Welfare reform shapes as toughest test for Bennett

Paula Bennett's remarks this week about the welfare reform debate turning ugly were lost in the firestorm kindled by the exposure of former Labour ministers' rorting of their taxpayer-funded credit cards.

However, the Minister of Social Development's musings on the Government's forthcoming overhaul of the benefit system are arguably of far greater political relevance than the copious documentation showing when, where and on what ministers flashed the plastic.

In expressing fears that the debate could turn ugly, Ms Bennett was trying to denigrate opponents of welfare reform without directly saying so.

The attempted spin was transparent and somewhat disingenuous.

The only people who stand to gain from what is likely to be a humdinger of a political argument becoming ugly are Ms Bennett and her National Party colleagues.

That is because much of what National will likely include in its welfare reform package has been tested in other countries.

A formidable amount of evidence - much of it conflicting - has been accumulated on the practicality of various options for getting people off benefits and into work.

Any distraction which skews the public debate away from an appraisal of the value, viability and validity of the Government's eventual blueprint for restructuring the welfare system in the light of such overseas evidence will be to Ms Bennett's advantage.

As it is, she already has her hands full with her Social Assistance (Future Focus) Bill, which tightens sanctions and increases incentives for beneficiaries to find jobs.

Of particular note, the legislation imposes a new obligation by introducing part-time work tests for sole parents on the domestic purposes benefit whose youngest child is 6 or older.

Currently in front of Parliament's social services select committee, the Bill has attracted numerous submissions questioning the availability and adequacy of child-care facilities, which are a prerequisite for the measure to work.

However, this is a walk in the park for the minister in comparison to arguing the merits of time-limited benefits and a two-tier contributory social insurance, which is presumably being mooted as a means of eventually cutting dole payments.

Ms Bennett confirmed this week that both those concepts would be canvassed by the welfare working group she has established to come up with recommendations by December for restructuring the benefit system.

This is uncharted territory and on the margins of National's comfort zone. Nevertheless, the question is whether National has the political bottle to follow the US example whereby eligibility to pick up a federal benefit is limited in many states to a maximum of 60 months.

That may seem tough.

In practice, however, many states allow exemptions from and extensions to those limits, some simply continuing to make welfare payments using state funds once federal funding ceases.

Moreover, those who have not found jobs at that point are still eligible for food stamps and Medicaid.

The bigger question is whether time limits cut numbers on welfare.

One major independent study found there was "some evidence" that time limits prompted welfare recipients to find jobs.

However, the magnitude of this effect was not clear.

The difficulty of measuring such an impact lies in separating it from other factors that might be responsible for getting people off welfare, such as an improving labour market.

Ms Bennett will be punting on the welfare working group navigating a path through this potential minefield, leaving her to gauge public reaction to the group's recommendations before choosing which ones to run with.

That is politically preferable to putting up proposals of her own from which she might later have to back away.

However, her view that the welfare reform debate could "spark prejudices" and reveal "an ugly side of New Zealand" are also an admission of the difficulties of convincing people of the merits of initiatives that have previously only found favour with the likes of Act New Zealand and the Business Roundtable.

Ms Bennett is trying to paint National as working for the public good, and opponents of reform on the political left as negative and out of touch.

Her warning that things could turn ugly came at a two-day conference organised by Victoria University's Institute of Policy Studies to help the welfare working group engage with individuals and organisations "in the conversation about creating a more sustainable and fair welfare system".

Such loaded language has critics claiming that conversation will be very one-sided.

They argue the only ugliness is Ms Bennett's use of the working group as a vehicle for the beneficiary-bashing necessary to soften up the public to the merits of restructuring.

Nothing those critics heard from Paula Rebstock, the working group's chairwoman and former chairwoman of the Commerce Commission, will have altered their view that this exercise is picking up where Ruth Richardson and Jenny Shipley left off nearly 20 years ago when they launched an unsuccessful offensive on the very foundations of the welfare state.

Those two failed because the country was not ready for such an overhaul or the conviction politics driving it.

National has accordingly learned to be less brazen and more subtle in the way it tackles fundamental reform.

Mrs Rebstock talked of the current system locking "many people" into life on a benefit which "robs them of their potential", but such talk also does not equate with the facts.

Ministry of Social Development data shows those receiving the DPB number about 110,000.

But that disguises the stream of sole parents flowing in and out of that category.

About 31,000 people signed up for the DPB in the year to March.

In the same period, nearly 26,000 came off that benefit.

Similarly, despite the recession and a weak labour market resulting in 103,000 people signing up for the dole, about 78,000 came off it in the same period.

The figures suggest the current system does not lock people into benefits and that people want to work, but the determining factor is the state of the labour market.

Ms Bennett can expect an avalanche of such statistics and arguments when the time comes to start selling the working group's recommendations.

Her restructuring of welfare is shaping as the toughest test for a still relatively junior minister who likes to keep the arguments simple when the concepts she will be grappling with are anything but.

John Armstrong is political correspondent for The New Zealand Herald