It’s back to work you go

The government has signalled that it would like parents to go back to work when their youngest child reaches 12 months.

Parents can only go back to work if they have a job to go back to. The government can’t make parents “go back to work” – or even look for work - unless they are on a benefit.

But it is beneficiaries that this policy is designed for – those who, by definition cannot go “back” to work, but must find work. But it is not just any beneficiaries – it is targeted at sole parents. And in some cases it could cost taxpayers more than leaving them on the benefit. Not that it is a good or bad thing, it just is.

A sole mother with three kids on the DPB gets $326.82 in benefit payments, plus Working for Families payments. Some get a WINZ accommodation supplement.

If she gets a job for 20 hours a week she loses her benefit. But if she earns less than $80,000 – which she will – she can get an $11.52 an hour WINZ childcare subsidy - to a maximum of $576.00 a week - to look after her kids. Her Working for Families payments will also increase by $60.00 a week.

Say she has three kids under five. She gets a job for 20 hours a week at $23/hr – she’d get $460.00 a week. She works four hours a day and takes an hour to get to work. While she works 20 hours, her travel time is 10 hours so she`ll get 30 hours of state-subsidised childcare a week – that’s $345.60 - which is more than the DPB. She’d also have to pay about $30 each week to travel to work.

If she got a job at $16 an hour for 20 weeks, she’d be getting slightly more than she got on a benefit, due to the $60 In Work Payment - but the state will be contributing even more to childcare.

But - the theory goes - it is better for the state to contribute more to pay someone else to look after kids, than for a mum on the DPB to stay home and look after children.

Much better for the worker to contribute to the economy and pay transport costs to keep the buses running – because she is paying more tax.

Governments appear to think that staying home to look after your kids is only a good idea if you have an earning partner.

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Work testing beneficiaries

Danyl at Dim Post thinks it is patently moronic to start work-testing beneficiaries and suspending their incomes for non-compliance when there aren’t any jobs around for them to apply for.

There are plenty of jobs to apply for. The problem is that most are unsuitable for many unemployed people and also that more people are applying for each job, making interviews harder to get. If you apply for a job you won't be work tested - even if it is a job that you are not likely to get an interview for.

What should happen (if Work and Income does its job) prior to work testing is that that those who have little money in the bank could be told that if they have confirmation of a job interview, they can get up to $300 for free to buy clothes for the interview. For guys, at the moment at Hallensteins, I think, that`ll get you a suit, an extra pair of trousers, a business shirt, and a tie.

They then have some decent clothes for job interviews.

Who knew that?

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Scaremongering

I think some bloggers are scaremongering about National's benefit policy. Some are implying that loads on the dpb will be worktested off benefits and the system is harsh and the government is uncaring. I don't for a moment think the system is harsh. In reality I don't think people on the dole will be worktested off benefits any more than is currently happening.

It is not exactly happening to thousands at the moment. And I`ll be surprised if any person on any benefit who is meeting their obligations as a beneficiary is worktested off a benefit. And if you are not meeting your obligations, you simply don't deserve a benefit.

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Getting people off benefits

Every week on average, some people have their benefit cut - not because they have found work or returned to study, not because they are leaving the country - but because they are going to prison. Guess how many..
a.20
b.46
c.59
d.85

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Not exactly a luxurious life

I wouldn’t get too concerned that the government is planning to stick 7000 unemployed people into McDonalds. The scheme is over a five years period, equating to 26 per week on average. That is if the 7000 figure is reached. What if they only get 4000 into McDonalds – that’s about 15 per week.

And that is about how many people are being employed at McDonalds every week anyway, due to the high staff turnover. But this deal is not driven by a desire to get people work. It is driven by a desire not to pay so much money on benefits, as John Key explains:

When we spend a lot on benefits it means there are a lot of New Zealanders not really earning a lot. Life on a benefit is not exactly a luxurious life.

When lots of people work at McDonalds, it means there are a lot of New Zealanders not really earning a lot. Working at McDonalds is not exactly a luxurious life.

What if they were to offer a McDonalds fulltime position - 30 hours a week in WINZ language - to a main unemployed breadwinner with children? If they were to get $15.00 an hour, they`d get $450 a week ($23,400 a year), compared with a benefit payment of $18,850 a year before tax. That's an extra $87.50 a week.

Beneficiaries can earn $80.00 each week and retain the benefit. Effectively squared up. But the person in this example will be spending money on transport to get to work so he is worse off by working at McDonalds.

Would you do it?

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