Labour’s Perversion: the Winners and Losers of the Welfare State

It’s been interesting watching the unveiling of Labour’s policy platform of this year. Despite what the media and Prime Minister may tell you, this election is a near-certain romp for National, and a near-certain record defeat for the Labour Party.

Winners and losers you see.

Yes, there’s a small chance things may be upset (Kim DotCom’s planned release on Sept 15), and Nicky Hagar is releasing another book likely with data culled from Edward Snowden. But, barring a major collapse or calamity of the dead-girl or live-boy variety, I’m calling it now. Labour’s probably good for 27-28%, losing nearly a tenth of those who voted for Phil Goff’s historic defeat.

This is the humiliating reality facing the Labour caucus as they enter this election campaign.

The desperation is clearly showing, no more so than with the flagship Labour policy of this election – free doctors visits and prescriptions for those over 65. While in theory free access to healthcare should be a universal right, our user pays status quo makes this sort of policy very expensive, and hence there is a huge opportunity cost.

So why spend this money to gold-plate healthcare access for one demographic over any other?

The plan apparently has been costed by Treasury at $120 million per year – possibly accurate, though Labour hasn’t bothered to engaged with the privately operated sector on this policy. From NZMA

“while the Labour Party has acknowledged that it needs to talk with general practice about how these increased subsidies should be introduced, fully subsidised care has been promised to other groups without that sort of discussion. “General Practitioners are private businesses, not state employees and need to be able to set appropriate fees. For visits to be free to patients, General Practice needs to agree that the subsidy is sufficient to cover the significant costs associated with running a Practice,” he says.”

We’ve been here before with Labour – making electoral promises the front line simply cannot keep. “20 hours free childcare” morphed into something a lot less. Now even a limited childcare or healthcare subsidy is of some use to impoverished people, but Labour’s track record and complete lack of consultation in this space should be concerning.

But lets put these niggling doubts to one side – there’s an election on and policy must be made. Let us give the Red Team the benefit of the doubt – they are after-all facing a historic defeat so it behooves us to be generous and accept Labour’s promise of free GP visits and prescriptions at the projected cost.

Of more concern however, is establishing the scale of the social problem that Labour are attempting to fix. And it is here that this policy falls, profoundly.

The issue being that over 65s are the demographic in our society with the least deprivation, and the group who currently enjoy the best access to GPs and prescriptions.

The extremely low level of poverty amongst our elderly should come as no surprise to anyone, thanks to a universal income given to everyone in that age bracket. This is not means tested, nor clawed back through abatement unlike other benefits in our social welfare system.

This benefit has also been indexed to increase wage rises – last set by Labour to 66% of the average wage. The universality of the scheme, and the relatively high rate is responsible for elderly in NZ to have lowest rate of poverty for the elderly in the OECD

Within our own country, the elderly have the lowest deprivation of any demographic.

For as well as a relatively handsome income (by the standards of NZ’s poverty-level benefit system) those older citizens have been the recipients of the greatest welfare state of the 20th Century. Free education, free healthcare, full employment and well paid jobs greeted our elderly when they left school back in the day. Bold Government housing initiatives and family allowances allowed home ownership to soar to levels that the current working generations can only dream of.

The neoliberal revolution that kicked off in 1984 has led to 30 years of low taxes during the prime earning years of this cohort, allowing them to keep much more of their income, while at the same time as other demographics faced the introduction of high unemployment, declining wages, huge cuts to the social safety net and the introduction of user pays. All familiar to those who have watched Alister Barry’s excellent In a Land of Plenty.

This systemic and entrenched privilege means that NZers 65+ not only enjoy less deprivation, but also enjoy better access to user pays healthcare than any other group, including children.

The proof is in the pudding: from Kiwiblog

The Ministry of Health done an annual health survey. One of their questions is whether someone has not gone to see a GP in the last year due to the cost. Here is the breakdown, in order, by age:

25 – 34: 22.3%
35 – 44: 17.8%
15 – 24: 15.8%
45 – 54: 13.9%
55 – 64: 12.1%
65 – 74: 6.3%
75+: 4.7%

So Labour’s policy is not just slightly badly targeted – it is as far away from the area of most need as possible. They are saying we must provide free GP visits to the age group that has the least problem paying. It’s is purely about middle class welfare votes, not about health.

