Key's speech to the National Party conference

At today’s National Party conference, John Key flagged some changes (some of which weren't changes) he hopes will prevent 16-17 year old's going onto the unemployment benefit. Instead they will have jobs, education or training – and receive a copy of “Playground Battle” from the feelers, as it has the song “Stand Up”, the theme song from the conference.

Actually, they`ll miss out on the feelers – and the training incentive allowance. Some will miss out on most of their benefit too, as it will be put on payment cards that can't be used on cigarettes and alcohol( which they can't legally buy anyway). If they study part time, perhaps if they get accepted in a tertiary institute in a few years, they won’t get $1000 course-related costs, like I did when I was studying.

The Government is going to amend the Privacy Act and the Education Act to require schools to reveal when 16- and 17-year-olds leave during the year, and share this information between the Ministries of Education and Social Development. That is because it has no idea where 16-17 year olds have come from – mind you the MSD has no idea when people leave the country either and are paying thousands each week to ex-pats who they think are in NZ, but have never checked.

The government will also fund community and other organisations to provide comprehensive and concentrated support.

In fact the Government has been doing this for years through programmes like Training Opportunites – but while funded for training, it is measured on employment outcomes, so the policy design wasn’t the best as if they were fully trained and didn’t get work the outcome was less positive. But it is very similar to what Key announced today. Government funding would go to organisations to 'transition' in to work or training, perhaps by building skills or training, but assessed on employment outcomes.

The implication is that these teens do not have a competent adult in their lives to manage their money and to assist them to get ahead in life. So these support providers in community groups will be these competent adults, and in some cases will pay their bills from their benefits and help them get into education, training and work – or the Ministry of Social Development will do it.

Actually, the MSD can pay money for bills for young people directly out of benefits - So why isn’t it?

Further, young people who are receiving these payments will have clear obligations, for example; to attend budgeting or parenting programmes.

WINZ offers budgeting advice. Why aren’t these young people being referred to it? Why is National announcing policy that, in part, it can implement now, but isn’t to a significant degree?

Key says “you measure a society by how it looks after its most vulnerable. You also measure a society by how many vulnerable people it creates”.

Obviously, the more vulnerable people a society creates, the harder that society has to work to look after its most vulnerable. But if “competent adults” are to be place alongside vulnerable teens, God help us if these people are WINZ case managers or similar.

Key said we can’t continue to give young beneficiaries money and trust they will do the right things with it. That approach has not worked.

So can we trust WINZ case managers to do the right thing for all vulnerable teens on benefits, and offer budgeting advice, training opportunities, and bill payments out of benefits?

No policy or legislative change is necessary – just the ability to implement and evaluate it - and tweak it further. It appears they are doing the latter only.

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What is the Government doing about this – and what are the oppositions ideas?

The Household Labour Force survey is out.

There are now 159,000 officially unemployed in New Zealand. That's not including those whose benefits are suspended.

There are now 43,000 more people out of work than there were in November 2008.

Nearly 100,000 people are unemployed but are not receiving a benefit.

21% of those on benefits are caring for children under 6.

30.6% of recipients are aged 18 – 24 years.

34% of beneficiaries are Maori.

Maori unemployment is at 16.4% ( up from 15.4 % in February) and Pacific unemployment is at 14.1%, both big increases from 12.6% and 12.8% respectively a year ago.

At the end of June this year, 333,000 working age people were on main social security benefits - an increase of 75,000.

45,000 of them are teenagers.

19,000 people lost their jobs in the past three months.

In the last three months 7000 people have given up looking for work and have dropped out of the labour force.

The number of those on benefits has increased 29% in the 2 years ending June. That's one in three extra beneficiaries.

That's not including the "hidden unemployed" -the students, those whose partners work, those who work part time but want to work full time.

And the chances that you are one of the above is the highest since 1999.

What’s worse, there are now 255,700 jobless (either unemployed, not ‘actively’ seeking work, or not able to start work immediately).

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Treasury can't forecast unemployment

In December Treasury said unemployment would peak at a 7%. John Key said that Treasury was being too pessimistic. Figures released shows that unemployment is now 7.3%. The last time it was that high National was in Government, too. But there is one major difference: the 10 years Labour spent getting people off the unemployment benefit ( and off ACC) to sickness and invalids benefits:
[h/t Lindsay Mitchell]

I don't think unemployment has peaked yet - and the Government is silent on what to do about rising unemployment except blaming it on population growth - but 25.5 percent of all job seekers have been out of work for more than 6 months.Anyone know how many jobs the job summit created?

Employment is going to be a key issue at the next election. The question voters will be asking is: Can Labour do any better? I think it can.

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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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