Is it all in their heads?

After hearing around 100 submissions over 4 days on the latest welfare reform bill (see my summary of the first day of hearings here), some pretty strong themes have developed.

The most obvious theme is opposition. Quite overwhelming opposition. For many reasons. I hope this is a sign that increasing unemployment is helping people realise that ‘beneficiaries’ aren’t the problem.

There is much I could write about the detail of the submissions but for the sake of your sanity and mine I’ll break it down into different posts starting with:

Disability related concerns:

There needs to be coherence between different department’s plans and actions and pieces of legislation. This Bill is seen to run contrary to the updated Disability which was signed off by Cabinet this year and committed to leading focus on results in three cross-agency shared outcomes of:

  • Enabling Good Lives –
  • Disabled people have greater choice and control over supports, use more natural supports, and disability support funding is more efficiently uses
    Employment – an increase in the number of disabled people in paid employment
    Rebuild Christchurch – the Christchurch rebuild is inclusive of disabled people.

  • Promoting the Better Public Services results to be inclusive of disabled people
  • Business-as-usual actions by single agencies.

The many submitters also presented their views that the legislation runs contrary to the Convention on the Rights of Persons with Disabilities. The now famous cry of that convention, that New Zealand was so involved in drafting, was “nothing about us, without us”. It’s a basic, but sadly this Bill seems to all those communities as a return to the old thinking of able bodied people deciding what is best for them. This knowing what’s best isn’t even based on research because there is an absolute dearth of research.

Barriers to employment

We heard very clearly that people’s own perception of their ability to work is not the problem. The problem is our disabling environment that discriminates against people with disabilities. Here are some of the things the Government could work on that would help people with disabilities get the work they are crying out for:

  • Attitudes of employers and fellow workers.
  • Availability of suitable jobs in the local economy.
  • Ability to make adjustments to the work place, this may be as simple as knowing to give only one instruction at a time or as complex as specific equipment.
  • Lack of coordination with health carer services, we heard that there is no coordination or prioritisation of carers schedules. So a carer may not get to see and dress someone who is in work until mid-morning.
  • Availability of flexible hours.
  • Availability of formal and informal support networks.
  • A person’s access to education and work experience.
  • Lack of accessible transport options.
  • An inaccessible built environment.

Barriers to accessing assistance

Work and Income is itself a barrier. Many people are referred to websites and phone lines to get appointments or information. These systems are inaccessible to significant groups of people. When there is an automated notification of a meeting this can be sent in a way that is inaccessible to the person for reasons of blindness, hearing impairment, or illiteracy. The office counters can also be inaccessible. Work and Income staff have no or completely inadequate training around disability awareness particularly, though not exclusively, in relation to neurological disorders, autism spectrum disorders, learning disabilities and mental illness. This means they can’t necessarily communicate in an understandable way and people do suffer as a result. As one very competent and eloquent mother of a 27 year old son with a learning disability said (and I paraphrase) “I know we could claim more disability allowance but the processes are so difficult, even for me, that we don’t”.

Medical Assessments

People with disabilities are chronically over-assessed already. The last thing they need is another assessment. The Convention and plans have all been about moving New Zealand away from the medical model that treats people with disability as bodies needing intervention to actual people who have agency who need barriers removed to ensure their full participation in society.

Everyone expressed high levels of concern about the Minister having positively referenced the UK model medical assessment for income support which has seen some pretty disastrous results for people with disabilities, including increased suicides.

Preferred suppliers

Again, this is seen as another instance of choice being taken away and also deals with people with disabilities as more homogenous than they actually are. Just because two people have the same condition, it doesn’t mean that it will be experience or present in exactly the same way.

When the Government continually tells us they don’t want to pick winners, this seems to be an example where they hope to do just that.

We don’t know yet exactly what this is intended to cover so it could be only Pharmac funded drugs, it could be wheelchairs, it could be doctors, physios…

Currently the disability allowance only covers part of the cost of any disability support aid, but with this change to the law the Government could effectively control what services or products or drugs a person is able to buy, despite only contributing a percentage of the payment.

Diagnosis trigger shift in benefit category

People with cancer will be on the sickness benefit until they’re diagnosed as terminal. Changing your benefit category once you’ve had a terminal diagnosis can just be physically and emotionally impossible.

