Thursday, October 16, 2008

Locking in a decade of erosion

Labour announced its social welfare policy today, and the highlight was to raise benefit abatement thresholds. The initial step would be an increase from the current $80 a week (unchanged since 1996) to $100 a week. If you're wondering why that seems so familiar, its because National announced an identical move back in August as part of their beating up on the poor welfare policy. So, in the short term, its simply another recycled policy.

Where Labour differs is the long-term: this initial step is part of a five year plan to raise the threshold to the equivalent of ten hours pay at the minimum wage, with annual increases. I welcome the idea of cementing this relativity in legislation (if only they'd do that for benefits), but even so, this is actually a backwards step. When the threshold was set, in 1996, it was at the equivalent of 12.5 hours of minimum-wage work. So, their supposedly bold and innovative move to support beneficiaries transitioning into the workforce is actually cementing in place that decade of erosion, and so cementing in place lower living standards for those at the bottom of the heap.

This is not what I expect from the Labour Party. It's bad enough that Labour have wasted their nine years in government by not undoing the 1991 benefit cuts; to have them now cement that erosion adds insult to injury. If they were serious about helping beneficiaries transition into work, they'd raise the relativity of those thresholds, to at least 15 hours. This would allow beneficiaries to pursue real part-time work, rather than making it effectively impossible without benefit fraud. It would be a truly bold, imaginative policy, which would adapt our benefit system to the modern world. But sadly, that seems to be beyond Labour.

(There are however some interesting hints in that press release about where Labour sees the minimum wage going over the next few years, and they clearly expect it to be at least $14 / hour by 2012, and possible higher if this is assumed to be the final step in a transitional policy. So Labour isn't that far from those calling for a $15 / hour minimum wage, and it should be easy to move them in coalition negotiations).