Planned economy not planned unemployment

The Spark April 2010
Jared Phillips

In the first part of its first term the current National government strengthened its centrist positioning with a job creation agenda (national and regional job summits), redundancy packages (Job Support Scheme, transitional relief packages), and youth employment incentives (youth opportunities package). As was the international order-of-the-day, corporate welfare pervaded most of the policy that emerged. Now, outside of National and Labour’s struggle for the political centre, New Zealand’s increasing margins – the unemployed, the underemployed, the transient workforce – are up for direct punishment.

Key and Bennett launched Future Focus (aka beneficiary bashing)

As  soon as John Key and Paula Bennett announced Future Focus benefit reforms in late-March 2010 One News let the game begin with a headline story about Work and Income NZ fraud by an ex-gang member’s partner, who they’d ambushed with cameras at her court appearance. On queue, The New Zealand Herald (25/3/10) chimed the bell with its editorial ‘Benefit reform a step in the right direction’, in which there was a mouth-off about `Young women who regard the domestic purposes benefit as an open-ended career choice’, and a citation of John Key’s ‘breeding for business’ theory in regard to ‘unmarried women’ who ‘get pregnant’. This is the way in which the government has come out to front the mass unemployment problem.

Work and Income (WINZ) will now be able to reduce the Domestic Purposes Benefit (DBP) by 50% if a recipient (with youngest child aged six or older) is unable to take a job that’s assigned to them for fifteen hours per week. This will impact on 43,000 of 97,000 DPB recipients. Unemployment benefit recipients, who number 168,000, will be required to reapply for benefit eligibility annually. Sickness beneficiaries may be required to have assessments once per month. Medical certificates will be changed so invalids’ benefit recipients will face tougher testing. The income threshold at which a family can be disqualified from childcare assistance will be reduced by around five thousand dollars for each of the number of children categories. Of the 345,000 benefit recipients in New Zealand, the overwhelming majority will be effected. Significantly, the package introduces the possibility of benefit elimination for individuals as the DPB can be suspended at the second instance of refusal to take a job and then cancelled at the third refusal. Hardship supplements also get a slash.

With $100 million being taken off beneficiaries and $88 million being spent on implementation and associated costs, the whole Future Focus reform is said to be worth a total of $12 million in savings over the first four years. There is a bizarre costing involved; ‘I spend 88 and get 12-clear while inflicting pain on the poor and the poorest, and the children of the poorest’.

Child Poverty Action Group spokeswoman Susan St John has smashed to smithereens John Key’s assertions about the resultant savings, showing that the longer-term savings projection doesn’t stack up either. According to Key, if five percent of DPB recipients with a youngest child over six years old get into work then New Zealand will save $200 million in the next ten years. The calculation is that 2,150 recipients would not be covered for $14,144 for 6.5 years, and from this he takes the $200 million. But increased eligibility for In Work Tax Credits, Minimum Family Tax Credits, and after-school care subsidies, plus roll-out and case-worker costs, and the fact that DPB payments contain an element of Child Support all depreciate Key’s figures. Factor the cost of bumping other single workers out of part-time work into unemployment and St. John has shown Key’s savings to be an illusion.

The very small savings ‘to New Zealand’ will not benefit any section of actually-employed working people as there’s simply no transfer from the social welfare outlay to the employer’s wage outlay. Though that doesn’t mean that actually-employed working people won’t be affected. Benefit cuts in general create tougher conditions of unemployment outside the workforce. Cuts give stronger confidence to the employers in wage negotiations and privilege employers to implement harsher day-to-day discipline in the workplace. While there are varying degrees of job security, no job is completely secure, and the employing class wants workers to know that hell awaits if they go out the gate.

So apart from forcing people into new situations of powerlessness in low-paid and uninteresting jobs, what’s the rest of the government’s answer?

Higher skills and productivity funded by yourself and other workers. This can even be seen in the Future Focus policy. On guard to make sure that the employers that profit from higher-skill levels don’t foot the training bill, the government will kindly allow DPB recipients to take a yearly $500 loan to up-skill. And that’s a point that needs to be understood at another level; within capitalist anarchy of production, productivity increases over the long-term are drivers creating – not reducing – the reserve army of labour.

Since the emergence of structural unemployment and since the broader working class movement went into political retreat there’s always been a portion of actually employed workers cheering-on the attacks on unemployed workers. Opposition to beneficiary-bashing isn’t just a good moral position to be held by more upstanding citizens. What’s been made very clear by the recession and by the government’s attempts to address it (through centrist means and by frontal attacks on the unemployed) is that re-regulating organised unemployment doesn’t achieve anything for workers. Attacks on beneficiaries yield no improvements in terms of the number of unemployed in the short or long term. Further, attacks on beneficiaries weaken the position of the whole working class in relation to the whole employing class. We need to stop planning unemployment and recommence the discussion on working class control of a planned economy.


  1. If I may draw your attention to an article on Frogblog that exposes a Beneficiary Working Group (backed up by ACT and BRT)that is currently investigating the merrits of a benificiary insurance scheme to replace benefits.

    Drakula seems to think that this is no more than a corporate tax avoidance scheme.

%d bloggers like this: