-go social welfare just as they wouldn't buy pay-go ACC, but they would LOVE to get their hands on the billions sitting around in a ""fully funded"" model.)

Given that neither of these arguments will ever fly in New Zealand, it must be something else.

There may be incremental improvements to the system that can learn from this knowledge. If there are, that's to the good. But such incremental improvements would never get the political attention through leaks and trailing that the $78bn number has been connected with.

I'm left with my cynical explanation. It's just another distraction, just another form of abuse of the most vulnerable people in the country.

Just business as usual for the government we suffer under.

Comments

[John Small]

Not sure I understand this Jordan. Does the report forecast future welfare claims using the past history of the age of a claimant and the (historic) probability that a claimant of that age will draw a benefit in future years?

If so, it seems to rely very heavily on (a) a short history - unemployment at least is a fairly recent phenomenon in NZ and (b) a view that policy can't change the recent history.

And if you believe (b), then what's the point of "reform"?