PAULA BENNETT interviewed by GUYON ESPINER
GUYON Thank you Minister for joining us this morning, we really appreciate your time. You spoke in parliament this week about a rising tide of dependency which was going to threaten our children's future, what evidence have you got for that?
PAULA BENNETT - Social DevelopmentMinister
Yeah well certainly the projections I've seen looking out in 10, 20 years time, you know, if we had just the number that are on benefits now, we're looking at sort of a $20 billion cost without it sort of rising. Treasury sort of forecast it rising. If we don't do something in MSD you know in the best of times, and you know in the mid 2000s we saw still sort of quarter of a million New Zealanders reliant on welfare.
GUYON That had come down dramatically hadn't it Minister? Because there were 400,000 people on benefits when National left office in 1999 - 400,000. That went down to 286,000 when Labour left office in 2008, and they were supposedly soft on welfare. So doesn't that alone prove that your tough on welfare approach isn't going to work?
PAULA I think it tells us the opposite actually. What it says is yes they got the unemployment benefit down considerably, so when we came into office about seventeen and a half thousand people were on the unemployment benefit. But actually the invalids benefit had gone up, actually the sickness benefits had gone up and the DPB had stabilised, so in the best of economic times yes they made a difference to the unemployment benefit, but they made no difference to the others and in fact they increased.
GUYON But the unemployment benefit as you say, dramatically went up during the first year of you being Minister, it more than doubled to 66,000. Now that doesn't prove that you're a bad minister, that proves that it's the economy which affects unemployment and not welfare sanctions.
PAULA That affects the unemployment benefit and I would completely agree with you. So what we needed to do was just a few tweaks around that to make sure that we had the policy settings right, and we weren't letting people fall into long-term dependency. What we also did in that first year was spend a bit of time making sure that those portals, if you like, between the unemployment benefit to the sickness benefit to the invalids benefit were tightened and we did that considerable. So I agree with you on the unemployment benefit, but actually the others have been ignored and have risen in the best of times.
GUYON Well let's come to that in a second, but just before we leave the unemployment benefit, you're introducing a new penalty regime in terms of sanctions that could see benefits partially cut, and cut completely. Obviously you're not happy with the current regime. How often is the sanction regime being used at the moment?
PAULA Yes over the last year from memory about 3,700 people were sanctioned. That's 100% cut off, so their benefits were cancelled 100%.
GUYON But 29,000 altogether had some form of sanction?
PAULA Some form of sanction, but that means a letter was sent to them saying gosh you'd better turn up. What the actual benefit cuts were was less than 4,000 for well over a 100,000 people moving on and off benefits last year. So that's very low. So the sanctions are a letter, what we actually are talking about is benefit cuts and only less than 4,000 of them were done, and that's because Case Managers were reluctant to do them because they didn't fully understand what had to be done, because it was 100% cut and also for those on the unemployment benefit, they didn't understand it completely either. So we just simplified that system and introduced a half way mark, which we think is a lot fairer.
GUYON You're introducing a work test for people on the sickness benefit who could also face sanctions if they don't comply with work obligations, such as failure to attend a job interview. Now I can imagine that quite a few people on the sickness benefit who are mentally unwell, might miss job interviews, and may have their benefit cut by 50%. If you're 21 years old the benefit's $161, you'd be living on $80 a week, I mean is that fair?
PAULA They will still keep their add-on benefits, so the accommodation supplement if they get it, the disability allowance and those sorts of things, so just to keep that in perspective. But yes you're right, but that is for at the moment 9,000 people who have the box ticked by a doctor who says I think they are capable of working part time. Let me just give you a quick example, so in one of our Work and Income offices the Case Manager in charge of the sickness benefit said she'd write to all of those that have had that box ticked, and invited them to come in and get assistance to get into a job. Not one person turned up, and there was nothing she could do about that, because there is no work test on those people.
GUYON Those anecdotes are around, but let's look at the facts though, 9.000 people as you say are assessed as being capable of working part time. The vast majority of those people have psychiatric problems, they have mental health problems, a lot of them have depression. Would it be so surprising to you if those people failed to turn up for a job interview.
