Politics - The DPB: The Unfortunate Experiment (17 August 2009)

The recent furore over the generosity of income support paid to sole parents on the Domestic Purposes Benefit (DPB) is symptomatic of an undercurrent of discontent within our society. Put bluntly, taxpayers are sick and tired of supporting people who could and should be working for a living. To their credit, National appears to be listening.

In the last couple of weeks the Government has made two major announcements about welfare reform. The first was the launch of the $152 million youth job plan designed to prevent young people going onto welfare. The second signalled a tightening of eligibility for the Sickness and Invalid Benefits following revelations that taxpayers are now paying $10 million more a year to support beneficiaries who are too drugged or drunk to work. Figures show that 6,168 people, who are claiming the Sickness or Invalid Benefit have listed drug or alcohol abuse as the main reason why they can’t work - up from 5,361 a year ago.[1]

These reforms are a welcome change. For too many years welfare has been regarded as the sacred cow of New Zealand politics, fiercely guarded by the welfare lobby, feminists and other do-gooders who have a vested interest in maintaining the status quo. As a result, it has been almost impossible to have a sensible debate about the fact that the welfare system is now seriously out of kilter with the realities of modern-day New Zealand society.

This time, however, the revelation that many sole parents are getting far more money on the DPB than they could get in the workforce ignited public anger and outrage. The public now realise taxpayers (they!) can be saddled with paying for women who could and should be working, to stay on a benefit for almost a lifetime. Under the current rules sole parents on the DPB are not work tested and as a result are entitled to collect the benefit until their youngest child is 18 years old!

At the end of June, out of the 310,296 registered working age welfare beneficiaries 104,400 were receiving the DPB. Over half of those DPB recipients were Maori or Pacific Islanders, and three quarters had been on a benefit for longer than a year.[2]

The problem with the DPB is twofold. Firstly, society has moved on from the days when the DPB was designed back in the seventies. Then, mothers routinely stayed at home to look after their children while their husbands went to work. These days the norm for most women involves the juggling of jobs, children and households, with fewer and fewer mothers able to afford to stay at home full time to look after their children. A key part of the reason for this is that the tax burden on working families is now far greater than it was in the seventies. That is, to a large extent the result of the burgeoning welfare state which costs every man, woman and child in New Zealand around $2,200 a year (excluding pensions).[3] It is therefore surely an unacceptable state of affairs if the only parents who can afford to stay at home for 18 years to look after their children are sole parents on the taxpayer-funded DPB.

But there is another even more insidious problem with the DPB. When it was first introduced, it was designed to support women with children whose marriages had broken down. Over the years, however, as a result of the incentives inherent in the DPB - which pay many women more to raise children than they could get working in a job - this benefit has become a key driver of illegitimacy and unmarried motherhood in New Zealand.

The numbers tell the story. According to Statistics NZ, in 1968 there were 62,112 live births, with 87 percent of the babies born into families where their mum and dad were married. This compared to 13 percent born to unmarried mothers. Forty years later, the statistics clearly illustrate the decline in marriage as the foundation for raising a family. In 2008 only 52 percent of the 64,343 live births were to women who were married, while 48 percent were to unmarried women.

However, there is a more worrying aspect to this change. The ethnic breakdown of the figures explains what is really going on. In 1968, 72 percent of Maori babies were born to mothers who were married, while 28 percent were born to unmarried mothers. This compared with 89 percent of non-Maori babies born to married mothers and 11 percent to unmarried mothers.

But by 2008 the figures point to the almost total collapse of the traditional Maori family: only 32 percent of Maori babies are now born into a family with a mother and father who are married. A staggering 78 percent of Maori babies are born to unmarried mothers. For non-Maori the comparative figures are 65 percent of babies are now born to married mums compared to 35 percent to single mothers.

Politicians and policy makers simply cannot continue to turn a blind eye to such a massive change in the social fabric of New Zealand, especially when it is their policies that are a key driving force. The reality is that the DPB, through providing a secure income to women to raise their babies on their own – with more money available if they have more children – has incentivised single parent households. The result for many of those illegitimate children born to single mothers on welfare is socially devastating, and the economic cost to taxpayers colossal.

