Thursday, 30 May 2013

As milestones become entitlements… the “feed the children” edition

"The State is the great fiction through which everyone
endeavours to live at the expense of everyone else."

- Frédéric Bastiat

Welfarism: [n.]   The Great New Zealand Disease; an affliction
imbibed  with  Mother's  Milk,  incubated  in  the  state's factory
schools  and  released  like  a bacillus  in  humanities departments
across the country.  A mentality that assumes … the right … to fleece
the productive in order to placate and to fund the unproductive.

- “Cue Card Libertarianism: Welfarism

“Feed a stray cat, and you relieve its hunger for a day.  Keep
feeding it, and you’ll make two dozen friends. For life.”
- Traditional saying

“Build it and they will come…”

NZ’s means-tested Old Age Pensions Act was introduced in 1898, establishing the basis of the present welfare system. Fabian socialists the world over applauded. Unlike those benevolent souls who introduced it, they understood how gradualism works.

Income tax was introduced in 1908 to pay for it.  The rate was sixpence in the pound for income – about three cents in the dollar.  That was how things started. Superannuation (as it’s now called) now costs $11 billion every year—around $11,000 for every taxpayer in the country.  A “need” has become an entitlement.

There were other milestones on our path to rampant entitle-itis.

The United Government passed the 1930 Unemployment Act just as the Great Depression began, which required those those registered to participate in government 'make work' schemes such as building roads and working on farms or in forestry projects. When the register was opened, 23,000 people put their names down. (It was an emergency.)

In 1938, when Australasia’s Great Depression was already over, the pension act became the “cradle to grave” Social Security Act, “the first comprehensive and integrated system of social security in the western world.” It mashed together existing pensions and widows, invalids and unemployment benefits with a free-at-the-point-of-use health system and numerous new welfare benefits and allowances. The number now receiving an “allowance” rose overnight from 42,6oo to 230,000.  It was financed by a tax surcharge of one shilling in the pound, or a further 5 cents in the dollar, with a government deficit to make up the difference—the Reserve Bank having been nationalised in 1936 to make large government deficits possible.

Tax 001In 1972 the Accident Compensation Commission (now Corporation) was brought into being, with a 'pay-as-you-go' funding model collecting "only enough levies during the year to cover the cost of claims for that particular year."  It now costs well over a billion dollars annually, has $28.5 billion in liabilities, and the state is financially responsible for all accidents, injuries and trauma by either misadventure or negligence.

The Domestic Purposes Benefit was introduced in 1973 to offer assistance to children with unmarried mothers. It cost $250,000, and several dozen mothers were enrolled. At the end of December 2012, 109,000 working-age people were receiving the Domestic Purposes Benefit, around 4% of the working-age population of New Zealand.  It now costs $149 million every year, 15% of the  total welfare budget.

As a 2005 election bribe, Helen Clark and Michael Cullen introduced Welfare for Working Families, costing nearly two billion dollars every year and at a stroke transforming two out of every three NZ families (mostly middle to higher income) into welfare beneficiaries. Then opposition finance spokesman John Key called it communism by stealth. When elected he never touched it.


As we speak then, the government now takes over $80 billion from some New Zealanders and gives it away over their lifetime to other New Zealanders receiving some form of regular welfare payment.

How many NZers in total? As of April, there were 310,416 New Zealanders receiving one of the many benefits now on offer (all cunningly renamed by the present Welfare Social Welfare Work and Income Social Development Minister).  Add to that those the many tens of thousands sipping their lattes with their WFF benefits while trying not to think of themselves as beneficiaries (not to mention the many beneficiaries of the bailouts of South Canterbury Finance et al, or the country’s most highly-paid beneficiaries down there in Wellingtown).

So as of now, there is now around one net taxpayer for every net tax receiver—and that ratio is falling, not rising.

There’s nothing wrong with honest charity. But honest charity is not what any of this is.  Honest charity has long ago been crowded out.

What started just over a century ago as something that looked like simple benevolence to those who introduced—something costing their constituents only three cents in the dollar—has gradually morphed into something very different, and vastly more all-encompassing.  The “need” of others has become virtually a first mortgage on the lives and earnings of every taxpayer, and in the minds of many voters the moral purpose of their existence.

In the course of a century, simple benevolence has become raging entitle-itis.

And this week John Key announced the government will now feed the children. But, he says, it will only cost $11 million. And the 25,000 children getting the government’s breakfast really need it, he says.

Those old Fabians sure as hell knew what they were doing.


1 comment:

  1. Did your numbers include lawyers who receive legal aid payments, people who receive "NZ on air" payments, medical subsidies and the many others that I am sure there are?

    I think there is problem, but I can't see having more people on welfare (with no plan to get them off), as the right solution



1. Commenters are welcome and invited.
2. All comments are moderated. Off-topic grandstanding, spam, and gibberish will be ignored. Tu quoque will be moderated.
3. Read the post before you comment. Challenge facts, but don't simply ignore them.
4. Use a name. If it's important enough to say, it's important enough to put a name to.
5. Above all: Act with honour. Say what you mean, and mean what you say.