Wellington People's Resource Centre's response to WINZ's Wellington Regional Development Plan Questionnaire

March 1999

Before providing specific answers to your questionnaire we feel that some general comment is necessary. Doubtless you are aware that the Wellington People's Resource Centre has a rather different ideological position form the incumbent government. In so far as possible, such ideological views will be put to one side in our comments and answers to your questionnaire.

The questionnaire is for the development of the Work and Income New Zealand (WINZ) Regional Plan. However, in your letter you talk about the development of a "business plan". Also, both within the cover letter and the questionnaire there is an identification between "job seekers" and "WINZ customers".

As a first step in the development of a WINZ Regional Plan we would suggest the need for clarity and precision of thinking.

Specifically we suggest WINZ needs to clarify its thinking about:

what WINZ is.
what WINZ is not.
does WINZ have "customers"? If so, who are WINZ customers?
who are not WINZ customers?
does WINZ have non-customer stake-holders?
what are WINZ's functions?

We suggest some answers to the above questions:

WINZ is a government department.
WINZ is not a business. Fuzzy thinking about this can (and has) lead WINZ into fundamental misunderstandings about its functions and duties. The functions and duties of government departments are significantly different from the functions and duties of businesses.
technically WINZ does not have any customers. However, given the restructuring of government departments where the government sees itself as "purchasing" services from its departments it could be said, from within this jargon, that WINZ does have a customer, i.e. the government. As the government is the only purchaser of any goods or services from WINZ, the government is WINZ's sole customer. Further, when considering who is the owner of this "business" the role also will get applied to the government. However, technically, the government is neither a customer nor owner as under the Social Security Act 1964 Parliament has provided that WINZ administer this Act and as such has the responsibility to vote the necessary resources for WINZ to enable it to carry out this function. Where Parliament fails to provide the necessary resources, WINZ has the obligation to report this fact to Parliament.
beneficiaries are not customers of WINZ but, as their legal name suggests, they have the status of beneficiaries under the relevant enabling Acts.

(Probably the most ludicrous example of such fuzzy thinking is illustrated in the statement by an NZISS policy analyst who said "We need to ensure high quality customer service else our customers will go else where." In the context of a business this statement makes perfect sense. However, within the context of Social Security such statements are simply bizarre.)

Yes WINZ does have non-customer stake-holders. Besides WINZ's sole customer, WINZ's stake-holders include beneficiaries, employers (via employment subsidies and WINZ's employment agency function), groups accessing cheap labour under non-employment work schemes,[1] etc., as well as the general public whom have an interest in WINZ performing it statutory duties.
WINZ has a number of functions. It must, in a apolitical manner, implement the requirements set out in the Social Security Act 1964 as well as a number of subsidiary Acts. It must, within the confines of its enabling legislation, implement government policy. One function WINZ does not have is that of making a profit. The fact that WINZ does not have the quintessential function of a business should alert WINZ Regional Development Planners that there are fundamental problems that may arise in confusing this WINZ's planing with a business plan.

There are important implications for WINZ's Regional Development Plan to be drawn from the above questions and answers.

Confusion over whether or not WINZ is a business or government department runs significant risks. One of the risks that has in fact eventuated is the miss-identification of "customers" and beneficiaries. A fundamental distinction must be drawn between the interests of WINZ's "customer" (i.e. the government) and the interests of the beneficiaries under the Act WINZ administers. The recognition of this distinction must form a fundamental part of any WINZ Regional Development Plan. Part of this recognition involves the recognition that, at times, there will be conflict between the interests of these two groups. Therefore, without such a recognition, WINZ officials run a significant risk of breaching the code of ethics & conduct required of all civil servants.

We suggest therefore, that WINZ's Regional Development Plan must include sections identifying possible conflict of interests between WINZ's various stake-holders. Once an identification of these conflicts have been made, identification of WINZ's legal obligations with respect to these conflicts need to be highlighted.

EXAMPLE [2]

The government has a significant stake in moving unemployed people into community work schemes. This interest may be characterised as both political and paternalistic. However, the implementation of these community work schemes may conflict with the legitimate interests of individual beneficiaries. The WINZ Regional Development Plan which will include the implementation of these schemes must take account of the potential conflicts of interest and maintain a rigorous focus on the legal requirements involved with these schemes.

A particular example where this conflict of interest can manifest itself is when an individual works voluntarily for a community group that does not participate in the community work scheme. As such, this individual will not be counted as a participant in the statistics of the number of people participating in the community work scheme. As such, there will be, and is, institutional pressure within WINZ (stemming from the government's interests in maximising such numbers) to either obtain agreement from the community group to agree to participate in the community work scheme or to require the individual to become involved in some other community group that does use the community work scheme. Such pressure will develop irrespective of the nature of the work the individual is undertaking voluntarily.