What about free presciptions? Here’s the breakdown by age again of those who did not get a prescription filled because of cost:

25 – 34: 7.6%
45 – 54: 7.5%
35 – 44: 7.2%
15 – 24: 6.1%
55 – 64: 5.6%
65 – 74: 3.2%
75+: 1.9%

Also the Health Survey shows a positive trend for prescriptions, not a worsening one. The proportion of elderly not being able to afford to get their prescriptions filled dropped by a quarter to a third in the last year.

None of this is to say that every old person is rich, nor every old person has perfect health access. But, as a whole, the evidence is overwhelming that older people are better served by our health system than any other group in society already.

“To each according to their need” demonstrably wasn’t the driving issue behind this policy. It’s a cynical vote buying scheme benefiting the most comfortable demographic in our society. The elderly should be at the back of the queue here – there are much more worthy ways to use this precious health spending.

There’s also something more than a little galling watching Labour promising to spend up large on the patently false basis that people aged 65+ are the most deserving of our limited resource, while simultaneously cutting access to superannuation for younger current workers by lifting their age of eligibility to 67+.

Not only are Labour seeking to deny working New Zealanders the chance to retire with dignity at a reasonable age, but Labour also want to compulsorily garnish the pay packets of working New Zealanders with Kiwisaver. Important as it is widely believed that current spending on Super is completely unsustainable. This medium-term unsustainability is of no real consequence to current Labour MPs or Super recipients – most will be long dead before the coffers are emptied, and politically no attempt to means-test or claw-back this sacrosanct benefit can be made.

We pay millionaires in mansions a comfortable wage while working families struggle to subsist in garages in South Auckland and Christchurch.

To further add to the burden David Parker is also heaping responsibility for addressing inflation onto workers by allowing the Reserve Bank to hike Kiwisaver rates on the fly, lifting contributions to as high as 12%.

Workers with a student loan, could see as much as 24% of their income over the repayment threshold to be taken from them via loan repayments and Kiwisaver. Meanwhile the housing stock is locked up by an older generation of speculative New Zealanders who have bought up handsome former statehouses built on generous inner city sections. This housing speculation is of course the driving factor of our inflation rates, and thus the property acquisition of richer New Zealanders will result in lower take-home wages for workers under Labour’s proposal.

Parker has a rock-and-a-hard-place problem here. A low level of savings coupled with ballooning superannuation costs, an outrageous housing and inflation bubble and a imbalanced tax system means any rational Minister of Finance will face some tough choices. Someone is going to have to make some sacrifices along the way to keep our society copacetic.

But Labour’s choice is to force every sacrifice onto the young and working age generations. Those who are doing best, the demographic that can best afford to share some of their great wealth, the elderly, are cossetted from any negative effects of the unsustainable spending they have repeatedly voted for.

It’s a form of inter-generational theft, where Labour is attempting to pervert the welfare state to further cosset the most comfortable generation.

Labour’s superannuation and health spending, coupled with compulsory Kiwisaver and inflation busting will have a cumulative effect.

Labour is planning to wage a war on working age people.

From 1984 we have had 30 years of declining wages and increasing inequality and it is the deprived working poor and beneficiaries who will struggle to bear the brunt of rebalancing Labour’s economy. It is the children of workers who have poverty rates four times that of the elderly.

To what then of our social compact that we should support a robust welfare state, cradle to grave?

Simply put – it’s as dead as the word grave implies. The compact has been torn assunder by 30 years of neoliberalism.

And now we see that rather than reject Rogernomics, the Labour Party, have once again set out to become the enemy of the the working class. To take from the working poor, and give as much as possible to the rich. Labour are either too cowardly to defend the welfare state, or too venal not to resist exploiting it for cheap electoral advantage.

Yes, universal free healthcare is desirable, exploiting the poorer young to give it to the much richer old is morally unconscionable in light of the poverty experienced by much of New Zealand society aged under 65.

Either way, Labour clearly sense their electoral irrelevance and the caucus is in survival mode. And this attack on workers shows they’ll throw anyone or anything, including oxymorons like “Labour Values”, under the bus to preserve their seats.

Labour will punish working New Zealanders. They’ll steal from the poor and give to the rich. They’ll steal from our future for today’s electoral gains.

See, it is all about winners and losers.


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