SOCIAL POLICY : Welfare Is No Longer on a Roll in New Zealand

The office looks like a travel agency, with an open floor plan, wall-to-wall carpeting and oak desks where customers are served politely with a smile. There are no lines of people waiting, and the kids adjourn to an indoor playground.

This cheery and efficient office is the local branch of New Zealand’s Income Support Unit, the welfare office. Long before Newt Gingrich’s “contract with America,” New Zealand began audacious experiments with welfare reform and made major cuts as early as 1991.

Taupo, a town of 14,000 people in the center of New Zealand’s northern island, has become a laboratory for the latest effort to reduce the welfare rolls, and initial indications are the experiment is a remarkable success. The program is called Support Link, but it boils down to welfare with a human face.

As in many Western countries, New Zealand’s welfare system began in the Depression of the 1930s, but over 50 years had become one of the most generous, and costly, social benefit programs in the world. Between 1984 and 1990, for example, the cost of the system rose from $578 million to $2 billion.

One in four of New Zealand’s 3.5 million people receives some welfare benefit. The Income Support Unit administers not only payments to single mothers with children, but also to veterans, the local equivalent of Social Security and unemployment benefits.

When the current government came to power in 1990, it made across-the-board welfare benefit cuts of 15%, not including pensions. Welfare administration was broken up into “business units” and operated like a private firm, with staff cut to 4,500 from 6,000.

David Preston, general manager of the social policy unit, said spending on assistance had ballooned from 6% of gross domestic product in 1970 to 13% in 1990. With the cutbacks, the amount was shaved to 11.25%, a saving of about $1 billion a year.

The most controversial cuts came in payments to single mothers. Girls younger than 18 were ineligible for assistance if they had babies; the girls’ parents were made responsible for their support. Benefits were cut to about $130 a week for a woman and child.

“We came to the conclusion that as long as we had a benefit payment close to the minimum wage, you’re in trouble,” said Jenny Shipley, who was minister of social welfare at the time the cutbacks were instituted in 1990.

The cuts had a dramatic effect on welfare rolls, which had climbed from 17,231 in 1975 to 97,000 in 1991. After the cutbacks, the number on welfare remained virtually static for three years.

Even with the cutbacks, however, the numbers have begun to inch up, and last year Taupo was selected for a new approach to welfare. Rather than lining up before anonymous officials to receive benefits, each “customer” was assigned a caseworker who follows through. Turnaround time for aid requests was reduced from six weeks to less than 24 hours.

“We felt the cases would be resolved because of the rapport we developed with the customers,” said Debbie Rains, the Income Support Unit manager for Taupo. “Instead of just paying a benefit, we took it one step further to see what’s out there in terms of jobs, training and child care. It’s made a terrific difference.”

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The Taupo experiment included a control group of welfare recipients who were treated in the old manner of just receiving a benefit. The experiment produced some exciting results: 15% of those participating in Support Link went off the welfare rolls in just three months. Of those, 60 people found part-time jobs, 50 found full-time jobs and another 50 went into job training of some kind.

Kim Civil, a divorced mother of two school-age children, had received welfare for three years when the experiment started. She soon found part-time work, and has just been offered a full-time job.

“They’re really good support, those ladies,” Civil said. “Before, they were quite stuck-up and you’d get scared of the government, particularly when it’s your income. Now, they give you all sorts of guidance and help you achieve independence.”

The caseworkers can wield a stick as well as a carrot with their customers, said caseworker Angie Hendricks. While they are offered every possible assistance, women who refuse to participate or take job offers are cut from the welfare rolls.

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Mixed Results

When New Zealand set a minimum age limit of 18 for young mothers to qualify for public assistance, the welfare rolls stopped growing for three years.

New Zealand Domestic Purpose cases (Welfare rolls)

1994: 100,256

But the cutbacks produced two paradoxical results: The number of out-of-wedlock births has continued to climb . . .

Number of out-of-wedlock births

1992: 21,759

. . . and the number of abortions, which was expected to soar, has remained about the same.

Number of abortions

1993: 11,725