How To Treat NZ Super Applicants Like Other Beneficiaries

Old people in New Zealand are a funny bunch. On the one hand, they’re deeply critical of beneficiaries. They’re the first to support crackdowns on benefit fraud (a literal rounding error in terms of Vote MSD) and would likely agree that if a beneficiary starts earning more money they should have their benefit reduced.

They are much less willing to consider themselves beneficiaries, when they are nothing but beneficiaries. There is no material difference between a retiree couple who failed to save enough money for retirement in liquid assets, whilst living in a $700,000 villa in Auckland, and a person who continues to receive an unemployment benefit whilst they move into work.

NZ Super beneficiaries should be treated like other beneficiaries. If they were subjected to the same level of asset testing that any other class of person was, NZ Super applications would plummet because many NZ Super eligible people know deep down that they don’t really need state assistance, they’re just taking the free $15,000 a year with no questions asked.

How many older voters would have wholeheartedly supported the crackdown on other types of beneficiaries while happily spending their fortnightly super payment? They actually rationalise that because they paid taxes (which have already been spent) they are somehow entitled to NZ Super from their 65th birthday until their death.

The funny thing is that some NZ Super recipients will get more from NZ Super than they ever paid in taxes. Some NZ Super recipients never actually worked a day in their lives – but they’ll happily bank their super and vote for Winston First.

If you have a look at Work and Income’s website, you’ll be able to find the application form for NZ Superannuation. It’s 13 pages and doesn’t require much besides confirming the fact you worked in New Zealand and your bank account details.

If you move across to the unemployment benefit application form – you will find that it is 36 pages. You must declare if you’re still working, the financial situation of your partner and any assets you have. This means most Kiwis can’t actually get the unemployment benefit because someone else can support them or they can sell down assets to survive.

My solution to the NZ Super cost blowout because of changing demographics and a sense of entitlement is to simply replace the superannuation application form with the unemployment benefit application form.

This is a far simpler solution because many NZ Super applicants who don’t really need the money will be deterred by the level of disclosure they must make to Work and Income around their employment status and level of assets.

When they have to admit on paper that they are taking the mickey out of the safety net, many will not go through with the application. I would guess thousands of fewer applications a year would be processed, saving billions over dollars over the next few decades.

A lot of old people are really secretive about their financial affairs, so with one easy form change, the marginal applicant who doesn’t really need NZ Super to survive, will find that it’s not worth their time to gather details of their asset base in order to avoid getting done by Work and Income for failing to disclose details of their financial situation.

People who do need NZ Super to survive won’t be harmed by the form change – and the system will be able to continue functioning as a support net for people who actually need it instead of cynical asset rich cash poor older people getting more money than a struggling student gets from StudyLink.

Who Do Employers Compete With For Labour?

The common assumption is that employers compete with each other for labour. This is true for the currently employed or recent graduates. They have to deliver a salary that reflects the level of work expected and what the workers themselves want from an employer. It’s a two way street despite what some lobbyists would have you believe.

This ignores the alternatives to the labour market that are available. These include working in the cash economy, payment in kind, living off benefits or from family support.

I’m not casting value judgments here – I’m simply saying that in order for an employment offer to be competitive it has to substantially exceed that available from WINZ or StudyLink.

No potential employee will care about you if you are offering a rubbish wage. They’ll clock in and clock out just as they should – you’re on a different planet if you think employers arbitrarily lowering wages and moving towards casualisation doesn’t have blowback in labour productivity trends.

One of the reasons employers are struggling to plug the mythical “skills gap” is they’re not offering wages that are competitive with alternatives on offer, primarily from the welfare budget.

If the labour market was functioning healthily, and entrepreneurs were creating lots of new jobs to replace those lost in the recession, going back to university for another degree would be a financially irresponsible decision.

Foregoing a $40,000 salary for another 2 years of StudyLink would be blatantly stupid. But in the current environment, part-time and casual employment is significantly more likely than full-time graduate employment in the field that you studied.

There is a funny idea that students go onto post-graduate study because they want to. That might be true for many.

But the reality is that without Studylink many students would starve. They can’t even get low-skill part-time jobs to help them through university because the low skill labour market has become a numbers game.

So returning to study is actually a way of earning an income and putting food on the table. Not all students receive parental support or have the connections to get decent summer jobs.

The great tragedy of this whole debacle is that my generation has a lot of resentment towards the baby boomers at the top.

We don’t want much – contrary to popular belief – but it really irritates me how myths like “word harder” or “just get a valuable skill” persist.

The mathematics mean that not only can most graduates not look forward to full-time graduate employment, they can’t look forward to any employment that justifies the direct costs and opportunity costs they’ve spent on their wonderful university education.

There are 175,000 people unemployed, over 300,000 on benefits of some sort and over 100,000 students receiving student allowance.

These numbers aren’t going down anytime soon. The time for action is now. Aggressive job creation policy is a must by making it far less risky to experiment and find patterns of sustainable specialisation and trade.

And no, training wages and eliminating employment rights are not what I mean by “making it far less risky”.

The Vanishing Labour Market

…in New Zealand we have one political party talking about subsidising manufacturing and the other political party talking about how lazy the unemployed are.   It makes me a sad panda. – Matt Nolan

One reason that young Kiwis aren’t saving is because they aren’t earning enough. Income less expenses equals savings.

The cost of living has gone through the roof over the past decade, with hardly any increase in wages, salaries or opportunities to create your own wages through freelancing or self-employment.

In 2012, young Kiwis need to lower their expectations because of the destruction wrought by the baby boomers and assorted grey hair elite.

Yes, some young Kiwis buy fancy gadgets. But not all of them do.

Yes, some young Kiwis earn high incomes. But most of them don’t.

Yes, some young Kiwis waste heaps of money partying. But a lot of them can’t afford even that.

I am sick of reading comments by people born into an entirely different economic paradigm.

Yes, your job cleaning toilets with a toothbrush paid your way through university.

But if you’ve taken a look at low skill jobs these days, you’ll find that part-time is the new full-time and casual is the new part-time.

There is also an inability to perform basic math on the part of many who criticise young people who don’t work or can’t find a job.

Even if they did get a job, their employers can treat them like crap without a care in the world. Why? Because there are literally hundreds of other people who could do the same job.

We no longer have a functioning labour market in the sense that every generation before us experienced.

We have a skills market. If you don’t have a specific skill then you don’t get anything.

Our current education system is designed to produce people who slot perfectly into production lines and paper pushing jobs.

Creative ability is crimethink, innovation is insolence and self-directed learning is subordination.

There is an enormous gap between reality – skills market replacing the labour market – and what our entire education apparatus actually does.

There is no hope for changing the education and benefit system to focus on the sort of upskilling needed in the 21st century because it can’t be centrally planned.

If you have no skills employers want, the motivation to teach yourself them and put yourself in a position to earn income from those skills comes from within.

I’m a sad panda too, but not because of what political parties are saying, but because so many young people are ignoring the economic reality that they have to have a bunch of valuable skills to even get a look in to the skills market.

The bonus of many other young people’s lack of foresight is higher wages in the long-term for people who realise the way the economy is going and constantly add to their skill set through self-directed learning and real world freelancing projects.

Just look at the reality behind income inequality – we are moving towards a cognitive elite capturing almost all of the gains in productivity because not everyone can get their heads around the new economy.