PAULA Let's also deal with the fact which says that people, with low level depression and low level illness are often better off in work, and it's actually a road to recovery for them, it actually helps them get better. So it's not actually all penalties, this is actually what I believe is helping people get well and actually work is a big part of that. So yes they may miss an appointment....
GUYON So what does society do with a person who's on 80 odd dollars a week or 100 dollars a week, what do we do with these people, are they gonna beg in the street?
PAULA Guyon in all fairness, if someone missed an appointment and it was because of their illness or unable to do it, we're actually a country that understands that. My Case Managers understand that beautifully.
GUYON But you're relying on the Case Managers though aren't you?
PAULA Yeah I am, absolutely I am, I think they have the ability to work with people, understand the differences because we've actually got 9,000 individuals there all with different illnesses, all with different needs, and I am putting faith in those people to understand them, and get it right.
GUYON You talked about the upside for sickness beneficiaries. What do you think, do you think it's gonna be worthwhile for them to work for say 15 to 20 hours a week, is it going to be financially worthwhile?
PAULA Yeah for some of them it will be, and others I think they're gonna be coming out just about matched or only a little bit better off. But as I've said it's not just that sort of financial benefit, it's also the ones socially, it's also a help to recovery. We all know that being in job you're more likely to get another job, it's more likely to lead to more hours when you can, you're socially getting the benefits, it's not just the economic benefits.
GUYON Let's look at those economic benefits, did you consider seriously Treasury's advice on this issue?
PAULA Yeah, of course I did.
GUYON And what did they tell you?
PAULA I mean when they looked at it they said sometimes we've got to - it's actually for most of them, it's that crossover between IRD and how those benefits actually work as well.
GUYON No but Treasury recommended that the policy should not go ahead didn't they? They said that the work test should not go ahead, they said that essentially you'll be having people working for nothing. They gave an example of a beneficiary on the minimum wage who would receive one dollar an hour extra benefit. They say you work for 15 hours a week you're $70 better off, you work for 20 hours a week you're $75 better off. Is it fair to have a mentally unwell person working for a dollar an hour, that's effectively what you're doing?
PAULA Treasury also said that actually they were worried that if we started part-time work testing those on the sickness benefit then we're ignoring that actually the sickness benefit is a temporary benefit for people who are unable to work temporarily and then move to full time.
GUYON Address that please Minister, is it fair to have a person who's unwell working for a dollar an hour extra gain?
PAULA Well I actually think it's about more than just the economic benefits, and that's one example, it will depend on what they're on per hour, it would depend on the add-on benefits they get, they don't lose their accommodation supplements, they also get a disability allowance.
GUYON You're about incentives though.
PAULA Yeah we are.
GUYON Yeah, and where's the incentive on a dollar an hour?
PAULA Look I think that actually those on the sickness benefit will be better off in work, you've given an extreme example of a dollar an hour.
GUYON No I'm giving you Treasury's example Minister, this is what the Treasury told you in your Cabinet papers.
PAULA Yeah, and they've also ...
GUYON It's not an extreme example is it?
PAULA Well no, it is an extreme example actually.
GUYON Well many of these people will be on minimum wage won't they?
PAULA Yeah and many of them won't be. You're actually I think underselling them, and I think they've got something to contribute, both for themselves and for the economy, and I'm going to back them to do it.
GUYON You're also introducing for people on the sickness benefit an extra medical assessment at eight weeks. How many more medical certificates are we gonna see processed as a result of that?
PAULA Yeah certainly talking to GPs and talking to Case Managers and things, they're saying actually for many it won't be an extra visit as such.
GUYON How many? How many more medical certificates?
PAULA Well actually most of them go three times in the first 12 weeks to their doctor, it's quite the norm at the moment.
GUYON Well your papers say that it's 49,000. I'll put a figure on it for you, 49,000 in a year. And this is what they told you, they said that this will increase sickness beneficiary visits to General Practitioners by an estimated 49,000 per year, this may increase waiting time for General Practitioners' appointments in some areas of New Zealand I think.