Renaming of invalid’s benefit to the supported living payment

It was almost unanimously requested to be renamed to the living payment allowance, as the supported living allowance is already the name of health sector funding. While this may seem a small issue to some, if you’re asked what your job is, and you don’t have a job your identity tends to get intermingled with the name of your income support. This is especially true for people with learning disabilities who make up over half of the people on the invalids benefit. People have been lobbying for years to get a name change.

Minimum Wage Exemption

Currently over 1000 people in New Zealand with learning disabilities are paid less than the minimum wage in the open employment market. This keeps people on income support, even if while they’re working. The minimum wage exemption should be phased out and employers should access financial support if needed through existing schemes.

The problem is so clearly not in the heads of the people with disabilities. The problem is with us and how we’ve organised this society.

Here are some of the brilliant ideas that were suggested as ways to get people into work:

  • Run a national disability awareness campaign.
  • Employ people with disabilities in the state sector to ensure public services are fully accessible including Work and Income.
  • Encourage the private sector to follow suit, by getting rid of the MWE and ensuring there are enough funds to enable employers to make suitable adjustments.
  • Create jobs.
  • Contract support agencies/DPO to work alongside people.
  • Bring back designated case managers who can build relationships with people and learn about their needs.
  • Ensure carers prioritise people with work or going to work interviews.
  • Increase disability allowances to enable people to cover transport and disability costs.
  • Extend the living payment provisions for the blind all groups entitled to the original payment.

26 Comments Posted

  1. @Smith – it is a challenging concept to people who have never done this before (as is obviously your situation). Again, I will dispel a couple of common myths: 1. You do NOT need a whole lot of money to start a business and 2. You do NOT need a “good idea”. There is plenty of people with one or both of these who have fallen flat on their faces and plenty of people who had neither, but through sheer grit, determination and having the other required ingredients, have made it work. What you need is the above listed items (which Gerrit and myself have listed) – and again – focus on **Selling something to a willing marketplace who will pay you for it**. There is plenty of people around who are in the position to provide what you want and with the right approach you will find them incredibly generous. It all starts with forward motion.

  2. @Michael “It’s just as well as you haven’t been funded as you would have lost it by now with that approach.”

    I have a disability that means I need additional support. It was totally impossible to co-ordinate the supports with even just the two week course that Work and Income send you on, or anything else for that matter.

    I can’t tell you how frustrating it is to have put in the groundwork and not be able to get enough support to start. Without knowing exactly what my combination of disabilities is you can’t possibly understand just how tough it was to fight my way through the system (which doesn’t accommodate disabilities well, as Jan pointed out) and discover I had gone nowhere and to also know that I still wouldn’t be able to get a job because of the lack of adequate supports (this is exactly what was referred to above)

    I did have a contract which would have been quite lucrative had I been able to obtain the funding. I could explain it but I’m getting tired.

    But you have me all figured out right?!

  3. There is a difference between starting businesses that do niche exports (and getting seriously whacked by the high NZ dollars) or make a few bucks locally, and actually solving the systematic destruction of NZ industry and the balance of payments issues. The two problems are different. If you want to start a business, fine. Do it. That’s what the free market is all about – WITHIN NEW ZEALAND.

    If you want to solve the problems of malinvestment and job loss and low wages and people leaving the country, you aren’t going to be able to do it with the simplistic “free market” cheerleading that comprises “New Zealand Business Expertise” these days. You aren’t looking at the same problem and you can’t solve it the same ways.

  4. Micheal,

    Profit level is dependent upon how quickly you want to repayment for the investment made.

    I paid myself a living wage but massively returned dividends to repay my investment. Meaning I’m 100% debt free and now have higher profits (no interest payments).

    It all depends on what is important to you. At my age (60+ now) it was more important to be debt free then to retain profits to grow the business.

    I morgaged a debt free family home and my first priority was to return that back to a debt free situation.

    So while no “bottom line” profits as such for a number of years, things are now much much better.

    You may want to add to your list of prerequisites to start a business

    1. Get the best accountant who is fully up to speed wityh IRD taxation rules.

    2. Get the best accounting software (no it does not need to be expensive $300 at most for Cashflow Complete) that tells you how sales and expenses are to budget.

  5. Good businesses and ideas do not have trouble attracting customers and capital. Bad business ideas are easy to spot – they typically rely on state funding.

    Not really as ‘black and white’ as that though is it, Arana.

    Xero, which has attracted both customers and capital was founded in 2006 but has yet to turn a profit and has received considerable government assistance.

