Moralising Poverty and the Two-Tiered Welfare System / Rachel Mackay

Following the economic downturn after the Great War, the New Zealand Government of the 1930s took drastic and unprecedented steps to heal a nation.

With the introduction of the Social Security Act 1938, Aotearoa established the modern welfare state, instituting ten benefits with the understanding that every citizen had the right to a reasonable standard of living. It advocated that it was the responsibility of every member of the society to ensure that their fellows were safeguarded from poverty and uncertainty beyond their control. For the first time, welfare was extended beyond the ‘worthy poor’ - those individuals who came by their misfortune by no action of their own, such as widows and orphans – to encompass all those who needed to access it to support their households. The architects of this Act specifically rejected the insurance concept on this basis – that the care and welfare of citizens is a national responsibility.

Through the economic unrest of the last forty years, we come now to 2022 and the proposal of the Income Insurance Scheme. This would introduce a user-pays, insurance-based safety net for New Zealanders who lose their jobs through redundancy and ill-health. It requires a 1.39% levy on wages from both the employer and the employee and it would provide up to 80% of the individual’s normal pay for 6 months while they look for a new job of similar standing and pay or up to 12 months if they are engaged in training or rehabilitation. On the surface, this scheme appears well considered and timely, especially considering the current economic uncertainty as we climb out of the Covid Era. However, the Covid response itself begins to shine a light on some of the holes in this approach to welfare.

The Covid-19 Income Relief Payment (CIRP) was instituted between March and October 2020 to support those who lost their normal form of income due to the pandemic. It was paid for 12 weeks to assist in covering the income loss while individuals searched for new work. It paid up to $490 a week, depending on how many hours an individual was working before they lost their job. At the same time, the normal, everyday JobSeeker benefit continued for those out of work in ways that predated or were not related to the pandemic. In stark comparison, these individuals were eligible for only $281 a week, with much stricter conditions on eligibility. The reason given for this was that people who normally are employed live in such a way that they had higher living costs, and would need more support to maintain the lifestyle they were used to while they looked for new jobs.

The question was raised then and is now raised again in the light of the Income Insurance Scheme – if the normal amount of welfare support provided to households is ‘insufficient’ to support the needs of anyone who may find themselves out of employment, is it sufficient for anyone? If the regular levels of payment cannot provide for the quality of lifestyle of those who are normally employed, why is it considered sufficient to provide for a quality of lifestyle of those who are normally on lower incomes, or have benefits as their main source of household income?

The Social Security Act changes in the 1930’s removed the government’s classification of people as ‘worthy’ or ‘unworthy poor’, but people still think strongly about those on the benefit in these two ways. Those forced into poverty through injury, illness, or acts outside their control are not criticised or looked down on for accessing welfare. In contrast, ask many people how they feel about long-term welfare beneficiaries, especially those on JobSeeker, and you will receive a mixed response varying from encouragement to insult. Recently, leader of the National Party, Christopher Luxon, noted in an interview that he considers that New Zealanders “don’t just do bottom feeding and focus on the bottom.” While he, when later interviewed, adjusted the context of these words to be more acceptable, the initial message was clear – this country values some individuals more than others. We value those who work more than those who do not.

Social Insurance expands this idea of modern categories for the worthy and unworthy poor into the core of welfare support. If you are the kind of person who has lost your income in a way that has been decided is worthy and outside your control, then you should have access to separate and higher level of support than others who do not have jobs. Your ability to retain a lifestyle that provides you and your family with dignity is more important than extending that same respect to those whose choices and circumstances mean that they are also without work.

By moralising the way in which people find themselves without income, we are creating a two-tiered system of welfare that does little to protect a promise that “people have an adequate income and standard of living... ensuring that they can live in dignity and are able to participate meaningfully in their communities” – the government’s own vision for the modern Social Security Act.

If we are so concerned that the existing forms of Social Security cannot provide for the dignity of life for individuals who have been made redundant, we should as a nation take serious stock as to why we find the payment amounts and conditions attached acceptable to anyone within our communities. Every individual, no matter what they earn, is intrinsically valuable, worthy of respect and dignity, and deserves to be treated that way. If instead of pouring time and resources into a new system for this generation’s new “worthy poor”, we instead invested in making our Social Security function as it was intended to for all New Zealanders, then this two-tiered system would be unnecessary.

Rachel Mackay is a policy and data analyst for the New Zealand Council of Christian Social Services, working in the Impacts of Poverty and Exclusion portfolio.

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