National’s plans for the Domestic Purposes Benefit (DPB)have drawn a predictable response from the far left, while others have hailedthe changes as well overdue. The DBP has always run a fine line between makingsolo-mum an attractive career choice and providing reasonable assistance tothose in genuine need. More workers mean more money to go around and workingtowards financial independence can be very empowering for a person. Althoughmost people do see handouts as a temporary last resort, we need to avoid havinga 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 orthose unfortunate bouts of Tourettes syndrome that occur only during jobinterviews. Most of us find ourselves in tough circumstances occasionally, butonly some people genuinely need government intervention. People can be borninto poverty, some are victims of circumstances, others make bad choices and manychose a reduced standard of living now so they can train for a better future. Ifwe are to have a truly prosperous society, we need to know when it isappropriate to intervene.
The current government likes to play the part of theall-powerful provider. If you take tax off the workers and hand it around, youmight make more friends than enemies. You can bribe the students, increase thenumber of people on welfare and instead of simply cutting taxes for nine yearsjust 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 conditionshave produced near full employment, swelled the government coffers and raisedwages across the board. Yet it is clear from the graph presented that thegovernment has been unwilling or unable to reduce our reliance on welfare. Even adjusting for inflation and population growth, the Labour party hassucceeded in increasing our welfare bill during the most favorable economicconditions my generation has even seen. In 2007, they spent over $17 billionon 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. Studentswould be paying off their loans faster and people would be less likely to turnto the government for help because their wages would be higher and they wouldbe paying less tax.
Academic study is not only accessible for solo parents, butgreatly increases their long term employment prospects. Helen Clark’s commentsimplying solo parents should have the freedom to stay completely out of work ortraining, even when their child is at school, show us just how wide the net hasbeen cast. Those of us who pay tax start looking around and wondering whenworking for a living became a casual choice for some people.
But what of the working poor, the growing underclass we hearso 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 therich. But the problem with demonizing and taxing the faceless rich is youpunish hard workers right across the social spectrum. Why can’t we seebecoming wealthier as something positive to aim for? Thanks to economicgrowth, your becoming wealthier does not mean someone else must become poorer. If you earn more by becoming more productive in your job, inventing betterproducts or creating good ideas, then society benefits too. What you actuallydo with your money if you become wealthy is up to you and charity featureshighly on many people’s lists.
The second approach to tackle poverty is to cut taxes acrossthe board and focus on policies that will help grow the economy. Not only willlower income workers receive an immediate cash bonus from tax cuts, but incomeswill continue to rise within the low tax environment. There are non-welfaremechanisms like the minimum wage which can help ensure that everyone benefitsfrom a growing economy.
The Robin Hood approach can only go so far in helping thosewho find it difficult to support themselves. Independence should be theultimate goal for those capable of achieving it. Perhaps we may start valuingfinancial success as a legitimate goal in life, rather than putting people intoboxes 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 byworking both harder and smarter. It’s time we stopped looking to the governmentwith outstretched hands and got on with the job ourselves.