Sunday, July 31, 2005


The right generally opposes welfare and where it accepts it thinks it should be the absolute minimum to survive until you get a job. The far left believes it should be universal at a reasonable level of income.

I think there should only be one benefit because the benefits should be behavour neutral. this means you have no reason to want to move from sickness to unemployment to pension and you all have equal incentive to find a job if possible (yes including pensioners). This also makes administration easier.

I am very interested in the concept of a universal benefit. Now you may have heard of it as a socialist policy but in this context it is a little different. The major problem with the current policy is that some members of society will face marginal tax rates (the effective tax on earning another dollar) close to or over 100% - I personally have been exposed to a well over 100% tax rate where my benefit (student) was reduced by more than the additional amount that my partner earns. Basically punishing me for her working an extra few hours.

This cannot be allowed to happen.
A universal benefit allows us to help the poorest in society to not starve and yet not distort the behaviour of any other group. For middle class to rich people it will amount to a small tax deduction to poor it will be a small payment.

On to more general welfare policy...

A government should realise that you cannot let people starve - if you reduce a part of society to desperation you are likely to have to fight them and poverty can become a trap. HOWEVER the main reason is not a poverty trap it is lethargy - i.e. people getting in a habit of not working. This means there is some value in forcing people to work (although there are also costs it must be measured against). And the government has an obligation to use any tools it has to get these people work even as far as it might start counting payments as debt and taking assets from them or requiring them to move to places where suitable work is available.

Living on current unemployment rates is possible and in fact quite easy IF you are not a person who has a need to buy consumer goods or a person who can’t understand finances properly (I speak from experience). However most people do have trouble with finances unfortunately some of these people will be poor at any income, but it also means that htey will have the incentive to work at almost any income also.

My hard headed pragmatism leaves me somewhat closer to national on this issue although I doubt they are ready for my universal benefit proposal.

Asset testing - well a universal benefit would solve the problem but In the current system I have a neat solution - when you first go on a benefit you probably need to be tested (including the value of your home) after that you can save all you like.

time limits on benefits - on a case by case or a time limit basis people could be required to do some work - either something with value or if supervision costs too much (i.e. for particularly low value employees) then just production of something that can demonstrate they did the equivalent of a 8 hr days work - this is good because it creates work habits.

Child care and return to work policies - a universal child care benefit and various other policies to make making good childcare decisions cheaper.

Superannuation - Rise the age to 70 just based on the fact that people are now healthier when they are older - the argument for 65 has expired. Furthermore the benefit should just be an unemployment benefit - many can work perfectly well at 70 or 75 no reason to take them out of the work force unless they genuinely cannot work.


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