    I do however, second your sentiments re Michael’s list – an excellent synopsis.

  6. @Gerrit – $250k is not a first time business in the context of the earlier poster. However, why not make a profit from the 1st financial year? The only year my business has made a loss is YE2006. (Year 4). We dumped a no longer profitable activity and took 1 or 2% of stock value in an auction. The resulting tax loss was fully absorbed in YE2007 accounts.

  7. Micheal

    in other words the business was loosing money.

    Any business where you pump $250K into is not going to be making money from day 1.

    Claw back the GST on the investment so as to maintain cashflow.

    Naive to think it will make money from day 1, as you need to put into place your customer base, product mix, pricing, delivery, raw material supplier and pricing, establish factory costs and overheads, etc, etc, etc.

    No business plan can do that for you accurately until you have established an operational process and pattern in real life.

    Another barrier to starting a business is gaining credit at your suppliers.

    When you start up the best you can expect is cash accounts at your suppliers, followed by 7 day accounts and than onwards to 30 day transactions.

    Volume related discounts wont apply until your business takes off and negotiations for better pricing on raw materials can begin due to increased through put.

    Your business make money from day 1?

    Even if your customers were paying cash (instead of making you wait for up to 8 weeks to pay you under normal terms of trade) you wont make money from day 1.

  8. “Have had significant GST returned in my first few years, well worth it.”

    In other words the business was loosing money.

  9. Micheal,

    I would register for GST straight away as the major purchasing expenses are in the first few years, when income is low but expenses are high.

    Have had significant GST returned in my first few years, well worth it.

    I do recommned to pay GST every six months. That way you collect some interest on the GST collected for the state.

    Totally agree that business in competitors generally work (not to close or the commerce commision is on the case) together.

    Industry clusters are a positive creation.

    Also join industry organisitions such as the EMA.

  10. Another point to add to my list – New Zealand business tends to be pretty co-operative and cordial compared to, say, Australia. Always keep good relations and be prepared to help out a competitor if the situation calls for it. Anyone who thinks the world of business is all cut throat is deluded. There are plenty of competing companies who’s owners are drinking buddies… (If not literally then figuratively).

  11. @Gerrit – Very good points which I will elaborate on. 1. Ltd Companies are overrated. A business does not start with the company registration, it starts with the first sale. Granted, there is times and places where a inc. company is desirable, but is someone is on the dole and money is really tight, there is better uses for the $160. 2. Your point about putting money aside for tax is very good. I would certainly add that to the list. Having said that my advice would be DON’T register for GST (until required to) unless someone expects to have over $60k turnover (from the sale of goods and services) in the first year.

  12. Michael’s Business 101 post is gold.

    Good businesses and ideas do not have trouble attracting customers and capital. Bad business ideas are easy to spot – they typically rely on state funding.

  13. To add to Michael’s list

    Always put aside 40% of your gross income into a seperate (savings) account to pay your GST, provisional and final taxes. And only under the absolutely last resort dip into those funds to pay expenses.

    If you do make sure future cashflow is sufficient to reinstate those funds ASAP.

    Most businesses fail as they dont account for the taxes they need to pay.

    You will get used to being an unpaid GST tax collector for the state.

    Alternatively you could always do a Unite union trick and not pay the taxes owed. Doubt you will get a “let off” from the IRD as good as the union got.

  14. @Smith – So you are telling me you have had FOUR YEARS to start a business and have got nothing to show? It’s just as well as you haven’t been funded as you would have lost it by now with that approach. The Universe (and world of business) rewards people who do what it takes to make it happen, not wait around on the State. New Zealand is the easiest place in the world to start a business. As long as you are not bankrupt or disqualified you don’t have to ask permission in most cases. This is business not a love in. While it is true we all need support – this is secondary to selling something to a happy customer who pays you. Simple as that. The universe will give you the support you need when you put one foot in front of the other and have some forward motion.

  15. @Michael “Again, more pleading for the State to sort out (aka run) people’s lives. The biggest issue with new businesses is not start up cash, but coming up with a viable business plan. As for start up cash I think the current regime (About $9 – 10k gift) is enough. If someone can’t start a business with this, how are they going to cope when things get tough?”

    The current regime isn’t paying anywhere near this – that was the way the scheme was administered under Labour. When the business plans were presented if they were viable, they were funded.

