$78 billion

September 13th, 2012 at 10:00 am by David Farrar

Kate Chapman at Stuff reports:

The lifetime cost of current beneficiaries is more than $78 billion, a new report has found.

An actuarial valuation conducted as part of the Government’s welfare reforms shows the average total cost of all who had received a working-age benefit in the year to June 30, 2011 was $78.1b.

Of that, $17.8b came from those who started out on the DPB, $19.1b from those on an invalid’s benefit and $7.2b to those who were on a sickness benefit.

Just five per cent of the total cost, or $4b, was from those who started out on an unemployment benefit.

They’re some large figures, and do demonstrate why it it important to reduce the numbers of people long-term on welfare. Those on the dole tend to be for a short period of time. It is the other three major benefits which have the bigger impact.

But the fiscal cost is not the main reason we should try and reduce the number of people on long-term welfare. It is for the benefit of those actually on welfare. There are a small number of people who are genuinely incapable of ever being able to do any paid work – and they should get gold plated support.

But most people are capable of some work, even a few hours a week. Yes they’ll still need income support, but being in work benefits people not just financially, but physically, emotionally and mentally.

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30 Responses to “$78 billion”

  1. fish_boy (152 comments) says:

    So how about your mates in the Beehive actually getting off their lazy arses themselves are provide the country with some jobs?

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  2. tom hunter (4,566 comments) says:

    But what about the “Big Polludars” (HatTip: Julia Gillard) and their lifetime cost?

    You may think these beneficiary debates have traction with the public, and with the Clarke administration still a reasonably fresh memory, you may be right. But the ETS angle that you have enabled is going to bite you (and the country) on the bum sooner or later in far more damaging ways.

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  3. Mighty_Kites (83 comments) says:

    Good to see another distraction to try and focus public attention away from the fact that under National our economy is well and truly in the tank

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  4. cha (3,856 comments) says:

    Lies, damned lies, and statistics.

    New figures reveal the New Zealand economy lost jobs in the past two years even though the Government says 50,000 new jobs were created.
    According to Statistics New Zealand, nearly 452,000 jobs were created between 2008 -2011. However, nearly 465,000 were lost.
    But Finance Minister Bill English says there has been a net gain of 50,000 new jobs in the past two years.
    Mr English’s office says the figure is based on the Household Labour Force Survey, which measures unemployment.

    But Statistics NZ says that’s not an appropriate measure of job creation and destruction.
    Instead the agency uses employer-employee linked data set to determine how many new jobs have been created and how many existing jobs have been lost.
    Mr English told Morning Report the Household Labour Force Survey has always been the measure of employment statistics.

    http://www.radionz.co.nz/news/national/115734/nz-economy-lost-jobs

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  5. tvb (4,255 comments) says:

    That is a huge number. We have too high debt, our welfare costs are far too high and our dollar is killing exporters. The Government could bring in a programme is quantitative easing to deal with our debt and our high dollar. I assume this will form part of Labour Party policy.

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  6. Scott (1,736 comments) says:

    Some very good points DPF. I couldn’t agree more.
    This afternoon I am going to have afternoon tea with some fellows who are on the mental health. They live in a community house. They have staff to look after them and help them cook their meals. But one thing I noticed about them is that they don’t have a lot to do. They seem bored.

    To me if they were able to work even just a few hours a week that would make all the difference. Their self-esteem would be higher, they would have some activity to keep them going. Now they are to be frank, not worth paying the minimum wage for. But if they could be paid something for work? I reckon that would make all the difference in their lives.

    So I think one thing that would get people back to work is more market and less restriction on labour laws. Too many youth for example are on the unemployment benefit. If youth rates were reintroduced I think the number of young people on benefits would fall and the number of young people working would rise. Apparently our youth unemployment rate is something over 25%. Young people need that first job. Okay, if it doesn’t pay much well at least it’s a start.

    We need fresh thinking from this government. Let’s think about a more flexible labour market and get people back to work and off the benefit.

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  7. Mark (1,432 comments) says:

    Not that I disbelieve the enormity of the cost of welfare it would be interesting to see the assumptions and variables used in making this grand statement. Lifetime costing is fraught with wild swings when the variables are changed only marginally. I have to say I am a bit sceptical of this.

    As for the household labour force survey Statistics NZ is correct in that it is not a good basis for the measurement of improvement or otherwise in employment.

    All that said you get the sense that if Labour had the reins on treasury in this environment it would be a Cluster$*!* right now.

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  8. tom hunter (4,566 comments) says:

    Lies, damned lies, and statistics.

    Indeed Cha. Much as I don’t like cutting and pasting across blog threads, I think this deserves a place here as well as GD …

    For those interested in how one can lie with statistics, there’s this terrific YouTube piece. They analyse a recent, very carefully crafted statement by Obama:

    Our businesses have gone back to basics and created over 4 million jobs in the last 27 months–more jobs than were created during the entire 7 years before this crisis in a little over two years.

    If somebody ever asks you whether you can lie while telling the truth, this is a great example.