The above is an example of how conflicts of interest can manifest themselves is neither hypothetical nor limited to one WINZ region. Therefore, this example, along with others, provide case studies which can be used in WINZ's Regional Development Plan to develop procedures that fairly and objectively implement the relevant requirements of the Social Security Act 1964 insofar as they relate to the community work scheme.

It should be remembered that, as in the above example, there is not an identification between the interests of the government, community group, and individuals subject to the work-test. WINZ must, in the implementation of the community work scheme, mediate the competing and conflicting interests and legal rights of these groups. WINZ must not adopt as its own any one of these group's interests.

The identification of WINZ [3] as a business, with the government as its owner and also, perversely, as the customer, will lead WINZ to inevitably put the government's interests ahead of other legitimate interests. This has the potential to involve WINZ in the systematic violation of the rights and interests of other WINZ stake-holders. WINZ must take care in its Regional Development Plan to clearly identify what WINZ really is and what are its real functions and the actual status of its various stake-holders. In doing so, WINZ needs to recognise the fact that language can have an important impact on what we do and how we do it.[4]

The following are comments on the specific questions set out in the Questionnaire:

From national and regional trends we would expect a reduction in the number of permanent full-time jobs with a consequent growth in temporary, fixed term, or casual part-time jobs. It is unlikely there will be any real growth in the number of actual jobs within the region.

We would also expect, were the community work scheme to be extensively implemented, for there to be a reduction in the following paid jobs (both full-time and part-time): teacher aids and other non-teaching school support work, WCC workers (particularly in low skilled out-door work), community workers of all types, nursing aids, grounds people (particularly sports clubs), home help workers, etc.

The question presupposes there will be job growth. Based on current forecasts, we would expect that there will be no overall real growth in employment relative to the total labour market (see answer to question one) In other words, unemployment within the region is unlikely to fall significantly as a percentage of the labour force.

Again, from national and regional trends, the likely growth areas will be in the low paid casual service sectors such as shelf stacking in supermarkets to bar and restaurant staff. Such job growth is likely to be at the expense of relatively well paid permanent full-time jobs.

The first presupposition to this question is the expectation of job growth. We do not expect significant growth relative to the labour market. The question further assumes that the jobs in the employment sectors identified in the answer to (2) (those sectors were jobs are likely to become relatively more common) are the sort of jobs that require skills not found within the current "job seekers". Therefore the second presupposition of this question is that "job seekers" require more skills to access these jobs. Both parts of this presupposition are, in our view, misguided.
Through an analysis of past falls in relative levels of unemployment it can be seen that such falls have not depended upon "up-skilling" of "job seekers" but upon there being a relative growth in the number of economically viable jobs compared to the overall labour force.
The single most important issue WINZ needs to address is the development of a realistic macro-economic understanding of the New Zealand labour market. Without such a basic understanding WINZ (like NZISS and NZES before it) will waste enormous amounts of resources in its attempts to help/hassle individuals into work. The overall affect of such efforts by NZISS and NZES have been statistically negligible. There is no objective evidence at all that any activity carried out by these two organisations increased the number of people in the work force. WINZ's Regional Development Plan needs to take the past total failure of NZISS and NZES into account.

By re-focusing itself on job creation (both within the public and private sectors) WINZ may be able to have an impact upon levels of unemployment within the region. However WINZ needs to be aware that its efforts will be minor (given its resources) compared with macro economic changes. A major barrier WINZ faces is the community work scheme which legally it must administer. It is almost universally recognised [5] that this scheme will have the effect of reducing the number of paid jobs available. If WINZ is to minimise the displacement affect it must be rigorous in eliminating from the scheme any work that would normally be carried out by paid workers. For example, teacher aid positions should never be approved nor should any work that historically was performed by local or regional councils. WINZ must not approve such schemes merely because the organisation applying for them cannot afford to pay someone to do the work. To allow such schemes is exactly how displacement is created.

There is a range of training that individual "job seekers" may wish to undertake. WINZ ought to make access to such training as easy as its current legislative authority allows. However, WINZ ought not to believe that such training will have any measurable impact upon paid employment or the numbers of those on work-tested benefits. To do so would be to again fail to understand the forces that actually govern the job and labour markets. As a corollary to the above it follows that the punitive measures known as "sanctions" serve little point if the objective is facilitating people from benefits into adequately paid employment.

WINZ should keep in mind that the political interests which brought about the sanctions regime had little to do with macro economic reality. The "hassle" approach of which sanctions are a part, is not aimed at creating employment, nor is it aimed at helping people increase their employability. Rather, the hassle approach is aimed at making life on a work-tested benefit as unpleasant as possible.

The purpose behind making life on work-tested benefit unpleasant is that it is believed that by doing so this will ensure that when jobs become available people will therefore willingly move from benefits into employment no matter the pay or conditions such employment offers.

The proponents of the hassle approach also hint (sometimes quite broadly) that people on benefits do not wish to work. That such a view has no basis in reality, as data held by WINZ concerning movement into employment shows, is ignored by these proponents though this is not to say they are unaware of the lack of evidence for this view.

From such divergent perspectives it, again, can be seen that WINZ must, in developing its Regional Development Plan, examine critically whose interests any particular approach serves. The Act WINZ administers provides the Chief Executive wide ranging discretion. In order that she exercise this discretion she needs to get past the plastic political rhetoric characterised by describing WINZ as a "business" and beneficiaries as "customers". She must also understand that to a very large extent she and her department have almost no control over the level of unemployment in New Zealand. Understanding these quite simple facts ought to be enough to place the role and functions of WINZ into a more realistic framework.

To answer the second question first, the community work scheme is (as was its forerunner the community task force) counter productive in that it will and has costs jobs and thus is likely to make it even more difficult for a person to get decent paid full-time employment. The attached sanctions regime is pointless from the perspective of helping to increase a person's employability. In exercising her powers to impose sanctions the Chief Executive must bear in mind the political nature of the sanctions regime. When it is understood that participation or lack of participation in such schemes will have virtually no effect on a work-tested beneficiary being more or less likely to obtain employment there can be little legal justification on the part of the Chief Executive to impose such sanctions.

From our experience such activities as job action workshops etc. have little to no value unless the individuals are personally motivated to undertake them. This motivation cannot arise out of any compulsion or threat of sanctions. This is also true of community work. Where community work is undertaken voluntarily it can be of great value to the individual, however, where compulsion is used it is likely to do harm both to the individual concerned and to the community group involved.

With regard to providing employment subsidies, our experience is such schemes enable community groups to provide actual full-time paid employment if only for a limited time. As to whether this serves the longer term objective of the beneficiary of this employment moving permanently into paid work, again this is generally a product of macro economic factors rather than the local facts associated with individuals obtaining temporary full-time employment.

With regard to the department's self-employment scheme (the enterprise allowance) we believe that this is a valuable means to assist people creating their own employment - possibly the only assistance provided by WINZ that actually helps to create new permanent jobs.[6] Any assessment of how this scheme has and is working needs to be viewed in the dual contexts of the high failure rate of new small business and the potential savings to the state should the new business succeed. We would recommend that this scheme continue and the support systems for these small businesses be made more extensive. We also support what we understand is a change to how this scheme works in that there is no longer the requirement that it only be available to people who will be full-time self-employed. This we see as an important realisation that in most cases the income generated by any new small business is likely to be small. That to insist that the business, almost from the start, provide sufficient income to support the person (and family) was a rather unrealistic requirement.

* * * * *

Notes:

This description is not intended as being derogatory but as an accurate description of a person's status under the community work scheme. The legislation governing this scheme is explicit about not creating an employer-employee relationship. Further, from the point of view of the group accessing this scheme, there are no minimum labour costs (i.e. the minimum wage does not apply) thus the labour is comparatively cheap.
This is only one example among many. If there is interest in taking seriously such conflicting interests within the WINZ Regional Development Plan then we would be happy to provide additional examples.
It is interesting to not at this point the fact that "Work and Income New Zealand" is the trading name for this government department. One is tempted to ask the rhetorical question: what exactly is WINZ trading? Again the business terminology leads one to think about WINZ in totally inappropriate terms.
Without suggesting a close analogy to WINZ one need only look to how language developed with The Third Reich or within the USSR On the literary front, Animal Farm and 1984 provide chilling examples of how the language we use can impact upon the reality we live.
Recognition of the displacement effect extends from Treasury through most government departments and is acknowledged by such diverse groups as, the Employers Federation, the CTU, TUF, and most experts on labour markets. The only significant sector within New Zealand that does not recognise displacement as an inevitable concomitant to the community work scheme are the political proponents of the scheme.
Job Plus, for example, is aimed more at encouraging an employer to take on someone who, initially, lacks some of the skills required for the job. As such this subsidy can enable the employer to provide the person on-the-job training. This subsidy also appears to have the objective to make a beneficiary more employable (compared to others applying for the job) and thus remove individuals from the benefit system. However, no account is taken of what happens to the other people who applied for this job. Presumably they replace the lucky beneficiary within the benefit system. It is unlikely, and we have never seen evidence, that Job Plus actually creates new jobs though it may well change which people are in the benefit system.