    Under National beneficiaries applying need to complete with the other applicants for the limited funding. 9-10 K is a pipe dream. I would be off the benefit by now if this were still administered in the same way.

    I had to fight my way into the scheme with case managers not knowing what the hell I was talking about. Then I found in 2008 they had run out of budget. Then after nagging several case managers I finally got interviewed and sent on the course. Anyone I spoke to discouraged me as much as they could, mostly telling me it was competitive. This process took from 2008 – 2010. What a waste of money.

    Of the 13 of us on the course we were told that only a couple of us would get the grant and this would go to the strongest business plans. Notice that it doesn’t matter if you have a VIABLE business plan…it this case actually has to be considered better than at least 11 other beneficiaries all of whom are considered disadvantaged in the employment market, but the level of disadvantage seemed to me to vary greatly.

    I’m not sure if it was intentional or not but it also seemed that the less it cost your business to start up, the more likely it was to be approved. I can’t say if they did use this as part of the criteria, but the days of 11K of funding appear well and truly over.

    Hardly supportive of long term unemployed, like me. Of course I will try and adapt and move on but the reality is that the process could be much faster if things went back to the way it used to be.

  16. Business 101 (aka. lessons I have learned). 1. Cashflow and profit is king. 2. Vanity will lead to serious problems. Noone cares how flash your car is, whether you have a leather chair or an Iphone. 3. Never sign a lease for anything. Avoid term contracts where possible. 4. Keep a close eye on prices paid for commodities and shop around, but always buy quality tools (even though they cost more) 5. Stick with core business activities especially until experienced. Avoid red herrings and distractions. 6. If a business activity can’t turn a profit within 6 months maximum, dump it. Be ruthless and unemotional. 7. The Internet is a huge marketing opportunity but social media is overrated. A quality professionally designed brand and website is a must for almost any business. 8. Bankers should be treated with equal doses of respect and caution. They are certainly fair weather friends! 9. Never ever go into an industry with no competition. There is a reason why this is the case and it’s not favorable. 10. People new to business should avoid any industry that is highly price conscious. It is possible to make good money in such industries but only if experienced. Often customers are not after the cheapest. 11. Always research before starting up a business. Sometimes it can be fluked (I have done this) but the odds are far better when carefully weighted up.—————- Note that nowhere here have I said “Have plenty of start up capital” because this is not required. In general businesses that require lots of start up capital should be left to people who have it to spend or know how to get it. Having the State throw more money at this or anything else is not going to work. It will just result in bigger fails.

  17. @Smith… Again, more pleading for the State to sort out (aka run) people’s lives. The biggest issue with new businesses is not start up cash, but coming up with a viable business plan. As for start up cash I think the current regime (About $9 – 10k gift) is enough. If someone can’t start a business with this, how are they going to cope when things get tough?

  18. “There are many people that will not work. My guess is that you find a job you really want to work, do not see why we should complain when we try to do more ….”

    Who are these people you refer to? I’d like you to report them to Work and Income immediately instead of making a vague and unsubstantiated post.

    You say “many people” – how many specifically?
    How is it you KNOW they don’t want to work? Do you have full and complete access to their medical records, or are you making guesses about their condition and circumstances based on your psychic ability alone?

    The last part of your post makes no sense, but I’m assuming you just think disabled can trot off to work if they REALLY want to work. It is critical disabled people have proper supports so they can work (ref: Dr David Bratt, health advisor to the Ministry of Social Development).

  19. There are many people that will not work. My guess is that you find a job you really want to work, do not see why we should complain when we try to do more ….

  20. How about increasing the subsidies available for disabled persons starting their own business?

    There are plenty of supports for employers, but disabled people taking control over their lives through business are left to fund themselves with little or no support.

    Workbridge offers the self-start grant of up to $1000 for modifications etc, but there is no follow up to ensure the business is supported through the first start up phase of around six months to a year.

    This is critical because governments don’t create jobs, businesses do. By funding disabled persons starting a business we cut out the middle man and avoid paying wage subsidies to existing businesses, which personally I think can set the scene for exploitation.

    Great coverage btw Jan! That’s a lot of info condensed down into a readable chunk.

  21. You are right Jan, beneficiaries are NOT the problem..
    a lack of jobs is !

    where are the 170,000 jobs this Govt. stated they would ‘create’ instead they continue to cut public service & manufacturing opportunities (e.g. Hillside workshops) & the dole queues get longer & the stream of kiwis going overseas has turned into a massive torrent !!

