A social contract between the Government and its citizens was established in New Zealand legislation with the Social Security Act 1938. Government would provide financial assistance for New Zealanders unable to achieve an adequate standard of living (which remains central to the social security system), alongside other critical support such as access to health care, education, housing and adequate employment. In return, people receiving financial support would participate in training or other activities and seek employment when appropriate. This social contract is now out of balance.
The current system is based on conditionality including sanctions and is tightly targeted, with inadequate support to meet even basic needs. The experience of using the system is unsatisfactory and damaging for too many of the highest need and poorest people. We heard overwhelmingly during our consultation that the system diminishes trust, causes anger and resentment, and contributes to toxic levels of stress. There is little evidence in support of using obligations and sanctions (as in the current system) to change behaviour; rather, there is research indicating that they compound social harm and disconnectedness. Recent studies recommend moving away from such an approach towards more personalised services. For the welfare system to work effectively to deliver the new purpose, principles and values we conclude that mutual trust between parties is essential.
Given this, we propose a system based on whakamana tāngata – an approach based on mutual expectations and responsibilities governing interactions between the state and welfare recipients. It is a commitment to improving wellbeing by supporting positive long-term outcomes for the individual, including increased skills and labour market capability. This approach must immediately reform the current obligations and sanctions regime.
The proposed mutual expectations and responsibilities need to be responsive to the circumstances of the individual in a way that will meet the proposed values of the system, with robust checks and balances to mitigate potential negative impacts on individuals and their families. The overarching expectation of both recipients and the Government is to act with respect and integrity in their mutual interaction.
1 New Zealand Superannuation, Veteran’s Pension and War Pensions, and the Student Support System are outside the scope of the Welfare Expert Advisory Group. See the Terms of Reference in Appendix B of the full report.
Many New Zealanders lead desperate lives with seriously inadequate incomes – this must change
Evidence is overwhelming that incomes are inadequate for many people, both those receiving a benefit and those in low-paid work. Current levels of support fail to cover even basic costs for many people, let alone allowing them to meaningfully participate in their communities. In New Zealand, poverty and benefit receipt are strongly associated. Māori, Pacific People, people with health conditions and disabilities, and young people are especially adversely affected.
Many sources of information inform this report, including our consultation and hui with communities, our research using example families, and analysis about the current rates of poverty and hardship in New Zealand (particularly for families with children and people receiving benefits).
Living in poverty often results in long-lasting, poor outcomes for benefit recipients, their children, families and whānau, and society. Evidence is strong of the negative effects that poverty has on a wide range of children’s outcomes, including cognitive development, school attainment, health and social, emotional and behavioural development. Evidence is also emerging of poverty’s negative impacts on the mental health of people of all ages.
The Government must urgently increase the incomes of people in receipt of a benefit and in low-wage work and maintain these increases over time so that they keep pace with the incomes of the rest of the community. It must also reduce the barriers to people accessing this support and commit to a social security system where people are treated with dignity.