According to British analyst Blair Gibbs, “The consensus is that out-of wedlock birth and growing up in a single-parent family means the child tends to experience retarded cognitive development; lower educational achievement; lower job attainment; increased behaviour and emotional problems; lower impulse control; and retarded social development. Unsurprisingly, such children are far more likely to engage in early sexual activity; have children out of wedlock; be on welfare as adults; and engage in criminal activity.”[4]

The time for New Zealand to address our welfare crisis is now.

The public instinctively knows that the DPB needs to be changed. That is not to say that unmarried or separated parents shouldn’t receive support – of course they should. But the support should be delivered through other assistance mechanisms, not through the stand-alone DPB.

An examination of how different OECD countries support lone parents is revealing.[5] New Zealand is one of only about four countries to have a special stand-alone benefit for sole parents. The fact that the DPB appears to be the most generous, with no enforceable work requirements, helps to explain why New Zealand has one of the highest rates of child deprivation and sole parent dependency in the OECD.

Over the last few years, a great deal of concern has been raised about the problem of Maori disadvantage. But until the DPB is replaced by a system that rewards responsible parenting by both mothers and fathers, the appalling problems will continue to grow. No amount of hand ringing or government funding will make any more than a peripheral difference if the DPB is allowed to continue destroying the life opportunities of children.

Welfare commentator Lindsay Mitchell has been researching this issue and has recently published a report, “Maori and Welfare”. She has generously agreed to share her work with NZCPR readers through a series of regular columns – the first one starts today.

Lindsay is also this week’s NZCPR Guest Commentator, with an article that raises concerns about a rarely discussed benefit, the Emergency Maintenance Allowance (EMA), which is the precursor to the DPB. The EMA provides funding for teenage girls who get pregnant, but are too young to qualify for the DPB. The EMA is an insidious benefit in that it locks many teenage girls into welfare lifestyles, as Lindsay explains:

“Every year thousands (5,000 in 2008) of teenage girls give birth and over half go on welfare. Because they have failed to complete their education or attain work skills, welfare traps them. Their income is comparable to any working wage they can command, so they get stuck. The only way to increase their benefit income is to add to their family. Many do.

“At least half (the Ministry of Social Development can only supply historical data relating to beneficiaries 35 or younger) of the single parents currently on welfare first received a benefit as a teenager. Clearly, in this context, the benefit is not a safety net. It is a lifestyle. Not a particularly pleasant one. Being bound long-term to welfare often involves a financial struggle from one benefit day to the next; getting deeper and deeper in debt; falling foul of various authorities; finding temporary relief through drinking and drug taking; finding temporary relief and hope in front of the pokies; getting involved in criminal activity to supplement the benefit; forming relationships that produce more children but turn abusive – financially or physically; being powerless and vulnerable. This is the lifestyle too many Maori are slipping into or defaulting to via an early entry into the benefit system.”

In her article, Lindsay makes the point that in announcing that the Government’s new youth job plan to stop young people going onto welfare, the Prime Minister may inadvertently have created an incentive for even more young girls, who lack the skills and inclination to get a job, to get pregnant. It is the old story of unintended consequences. But if this situation does eventuate, we should be able to expect that the system will be changed.  

Now that the Minister of Social Development – supported by the Prime Minister - has shown that she has the courage to stand up to the welfare lobby’s hysteria, sticking to her guns over the removal of new entitlements to tertiary education funding for DPB recipients, I would urge her to turn her mind to the bigger issue.

New Zealand’s problems with the DPB will not go away until that benefit is replaced by one that is more appropriate for this day and age. Tweaking is not the answer, the problems are fundamental.

Back in the seventies the DPB was a feminists’ dream – state funding for women to have and raise children independent of men. But this social experiment, based on a misguided notion that children don’t need a father and mothers don’t need a husband, was always destined to fail. The tragedy is that it has taken politicians this long to recognise that the model is flawed and is in urgent need of change. Unfortunately the tragic consequences of this failed social experiment will not be reversed overnight.   

Read more from New Zealand Centre of Political Research.

FOOTNOTES:
All articles can be found on the NZCPR RESEARCH PAGE
1.Dominion Post, Drug-abusing beneficiary costs up $10 million
2.Ministry of Social Development, National Benefit Factsheets 2009
3.Treasury, Welfare Benefit Expenses
4.Blair Gibbs, The Underclass and Crime: How to deal with an Economic, Political and Cultural Disaster
5.OECD, Benefits and Wages: Statistics

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