PAULA Yes they've gone for that real hard end of it, but the reality is that for someone that's so unwell that they're on a sickness benefit, actually when they start out on that to visit their doctor three times in the first 12 weeks is not unrealistic. We're also looking at some of those areas where there just isn't enough GPs or it's too hard to get in, we'll certainly acknowledge that, they won't lose their benefit because they haven't been. They're just going to have to have made an appointment and be going at some time. So there's a degree of flexibility in there for people, and we're not going to be unrealistic for those that can't get there.
GUYON Are there people on the sickness benefit who aren't sick?
PAULA I'm sure there's - it's assessed at the moment by doctors that they should be there, there's many different reasons, there's those with drug and alcohol problems, there's those with low level depression, there are those that have hurt themselves and they're not able to get on ACC, there's just such a difference - you know there's 58,000 on it at the moment and they're all individual and all with very different illnesses.
GUYON But you must have a pretty good idea whether you believe that there are people on the sickness benefit, who simply should not be on it, they're not sick, they can work, they're just malingerers.
PAULA I believe there's people that could be getting well faster and we could be helping them to get back into work quicker.
GUYON Because what role do the doctors play in this because presumably they're not lying are they?
PAULA Of course not, and for the doctors we have certainly been working on that relationship and actually Labour were as well, and then we've been doing a lot of work with them over the last few months. We're gonna be changing the forms that they fill in to put someone on either the sickness or invalids benefits, get that a bit better in line, I think we ask too much of our GPs at times, without them having access to the information that they should.
GUYON Can you guarantee, sitting here this morning, that this is not going to clog up the health system, because to me 49,000 extra medical assessments in a year sounds like a lot, your own Ministry of Health has some fears about that. Can you guarantee this isn't going to clog up the health system?
PAULA I just think that you can see that someone that's unwell enough to be on the sickness benefit actually they're already visiting a doctor at least twice, most of them are actually visiting three times anyway, and I don't think it is going to unnecessarily clog up the system.
GUYON These people are at the sharp end of this, some of these people have been on benefit for quite a long time, another area where people spend considerable time on the benefit is the Domestic Purposes Benefit, and you're looking at some quite strong changes there. Some 40-odd thousand, 43,000 isn't it, who have a child who's the youngest one aged six, they will be the ones who are made to seek 15 hours a week of work. Where are the jobs for these people?
PAULA Yeah look, they're not going to be there overnight, and we're really aware of that, so the policy's not coming in until October anyway and then we're just going to be part time work testing those in a staged process.
GUYON Four and a half thousand at a time.
PAULA Yeah four and a half thousand at any one time, so as people move up we'll sort of keep it at four and a half thousand, so people move on and off.
GUYON It's gonna be pretty difficult isn't it for those people, in a tough economy to find jobs with flexible family friendly hours that they can actually go home in the school holiday presumably. How are they gonna find those jobs that single people without those issues can't even find now.
PAULA A number do now, so let's be frank just not those that are on the DPB but a number of people that are working actually find jobs and whether they're in a relationship or you know not reliant on benefits, and actually a whole heap, 14,000 in fact actually on the DPB currently work part time. So I'm not saying there's gonna be 40,000 jobs in October reading in the perfect hours for those on a benefit, but I do believe that they will be there over time, I do believe there will been to be an element of flexibility, hence I'm looking at the after-school child care allowance.
GUYON Yeah but that's a minimal increase though isn't it Minister, that's two million extra that you're putting into that.
PAULA Actually 4.2 million we're putting into OSCAR ...
GUYON Over three years, it's two million a year, it's not much.
PAULA Yeah but what we need to do is actually just tweak the bureaucracy around it. I couldn't believe it when I became a minister and looked at the OSCAR and how hard we made it for people to actually step up and do the after-school care, but we can cut a whole lot of that and that will just open up a lot more programmes.
GUYON Well is that right? Because your own papers say that the changes that you're making to child care and I'll quote them, they do "not address more fundamental questions about the adequacy of child care provision". I mean this affects 70,000 children this policy, the child care simply isn't there for them.
