National’s plans for the Domestic Purposes Benefit (DPB) have drawn a predictable response from the far left, while others have hailed the changes as well overdue.  The DBP has always run a fine line between making solo-mum an attractive career choice and providing reasonable assistance to those in genuine need.  More workers mean more money to go around and working towards financial independence can be very empowering for a person.  Although most people do see handouts as a temporary last resort, we need to avoid having a welfare system that encourages dependence.

We’ve all heard stories of individuals abusing the system.  The woman who falls pregnant every time their youngest child leaves school or those unfortunate bouts of Tourettes syndrome that occur only during job interviews.  Most of us find ourselves in tough circumstances occasionally, but only some people genuinely need government intervention.  People can be born into poverty, some are victims of circumstances, others make bad choices and many chose a reduced standard of living now so they can train for a better future.  If we are to have a truly prosperous society, we need to know when it is appropriate to intervene.

The current government likes to play the part of the all-powerful provider.  If you take tax off the workers and hand it around, you might make more friends than enemies.  You can bribe the students, increase the number of people on welfare and instead of simply cutting taxes for nine years just hand out billions in badly designed packages like Working for Families.  New Zealand has come a long way over the last twenty years.  Favorable economic conditions have produced near full employment, swelled the government coffers and raised wages across the board.  Yet it is clear from the graph presented that the government has been unwilling or unable to reduce our reliance on welfare.  Even adjusting for inflation and population growth, the Labour party has succeeded in increasing our welfare bill during the most favorable economic conditions my generation has even seen.  In 2007, they spent over $17 billion on welfare, or $4,100 for every man, women and child in New Zealand.  Cutting taxes would have returned money directly to workers and their families.  Students would be paying off their loans faster and people would be less likely to turn to the government for help because their wages would be higher and they would be paying less tax.

Academic study is not only accessible for solo parents, but greatly increases their long term employment prospects.  Helen Clark’s comments implying solo parents should have the freedom to stay completely out of work or training, even when their child is at school, show us just how wide the net has been cast.  Those of us who pay tax start looking around and wondering when working for a living became a casual choice for some people.

But what of the working poor, the growing underclass we hear so much about?  There are two main ways a government can try and tackle poverty.  They can keep taxes high, as Labour has opted to do, selling it as a tax on the rich.  But the problem with demonizing and taxing the faceless rich is you punish hard workers right across the social spectrum.  Why can’t we see becoming wealthier as something positive to aim for?  Thanks to economic growth, your becoming wealthier does not mean someone else must become poorer.  If you earn more by becoming more productive in your job, inventing better products or creating good ideas, then society benefits too.  What you actually do with your money if you become wealthy is up to you and charity features highly on many people’s lists.

The second approach to tackle poverty is to cut taxes across the board and focus on policies that will help grow the economy.  Not only will lower income workers receive an immediate cash bonus from tax cuts, but incomes will continue to rise within the low tax environment.  There are non-welfare mechanisms like the minimum wage which can help ensure that everyone benefits from a growing economy.

The Robin Hood approach can only go so far in helping those who find it difficult to support themselves.  Independence should be the ultimate goal for those capable of achieving it.  Perhaps we may start valuing financial success as a legitimate goal in life, rather than putting people into boxes based on the size of their cheque book.  Returning New Zealand’s living standards to the top half of the OECD is up to us.  We can achieve this by working both harder and smarter.  It's time we stopped looking to the government with outstretched hands and got on with the job ourselves.