Note to Bill English: NZ Citizens are NOT Liabilities.

Until the National Party came into government, I had never heard of a person being referred to as a ‘liability’ in real life. I thought that was just Hollywood talk. And then I stumbled upon MSD’s website and a full description of its ‘Investment Approach’.

Now I’m no Einstein but I am pretty good at deciphering jargon, and after a good hard look at the annual ‘Benefit System Performance Reports’ on MSD’s website, I found this statement “Liability is a measure of future expected benefit cost and as such is a proxy for long-term benefit dependency” – in other words, the use of the term liability here refers to PEOPLE who are likely to be on the benefit long-term.

And yet the convenient omission of the use of the word ‘people’ – to make it clear that what MSD is talking about are HUMAN outcomes rather than just financial ones – is indicative of the way in which social development is first and foremost about money saved. A liability is after all just that – something that’s a risk that you want to ideally avoid or get rid of. Never mind the fact that there are people who for very genuine reasons (e.g. those that live with significant long term disabilities and/or their carers) need long-term help and support. They are not liabilities to the State. They are citizens who deserve and need help in the long-term.

What’s worse is that the people who produce these annual reports for MSD are Actuarials – what on earth is that you ask? well, essentially it’s a business professional who measures the financial consequence of risk. That’s right – so not a professional with any kind of social work or social service background, just someone who looks at numbers and figures, assesses risk and then provides advice on how to manage it. Which would be fine if we were talking about the management of say stocks and assets but in this case we’re talking about social security support for NZ citizens – for PEOPLE.

From an ethical and good governance perspective this is highly problematic, particularly as these annual reports are critical to informing how well MSD is performing against targets that the government has set within it’s so called ‘Investment Approach’ – and immediately one can see the major issue at hand: the quickest way to perform well under this system is to reduce risk and therefore liability – but if liabilities are people….then it means getting as many people OFF the books as possible as quickly as possible….regardless of their actual outcomes.

And what are the outcomes? Well, based on research commissioned by SUPERU and undertaken by Taylor Fry (an actuarial agency) which looked at 140,000 who went off the benefit between 1 July 2010 and 30 June 2011 (which is the ‘most recent’ piece of research referred to in the latest report):

  • Of people moving off benefit into employment, 57% had income shortly thereafter of under $3,000 a month and 82% under $4,000 a month, implying that most are moving into relatively low-wage employment.

Well that kind of sums it up in terms of what the National Government’s aspirations for beneficiaries future employment opportunities are: low-waged employment. In other words – National has actively sought to not only reduce State liability but also create a class of working poor New Zealanders.

And what’s worse the actuarial reports also identify ‘risk factors’ for long term liability. With one of them being:

“For clients who are not receiving a main benefit (or recently exited from the benefit system), their liability is 83% higher if they are in a social house. This is because they have a significantly higher rate of entry on to main benefits than others not in Social Housing.”

So what does a statement like that mean for policy? Well from a purely actuarial point of view – it suggests that MSD should avoid placing beneficiaries in social housing in order to reduce risk. Appalling!

From a public policy perspective, this kind of ideologically skewed analysis belongs in the rubbish bin. And when the Green Party is in government, I’m going to fight to make sure that happens – because NZ Citizens are NOT liabilities, they are people who deserve to be treated with dignity and respect and supported to be the best they can be, no matter what their personal circumstances are. That’s what real social development looks like, and even more importantly: that’s what treating New Zealanders with dignity looks like.