Art of the state, Jane Kelsey

Redesigning the Welfare State in New Zealand: Problems, Policies, Prospects
eds Jonathan Boston, Paul Dalziel, Susan St John
Oxford University Press, $45.00, ISBN 019 558 3736 6

A Super Future?: The Price of Growing Older in New Zealand
Anne Else and Susan St John
Tandem Press, $29.95, ISBN 1 877178 32 2

In Redesigning the Welfare State in New Zealand, editors Jonathan Boston, Paul Dalziel and Susan St John have effectively prepared an alternative briefing paper on social policy issues and options for the incoming government later this year. A successor to the highly successful book The Decent Society?, published in 1992, this collection of essays debates the fundamental principles of social policy and explores many of the policy challenges that face New Zealand after 15 years of market liberalism. The contributions from 11 of the country’s most authoritative academic commentators (plus one from Australia) reinforce the importance of independent analysis in a policy environment that has often seemed intolerant of contrary ideas.

The book is essentially a humanist assertion of people’s right to live in dignity, and the government’s duty to enable all citizens to participate meaningfully in the society to which they belong. On both ethical and empirical grounds, the contributors favour the social democratic version of a “just society” sourced in social citizenship over that of market liberalism, which celebrates the self-reliance of the individual secured through a minimalist state and a competitive market. Readers are invited to reach their own conclusions from the evidence and arguments presented.

Each chapter presents a scholarly challenge to the theory and consequences of market liberalism, using a combination of conceptual argument, factual description and empirical data. The essays are concise; yet they present sufficient history and context to inform readers who are not familiar with a particular topic or issue. The collection is easily accessible to a general readership. It will be especially welcomed by researchers and teachers of policy, politics and economics, those working in the specific policy areas addressed – and hopefully by policy-makers themselves.

Part 1 explores key principles and themes in the social policy debate. Two basic questions underpin the discussion on welfare philosophy: what kind of society New Zealanders want to live in, and the proper role of the state. Jonathan Boston begins by examining three models of welfare provision: a residualist, minimalist or needs-based approach; one based on insurance or contributions; and a social citizenship or rights-based model. Historically, New Zealand combined the needs- and rights-based approaches. Major changes to income tax rates in the 1980s undercut both the fiscal and philosophical foundations for universal social support. More radical changes to specific social policies in the 1990s reflected a range of ideological, philosophical and economic considerations, usually backed by minimal empirical evidence. Some proved politically unsustainable or impracticable, while others (notably health policy) manifestly failed to achieve the expected efficiency gains. The distributional and social consequences in housing, health, employment, education, and basic income, forced some modifications. Yet these stopped short of rejecting the minimalist model and restoring a commitment to social citizenship.

In chapter two, Boston offers a closely reasoned critique of the objections raised by market liberals to a comprehensive welfare state and redistributive notions of social justice. Subsequent chapters in Part 1 explore notions of efficiency, self-reliance, equity, and the debate between universality and targeting. Paul Dalziel takes issue with arguments used to justify tax cuts for the rich and reduce the fiscal capacity of the state, and the refusal of supply-side economists to recognise the importance of aggregate demand in promoting economic development.

Dalziel and Susan St John then examine six situations where state involvement can be justified on the narrow grounds of economic efficiency: natural monopolies, merit goods, externalities, public goods, poverty relief, and social insurance. They conclude that in a number of these cases government expenditure can provide goods and services more effectively than profit-driven firms in an unregulated market. Boston teams with St John to assess the relative merits of targeting and universality. They conclude that this depends on what one is seeking to achieve: “the greater the weight given to social cohesion and fostering a just society … the stronger the case for universalism.” Targeting does not meet the objective of efficiency, either.

Centring this debate on social democracy versus market liberalism has its limitations. Because growing inequality is such a stark feature of the market-led economy, issues of gender and class inequality that also underpin the welfare state tend to be ignored. The dualism also marginalises other important challenges to Western humanism and the welfare state – notably the relationship between Maori and the state, and a redefinition of social justice that reflects Maori and non-Maori world-views.

The sole discourse on Maori notions of social justice is provided by Manuka Henare, who presents a Maori humanist understanding of values and ethics that is sourced in the spiritually-derived notions of tapu and mana: “The promotion of the common good and of authentic Maori social policy thus requires structures and institutions that enhance mana Maori.” This posits a fundamentally different problematic, and quite different solutions, from those that derive from social democratic notions of social justice, reflecting a Pakeha world-view. Henare’s important contribution sits rather uncomfortably with the Western social democratic discourse that informs all the other chapters in Part 1. None of the
later essays on specific policy issues seeks to explore this tension either, addressing the implications of market liberalism for Maori solely in socio-economic terms.

