Monday, June 27, 2011

Crisis? What crisis?

The Alternative Welfare forum last Monday was addressed by Professor Paul Dalziel. According to Metiria Turei:

Professor Paul Dalziel from Lincoln University pointed out that the Welfare Working Group attempt to portray some sort of “crisis of sustainability” in the welfare system was not backed by the evidence. Welfare payments as a percentage of GDP are actually dropping and will continue to drop, even under the Welfare Working Group’s worst case scenario. As I suspected, the whole basis upon which the Welfare Working Group’s report was based is flawed.


From page 58 of this report you can view the various modelling charts that attempt to estimate what will happen with the numbers of beneficiairies and associated costs. This is what the group found under a 'current trends' projection:


"....if current trends continue, there would be 16 percent of the working age population on a benefit by 2050. This would be unsustainable, particularly in the context of an ageing population, and would reduce the government’s ability to respond to a serious economic downturn."


A rise from the current 12 percent to 16 percent would increase costs by a third.

GDP would have to rise much faster if the increased costs were to account for a lower percentage than now.

And even if working age welfare was consuming a smaller percentage of GDP, Super and the health costs of our ageing population will be consuming considerably more.

But isn't the crisis of sustainability as much about lives impaired by welfare as the financial cost? Is it OK to give our blessing to spending X amount of GDP on welfare and disregard the social fall-out?

The Greens and other adherents of the modern-day welfare state seem to think so.

1 comment:

Anonymous said...

Crisis alright--Well over 600 jobs announced lost in today,s NZ Herald. Don,t you think prevention is better than a cure? While our PM sets new records in air travel miles in a three year term. Welfare costs alright- costs the victims of job loss more than anyone else. Freemarket ecomonics in it,s post usefulness era, and best dispensed with.