Mike's Minute: Government can't fall into benefit rabbit hole

Author
Mike Hosking,
Publish Date
Tue, 10 Nov 2020, 9:32AM

Mike's Minute: Government can't fall into benefit rabbit hole

Author
Mike Hosking,
Publish Date
Tue, 10 Nov 2020, 9:32AM

It is, of course, the slippery slope. It's the fate of all new governments, those with an agenda and an idea.

This week's money grab comes to us from no fewer than 40 groups all ganged up together looking to boost benefit money. The Salvation Army, Action Against Poverty, Child Poverty Action, those are two separate groups by the way, but both clearly want action. This does lead you to question just how many groups are there looking out for the poor and deprived.

Clearly in this instance it's at least 40. This might also lead one to suggest, fewer groups might mean a more dedicated, efficient, and laser focused approach to what is clearly an overarching commonality.

Anyway, in time for Christmas they argue, if the government could just see their way clear to upping the old benefits.

The old benefits have, of course, had a pretty good run of it of late. Even going back to the last National Government, they used money from the rockstar economy and an actual surplus to boost benefits in a way that hadn't been done in decades. It was a budget masterstroke and whipped the rug and argument out from under Labour.

But Labour are back and at the start of Covid they handed out $8 billion by way of wage support. That would grow to $13 billion but of the original $8 billion, $3 billion was for benefits. They didn’t have the money, we were sinking into the red, and as it turns out at a rate higher than any other country in the OECD bar Hong Kong.

And now having got two boosts, more is wanted. That is your slippery slope, once you start there is no end. The pressure coming from support groups who have no realistic economic outlook or understanding. They are simply driven by good intentions, but good intentions and other people's money.

One group reckoned $150 a week should do it. I did some back of the envelope stuff, as of the end of last year, we had 314,000 on benefits, so it'll be way worse now. But stat delivery is not a strong point of this country so those were the latest official figures I could find.

That, by the way, is over 10 percent of the working age population. Give them $150 a week and that’s $47 million a week. That's $2.5 billion a year. So you can see the delusion of the thinking.

And in return for what? Nothing more is produced or sold, productivity isn't up, nothing changes, so we didn’t make more, we just spent more.

The redistribution train has already left the station, it's building a head of steam, and these sorts of people are shovelling coal as fast as they can.

When you're already breaking records for debt, I pray someone in charge of something in Wellington recognises the dangers of the behaviour and is frantically working out where the hell the break is.