The book’s conclusion notes, in passing, a common view between Boston and Henare on the key moral value underpinning the welfare state: “the social responsibility of the community to work towards ensuring that all its members are able to live in dignity and to participate in the life and culture of their society.” But it fails to explore the relationship between what Henare calls a Maori humanist world-view and its Western social democratic counterpart. Such reticence may reflect the sense of Pakeha contributors that they should stick to what they know, that posing alternatives within the Eurocentric mainstream is difficult enough, or that it is not for them to comment on Maori perceptions of social justice. But the disproportionate impact of current social crises on Maori mean that Maori values and ethics must have a pivotal place in any remedial agenda. That, in turn, raises uncomfortable issues of colonisation, and requires some active reflection on the nature and derivation of Pakeha values that are often assumed to be universal in New Zealand social policy debates.

To produce a uniquely New Zealand vision of social justice, it seems equally important to recognise that there are diverse perspectives among Maori on such issues. Henare’s assertion that Christianity has assisted in the elaboration of a Maori world-view and the development of Maori ethics and values would, for example, be disputed by others who view Christianity as a corrupting influence. Equally, his rejection of a “tribal essentialist” view, which locates Maori identity in a specific iwi, in favour of “Maori humanists”, including urban Maori authorities, who define identity in terms of customs, ethics and values, reflects one position in a highly contested debate. Redesigning the welfare state on a new ethical foundation demands a more sophisticated exploration of, and engagement with, diverse Maori views than is reflected in the current debate.

The eight chapters in Part 2 of the book examine major policy changes in the areas of industrial relations (Pat Walsh and Peter Brosnan), accident compensation (Susan St John), health (Toni Ashton), compulsory (Michael Peters and Mark Olssen) and tertiary education (Jonathan Boston), housing (Laurence Murphy), poverty and social security (Robert Stephens), unemployment and workfare (Jane Higgins) and superannuation (St John). The authors focus on what went wrong in the pursuit of the market ideology, and what needs to be done to redress the damage to the most vulnerable and to the social fabric. While there is recognition that the past cannot simply be restored, the common goal is a tax-funded welfare state. Their justification rests on a combination of social democratic principles and the unsustainability of the current situation.

Discussion of future options stops short of how this change might be achieved, even under a more sympathetic government. Most contributors locate the contest between market liberalism and social welfarism at the level of policy and parliamentary politics, with frequent references to the Treasury and the Business Roundtable. Occasionally this extends to other interest groups, such as Grey Power’s voice on behalf of the more affluent elderly in the superannuation debate or private landlords on the housing issue. All the authors assume that former welfare state values still have sufficient traction to provide support for the policies they advocate. Recent surveys of social values by Massey University academics suggest this may be so, although the values of “children of the market” are largely unknown. Even so, the architects of the market liberal agenda remain key players in the policy bureaucracy. Self-interested, and committed, players are deeply embedded in Crown entities and other government delivery mechanisms. The commercial beneficiaries of these policies – insurance companies, landlords, owners of private hospitals and private training enterprises – can be expected to fight hard to defend their gains. Such considerations may cross the boundary between policy analysis and politics. But offering “what”, without “how”, leaves important questions unexplored.

St John’s chapter on superannuation comes closest to addressing these issues. Her account of the tortuous recent history of pension policy (from Labour’s compulsory contribution scheme in 1974, through Muldoon’s tax-funded National Superannuation, the fourth Labour Government’s imposition of a surcharge, National’s policy prevarication leading to the Superannuation Accord, and the abolition of the surcharge in 1998) highlights the marginal place of principled argument and research in a policy debate that is so politically charged. St John remains convinced that a universal, tax-funded system paid to individuals, with an income floor set through a surcharge on high income earners, is the most affordable and equitable option. But she is pessimistic about the prospects for achieving it, even through a multi-party agreement.

Her analysis of the problems and options is expanded in A Super Future?, co-authored with Anne Else, in an attractive combination of international comparisons, straightforward economic arguments, policy critique and storytelling. The impact of decisions on pensions is linked to similar issues in the areas of housing, health and community care. Women feature prominently, often telling their own stories; the chapter on “Ageing and Maori” gives authentic voice to kaumatua, especially kuia. The book’s style and accessibility will help achieve its goal of informing both popular and political debate on the issue.

Drawing the threads of their collection together, Boston, Dalziel and St John report a gap between the rhetoric and outcomes of social policy in the 1990s. This has produced social problems with new economic costs for individuals and the government. Somewhat unexpectedly, the conclusion then embarks on a discussion on employment, urging a return to the founding principle of the welfare state that the government should use its powers to achieve and maintain productive full employment. Accompanying this must be commitments to public education and training, research and development and physical infrastructure, and the strengthening of social institutions and social capital. The financial costs are acknowledged. So is the need to provide some greater policy stability. Any substantial policy changes must therefore be based on sound research, proper public consultation and a reasonably broad measure of political support. With recent signs of a waning political commitment to the self-regulating market and the ethos of market liberalism, this book should make an important contribution to that policy debate.

Jane Kelsey teaches in the Law School at the University of Auckland. Her new book Reclaiming the Future. New Zealand and the Global Economy (Bridget Williams Books) was published in August.

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