Wednesday, April 14, 2010

Against privatised welfare

So, not content with privatising ACC, the government are now trying to privatise welfare, with the appointment of a Welfare Working Group to look at compulsory unemployment insurance. To which I can only repeat the response of Jackson Wood: We already have compulsory unemployment insurance. It's called tax.

Its not the best system. Notably, the amount you get on the unemployment level is fixed, rather than being a proportion of your former salary (worse, it was fixed at below-starvation levels during the Richardson Black Budget of 1991, in order to provide an "incentive" for people to find jobs which weren't there. Another example of the sadism of the right). But it at least has the advantage that everyone can get it. In a privatised insurance-based system, this is not the case: time-limits and eligibility rules mean that many people fall through the cracks and into poverty. Plus of course there's the fact that insurance companies make higher profits by denying claims (AKA cheating people out of the service they have paid for). We have enough of that from ACC, without inflicting it through the welfare system as well.

In Canada, the country the working group is holding up as a model, the insurance system has seen reduced entitlements and large numbers of people excluded from coverage. Only 80% of insured job-losers actually receive benefits. Which means that one in five people made unemployed get nothing. That's not a "safety-net" - it's a scam. And the losers, as always, will be the poor and those in casualised, low-security work (just imagine how this will interact with a 90-day probation period in employment. Not very pleasant, is it?)

But beyond the sheer unfairness, there is another problem: that a privatised, insurance-based scheme would not be politically accountable to Parliament. Which means, effectively, that poverty and unemployment would no longer be the government's problem. The government is trying to wash its hands of a core social function here, and we should not let them get away with it.