PAULA No I mean we're about average I reckon in that, when you look at it overseas, as far as the provision that we've got and where it's going. It's something this government has put a strong focus on and we're quite committed to that early childhood sector, but I also don't want to undermine the informal stuff that goes on. I think we're sort of getting to a stage where we expect government to provide everything and actually subsidise everything. I know for myself it was other mums picking up my daughter, and I picked up theirs every you know third day and you actually swap back. Are we getting so prescriptive and it's gotta be with everything else that we're actually undermining what happens between parents with extended family, and we just now turn to the government and they must provide a place for every child after school or early childhood? I just think we need to start asking some questions around that.
GUYON Before I leave the DPB the sanctions that you're putting on people, a 50% reduction, that's as low as it can go when they have children, that's still going to have a massive financial impact. If you cut someone's DPB no matter how bad they've been, you're actually punishing the children aren't you for the sins of their parents?
PAULA Yeah well those parents can turn up and recomply that day, you know they can recomply the next day, it's a very simple process to recomply.
GUYON Hang on, you're gonna cut the benefit by 50% and then they turn up the next day and recomply, in other words they get the benefit back?
PAULA Yeah, absolutely.
GUYON Well what sort of sanction is that?
PAULA Well they have to turn up and recomply, so they have to actually turn up and do that, but actually they have to have not been doing...
GUYON So you're going to cut someone's benefit off, you go through that administrative process, you suspend the benefit, they turn up and you go through the process and it's back again?
PAULA Yeah absolutely, why on earth wouldn't you? We're not going to say well actually we're cutting it for a month or two months, all we're saying to you is there's obligations.
GUYON So this is a one day sanction, we didn't know that.
PAULA No that's not true Guyon, you're actually exaggerating it out now.
GUYON Well you're saying all you have to do is turn up back again at the office and it's back on?
PAULA No I'm not, I'm saying they have to recomply, and that's quite different things. So shall I have my go cos you've had yours? So actually what happens is there's set rules that must happen for people to be actively looking for work, the jobs aren't there nothing changes. We're just saying actually we've got this fantastic system now, we've got 6,000 jobs in Work and Income at the moment on our books, we actually match them to people with those sorts of skills, we contact them and say come in and see us we'd like to talk to you about a job that's there. We then expect them to go to that interview if we set it up for them. If they don't attend at that interview and we then write to them and they have no reason for not actually attending that interview, then they don't actually even come in and explain to us why they didn't attend at that interview, yes there could be repercussions for that, and that could be a 50% cut. They could turn up the day after that happens and say actually yeah probably should have turned up, sorry I didn't, what can I do to go back on? And we'll say attend this interview this afternoon and your benefit will be on that night, and I don't think that that's unrealistic at all. So yes it may be for a day, but it's not a one day policy at all. It's actually about people reaching their obligations, meeting them, and if they don't just recomply.
GUYON We take this forward into the future because you've set up a task group to look at further welfare reform, what will their focus be?
PAULA Yeah well I want to look at those sorts of long term policy settings really. I mean when you look at the invalids benefit and the sickness benefit, how do you rehabilitate people to get well, is the current system really working for them?
GUYON So that will be their focus, rehabilitation?
PAULA Yeah, one part of it will be rehabilitation. It will certainly be that long-term welfare dependency looking at the OECD, we've asked them to become involved and show us what's happening overseas, what is working, what's not. I just think we need to have a really good look at it, put ideology aside a little bit and question ourselves as to where are those policy settings, are we getting them right, where are we heading longer term.
GUYON Most of these changes come in on October 4, some of them coming in May this year.
PAULA 27th of September actually.
GUYON September this year?
GUYON Forgive me - so September this year. Are you going to be here to shepherd those through, because you are taking a scholarship at some stage later in the year, are you going to be here shepherding through some of these pretty crucial reforms?
PAULA It's fair to say that the work's going on now, it has been going on for the last year, and we've certainly got these next few months to get it right, as far as Work and Income being read for them, this is the crucial time, I'm very aware of that and the level of responsibility that I have leading up to that.
GUYON When do you go away on this scholarship?
PAULA I'm going away early October, so I am going away then, but we're putting them in in September, but I think actually it's the work that goes on now that'll make that difference then.
GUYON So are you gonna be here when the reforms actually kick in?
PAULA Yes I will be.
GUYON You will be yeah. Right we'll see how they pan out. Thanks very much for joining us this morning. We appreciate it.