    Now this Govt. is turning up the heat on beneficiaries (as if it is our fault) WRONG.. its the Govt. lack of action to boost employment. They say that giving tax cuts to business will create the environment for more jobs.. well sorry.. BUT I JUST DON’T SEE IT !!!


  22. The employee does not have that option due to government policy. The government is trying to foist the “unemployment problem” onto the private sector. Herein lies a problem, because the primary rational of a business is to make a profit for it’s shareholders – not to operate as a social service. Therefore I strongly advocate that both employee and employer should have the option of calling it quits in the first 90 days. This, however, goes against the Green party grain because like all political parties they are desperate to foist the problem onto someone else and leave them lumbered with the hassles if it doesn’t work out. The Marxist Unions have their own agenda, some of which I agree with, but I will break ranks on this one. I do not see why an employment relationship should be any different to any other – I strongly advocate the principle of voluntary association. Ultimately it is all a feeble attempt to patch up a system that is broken – and that is one of the unsustainable ideology of perpetual and unlimited consumption. For this, I blame both sides of the coin – business which often makes crap products, and just as guilty, consumers who just as often demand said products without care as to the environmental consequences and ramifications for the workers in developing countries who make these items. Every day I remind myself of the inevitablity this will come to a grinding halt or sharp slowdown at some point. The small part of me has a degree of sympathy for politicians across the spectrum who are often just desperately trying to patch up the holes and appease the consumeristic masses.

  23. Michael, my only real problem with the 90 day trial is that workers do not have the same option. If a worker leaves a job without good reason they can be stood down from receiving the benefit. This undermines labour mobility as there is a risk of a job not being suitable.

    I don’t see the wage subsidy of the long term unemployed as either a corporate subsidy or make work.

    1. the job is a real one
    2. there are costs taking on new workers and to provide an incentive for the long term to be tried (greater risk of this not working out).
    3. there are long term unemployed workers who want jobs.

    But given there is a labour surplus in the western economy – the days of full employment are over. Sure there has to be a better way than the current government approach of work testing more and more people (from SB and DPB).

    I prefer help to make people work capable (if they want this, including those on SB and DPB – but this does not require work testing everyone) and letting those who want/need work to go and take up the available jobs. Work testing all on benefits just spreads out scarce resource at Work and Income.

  24. I am not sure why your post got a thumbs down (It wasn’t me). From my point of view the only reason someone should be in a job is if their position contributes something tangible to the pot. As much as I am doubtful of a lot of what is called “free market ideology”, I must agree with it’s proponents that the State should not be involved in propping up commercially unviable businesses through corporate welfare. This is also another way the National government (and Labour/Greens during their regime) fudges the figures. They bribe businesses at the same time as trying to force the job seeker into a flakey job (at threat of cutting off their benefit). If someone doesn’t want to work what is the point of trying to force them? This is a damn good reason to have the 90 day trial period – to give companies an out if their new employee turns out to be unsuited – a probability that is greatly increased by the pressure on unemployed to get a job – anything to get them off the figures… Personally I think the idea of a “social wage” (as advocated by former Green MP Sue Bradford) is one worthy of being looked at. Pay people a subsistence no/minimal conditions amount as long as they stay out of trouble. There is only so many jobs available (and even fewer of any use in society) and plenty of people who *want* to work who will take them.

  25. Michael – those schemes were to ensure that those long term unemployed were placed back into employment. Even if they did not retain the jobs and were replaced by other long term unemployed – with recent work experience they were more likely to find further work.

    The 90 day law offers nothing for the long term unemployed as other workers are more likely to be hired. All it does is ensure that workers do not join union when they start the job – for fear of being laid off for doing so.

  26. The Greens and Labour (while in power) did nothing about one of the biggest National party rorts of the lot – and that is corporate welfare aka. employment subsidy scheme. This nefarious scheme uses taxpayer cash to bribe businesses to temporarily transfer people off the unemployed figures. It is a well known metric that an employee must return twice their total cost of employment in profit to be a commercially viable hire. Unfortunately, politicians of all colours care more about figures and less about real people, so again they seek to distort the proper operation of a marketplace. This way companies get to hire people at half price and 3 – 6 months later conveniently find a reason to “let them go” and rinse and repeat. The Greens and Labour had plenty to say about the 90 day law (which I think is far more justifiable) and nothing to say on this one.

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