    And Bill is not as slick apparently.

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  9. Mark (1,432 comments) says:

    DPF you make some good points.

    Welfare is a scourge on this country currently. I am all for protecting people genuinely in need of a hand up. The problem is we now have a mentality in this country of welfare entitlement.

    We have worked with a refugee who on arrival spoke no English, had 3 kids to support and could not read or write. This person now has 2 part time jobs supporting 3 kids through school the eldest of whom will begin University next year. This person’s aim right from the start was to contribute and not be a burden on a new country that provided the chance of a safe and decent existence. These part time jobs are cleaning jobs, they are poorly paid but they have been a start.

    Contrast this to some of our long term beneficiaries who have intergenerational dependency on welfare and an aggressive sense of entitlement to the money and support they receive.

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  10. hmmokrightitis (1,572 comments) says:

    Somethign Ive been toying with for a while, based on the mentoring work I do. Was trained to mentor years ago as part of my role at ‘big 6 consulting firm’. Found its an amazing way to put something back, pay it forward and to improve my own skills and awareness all at the same time. And the people Ive mentored have all gone on to amazing careers and lives, and many are themselves now doing the same thing. Its an amazing process.

    Ive been toying with the idea of taking it wider, and really making a difference here in NZ. Im just one person, but if I can enlist dozens, the impact starts to become exponential, and people can really start to build confidence in their own ability to make a difference – for themselves and their community. And the ability to take this from business and into the beneficiary community might make a huge difference, I really dont know, but would welcome some feedback. Confidence is the primary thing Ive found – the willingness to take a risk and go for it.

    So yes, batshit woman and ross, I fucking hate bennies, bash the crap out of em all the time.

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  11. tom hunter (4,566 comments) says:

    The Government could bring in a programme is quantitative easing to deal with our debt and our high dollar

    Because QE in the US and its LTRO siblings in Europe have really kicked their economies into high gear. Petrol at $NZ 4.00 per litre will only put a slight dent in our wealth creation, no?

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  12. Graeme Edgeler (3,277 comments) says:

    Someone on Twitter pointed out that the life-time cost of a beneficiary was something like one-quarter of the *annual* cost of a cabinet minister, which I thought was rather clever…

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  13. The Scorned (719 comments) says:

    There are a small number of people who are genuinely incapable of ever being able to do any paid work – and they should get gold plated support.

    ……funded via voluntary private donations to private charities.

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  14. Manolo (13,517 comments) says:

    A system created with the best intentions to assist to the needy and infirm is now inhabited by many a crook milking the system and getting undeserved benefit money.

    Welfare reform is well overdue. However, it does require the internal fortitude that Key and the current National Party entirely lack. It goes without saying, the Luddites and Labour will give even more money to the bludgers.

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  15. Redbaiter (8,032 comments) says:

    Wow, hmmmokI’musuallyacompletemoron actually says something sensible for the first time in about 823 comments.

    I guess that means getting up to 1600 odd before we see the same again.

    (actually, re mentoring, before socialism, and the concept of big caring govt, that’s how it worked)

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  16. Redbaiter (8,032 comments) says:

    To continue on from the above-

    (actually, re mentoring, before socialism, and the concept of big caring govt, that’s how it worked)

    But back then it was called “parenting”

    (sorry, ran out of time for the edit)

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  17. seanmaitland (472 comments) says:

    Graeme Edgler – that 130k figure is an average over all beneficiaries – there are hundreds of thousands of people who only claim the benefit for a few months, and it includes them also.

    Another simple maths question for you – there are how many cabinet ministers, compared to several hundred thousand beneficiaries over a given lifetime? Hint: one side has 78 billion spent on it, the other can be counted in the millions…….

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  18. Cunningham (829 comments) says:

    I am not sure what to think about the latest welfare policy announced to be honest. I am fully supportive of all of the things proposed (including ECE which has been FANTASTIC for my 2 girls) but as some have pointed out out, what does happen if it gets to cutting the benefit in half? Most will comply but some of the people on the benefit are truly horrendous parents as it is now. if they flatly refuse or cannot get their shit together to send their child to ECE then what will happen if there benefit is eventually cut? Their children will be well and truly fucked. I understand consequences but I would be very concerned (for their children) if it actually happened.

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  19. swan (659 comments) says:

    “It is the other three major benefits which have the bigger impact.”

    Other 3 DPF?????

    Arent you forgetting about the most expensive benefit of all? – Super?

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  20. annie (540 comments) says:

    There are a small number of people who are genuinely incapable of ever being able to do any paid work – and they should get gold plated support.

    Indeed. These are the people whose needs are continually ignored by successive governments – Labour because of an ideological conviction that to give decent support to the seriously ill and incapacitated is to distinguish between the ‘deserving’ and the ‘undeserving’ poor, National presumably as a result of lack of political courage.

    The genuninely incapacitated largely lead appallingly deprived lives, with high costs to compensate for their condition and no way to get any extra income.

    Unlike many beneficiaries, who refuse menial work or fiddle the benefit – including some of my extended family members, who haven’t been above various welfare scams in the past, including doing cash jobs or working under another name.

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  21. Pete George (23,344 comments) says:

    The genuninely incapacitated largely lead appallingly deprived lives, with high costs to compensate for their condition and no way to get any extra income.

    Unlike many beneficiaries, who refuse menial work or fiddle the benefit – including some of my extended family members, who haven’t been above various welfare scams in the past, including doing cash jobs or working under another name.

    That highlights a significant problem, the benefit user/abusers soak up a heap of money while those who really deserve assistance don’t get enough.

    This won’t be helped by just giving all beneficiaries more and more, and giving dollops to beneficiary families.

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  22. willtruth (245 comments) says:

    Mark. You allege that “the problem is we now have a mentality in this country of welfare entitlement”. But hang on. Back on the days before bankers wrecked the world economy and there were more jobs in NZ, most of these “lazy bludgers” were working. We had almost the lowest unemployment rate in the world. If our problem was “welfare entitlement” then wouldn’t these people refuse to work even though there were jobs? While it cannot be denied there are a few lazy bludgers out there, this is hardly “the problem” in this country. It’s a small problem at best. THE PROBLEM is that the economy is screwed and there are no jobs.

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  23. Pete George (23,344 comments) says:

    THE PROBLEM is that the economy is screwed and there are no jobs.

    More accurately, the economy is struggling, there aren’t enough jobs, and some people aren’t qualified or experienced enough for the sort of jobs that are or could be available.

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  24. Cunningham (829 comments) says:

    PG you make a good point. The number of low skilled jobs is decreasing and the number of people who don’t have skills is (I can guess) is increasing. willtruth we did have low unemployment but that was a time when there were alot of low skilled jobs to go around, no international business competition from the internet, no outsourcing etc. Those times have gone. Now days businesses have technology to do alot of those jobs or they do it in a cheaper way. It is no governments fault but rather the changes in technology. Unfortunately low skilled people are the ones who miss out.

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  25. willtruth (245 comments) says:

    PG and Cunningham. All good points. As you say THE PROBLEM is also that the unemployed don’t have the right skills. This is different from them having a welfare entitlement, so Mark is still wrong on that score. Someone like Steve Jobs would never be unemployed in any economy. But unfortunately the unemployed are not anything like Steve Jobs. They have failings to be sure, but for most of them”welfare entitlement” is not one of them, as evidenced by the fact that they were prepared to work when there were jobs that suited what skills they had. They failing is not that they think they are entitled to sit around and get paid money to do nothing. Their failing is that they are not smart enough, or they aren’t educated enough, or something like that, to go out and create jobs for themselves. Every country – even countries with first class education like NZ – has people like this. It would be great if we didn’t, but we do, so I think the only way to get them off welfare is to fix the economy. National’s strategy seems to be that threatening such people will help them unlock previously unknown depths of entrepreneurial brilliance that were lying dormant and they just needed a gentle shove. Good luck with that.

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  26. Paulus (2,565 comments) says:

    Fish Boy

    you usual crap

    Governments can only provide jobs in the Public Service.
    Companies and Shareholders provide jobs.

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  27. Cunningham (829 comments) says:

    willtruth incorrect, National is not saying that all these people can become the next Steve Jobs. They are trying to make to easier for business to feel confident to give them a go. Government is only part of the economy and jobs MUST be created by the private sector in order for us to have a robust economy. There are low skilled jobs out there but alot of them kiwis don’t want to do so they are filled by foreigners.

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  28. willtruth (245 comments) says:

    Cunningham. Really? OK then. Explain to me. How will drug testing of beneficiaries (to take one example) reduce the number of beneficaries? I suppose you will say that there are employers (e.g. a timber company) with unfilled jobs (e.g. lumberjacks) and they literally can’t find anyone to do the job. And there are unemployed people out there who could do the job (as a lumberjack or whatever), but they can’t cause they are drug addicts. And if we drug test the beneficiaries then this will get them off drugs (and not encourage them from easier to detect drugs like pot and only harder drugs like P) and this will make them suitable for hire.

    But hang on. Five years ago (before banks wrecked the world economy) most of the extra people who are now unemployed were working (as lumberjacks or whatever). What has happened? Do we suddenly have a lot more drug addicts?

    No. The problem is not that the unemployed are drug addicts who are unfit for work. The problem is that the economy is wrecked and there are no jobs for these people regardless of whether they are drug addicts or not.

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  29. hj (6,747 comments) says:

    Governments can only provide jobs in the Public Service.
    Companies and Shareholders provide jobs.
    ………………..
    That’s not true. Business lobbies for infrastructure; taxpayer pays.
    http://www.stuff.co.nz/business/money/4622459/Government-policies-blamed-for-house-prices

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  30. mister nui (1,012 comments) says:

    Hmmmmo at 10.40. I think I have something to offer (and receive) in regard to your mentoring. How does one get in touch with you?

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