This guest-post has been ‘cross-posted’ from Welfare Watch.

Just as it did in the 1990s National is attempting to restructure welfare. True to form, it is doing this by impugning the personal qualities of welfare recipients rather than dealing with what are much deeper, more entrenched structural problems: high and rising unemployment, an ageing population, the knock-on effects of accident victims being pushed back into the welfare system, and a low-wage, undercapitalised service economy.

The backdrop for this latest bout of beneficiary bashing is the government’s ‘unrelenting focus on work’. Work, according to Social Development Minister Paula Bennett, always and everywhere provides ‘better outcomes’ for people. This is the same Minister that fretted in late 2008 that mothers were at risk of being pushed back into work too early. In a remarkable change of heart, the Minister has ushered through legislation[i] requiring mothers whose youngest child is aged six or more, and sickness beneficiaries, to seek work for 15 hours per week as a condition of benefit receipt.

It is unlikely anyone objects in principle to sole parents working, least of all parents themselves who need the cash and often have limited social support. What the Minister and her fellow travelers have consistently and deliberately left out of the discussion is that work must be available, and it must be safe, appropriate, and socially acceptable. There are no protections written into the legislation to ensure any of this. Instead, the government’s Welfare Working Group has continued the theme that work is unambiguously good (despite a considerable body of evidence to the contrary)[ii] and is sending clear signals that the government not only wants to privatise the delivery of social assistance, but also funding through an insurance-based system.

In the meantime Minister of Finance Bill English has moved from describing the economy as ‘rebounding’ to ‘rebalancing’ – an altogether more modest proposition – and spinning that National’s infrastructure projects will ensure New Zealand is ready to take advantage of the economic upturn when it comes. We are assured this will happen, even though the timing is increasingly uncertain. The underlying message is that when the recession – a minor blip, we are led to believe – has passed, it will be back to business as usual.

In what Chris Trotter has described as an increasingly bitter debate around social assistance,[iii] there has been opposition to both the government’s changes, and the Welfare Working Group’s arguments that the current system is ‘unsustainable’ and that there are lessons to be learnt from private insurance. Opposition has mostly come from social agencies and NGOs who argue that the best mechanism for getting people off benefits and into work is a robust job market, that recent changes to the legislation carry with them the risk that people will find themselves with severely restricted, or no incomes and that children in particular will be vulnerable to reductions in household income in the event parents are unable to find child-compatible work. Moreover, they argue, rhetoric such as the Minister’s ‘the dream is over’ obscures the significant barriers many New Zealanders face in getting and retaining paid work. It implies people don’t want to work, and that they need some tough love from the nanny state to get them off benefits, and, according to the government’s spin machine, into a job, then a better job, and then an even better job! Given this happy state of affairs, it’s a miracle there’s anyone left driving the buses! The evidence, opponents argue, shows that in fact people do want to work, and will work when they are able.

For social agencies dealing with the heartbreak of unemployment and financial desperation on a daily basis the solution is not dissimilar to that of the government – economic recovery, more jobs, and more opportunities to earn a living or study. This is understandable. In a society where job status is a measure of success, being without work, being the object of public vilification, and feeling powerless, poor, and bored, takes its toll on people’s mental and physical health.

So the consensus across the spectrum converges towards a business-as-usual scenario. Whether conscripted under National’s neo-bootstrap capitalism, or moving back into the labour market as safe, appropriate work becomes available, getting people off benefits requires something akin to full employment for what are, in the end, reasons of state legitimacy.

What is missing from this debate is whether a return to business as usual as we knew it is likely, whether it is even desirable, what might a new business as usual look like, and how do we support people if, in fact, the halcyon days of our debt-fueled economic growth fail to rematerialise?

There are a number of thunderclouds on the horizon, but here I want to focus on one, and that is the coming energy crunch. It is impossible to talk about energy without mentioning its twin, global warming: they are the Scylla and Charybdis of our collective livelihoods in the 21st century. But while we have proven remarkably adept at rationalising away climate change, the oil price spike of 2008 clearly demonstrated it will be much harder to ignore increases in fuel prices, as is likely to happen when easily accessible fossil fuel supplies start to dwindle. Commonly called peak oil, it does not mean the oil runs out. It just gets more difficult to get out of the ground (think offshore wells such as Deepwater Horizon), and hence more expensive. Over time of course, reserves do diminish. Some experts believe peak oil has already passed, others, including reputable UK think tank Chatham House, believe it is much closer than has been officially acknowledged by the International Energy Agency (about 2015 rather than 2020-30). The 2030 date is well past any electoral term our current crop of politicians are contemplating, so our government, along with every other government on the planet, is burying its head in the sand. Peak oil, they hope, will be someone else’s problem.

What does this have to do with social assistance? Simply, economic growth as we understand it depends on cheap fossil fuels. Higher incomes enable us to buy more stuff, consumer purchases keep businesses going, and when economists talk about improving our standard of living they generally mean improving our capacity to buy stuff. It doesn’t matter if we need more stuff, or if stuff makes us happier, we just need to be able to buy it.

In the 21st century most stuff is made or partly made from fossil fuels (plastics, carbon fibre), manufacturing processes depend on fossil fuel-derived chemicals, fossil fuel-dependent transport carries our stuff to the local mall, and most of us drive to the mall in our gas-guzzlers to buy our stuff. As well, fossil fuels are used in food production and packaging. So we use a lot of fossil fuels just to get by as consumers. This is part of the demand side of oil.

The other part is the growing economies of the developing world. When the Chinese and Indians went everywhere by bicycle, lived in villages and ate locally produced food (yes, it’s a stereotype, but you get the drift), no one paid much attention. Now they have a burgeoning middle class that likes to drive cars, eat imported food, and buy consumer goods. Just like us, in fact. Except that there are, in total, of almost 2.5 billion souls in China and India alone, and as they strive to attain Western lifestyles they will claim a far greater share of the world’s fossil fuel reserves. [Note, this is not an argument about relative ecological footprints or who needs to conserve and who doesn't. This is about the inescapable fact of increasing aggregate consumption.]

On the supply side, there is little doubt that fossil fuel reserves are limited, and that to date nothing has been discovered that is as energy dense, reliable and, yes, clean burning, as oil.[iv] The first rule of economics is that when demand for a product increases, and the supply remains static or starts to decrease, the price goes up. As we saw in 2008, when that product is oil the price goes up a lot.

At some point in the not too distant future, oil will start to go up in price, all the things we like to consume will become more expensive, thereby reducing demand and employment as the people who manufacture, package, transport and sell our stuff have less to do. Higher unemployment will be the rule, not the exception. Those with jobs will cut back elsewhere, setting up a cycle of suppressed demand. (The other scenario is 1970s-style inflation as people try to maintain their incomes and lifestyles. High inflation has historically been unhelpful for world peace.)

So the question is: if we are all facing a reduced standard of living as measured by our consumption of stuff, how do we collectively organise to ensure the wellbeing of all?  In an energy-constrained world, economic growth will mean something different to what it does at the moment.

When thinking about possible models of social assistance, it would seem prudent to factor in that business as usual, if it makes a comeback at all, will only be back for a brief ‘so long, catchya later’. The social sector needs to start thinking now about what will be the reality in 10-20 years time. The key, it seems, is to move from the focus on paid work. At the Welfare Working Group forum held in June this year, the strong message from the NGO sector was that unpaid work is valued both by those that perform it, and those who benefit from it. This work includes raising children, assisting elderly or disabled family members and neighbours, volunteering for schemes such as Meals on Wheels or social agencies such as beneficiary advocates, and so forth. It is not paid work that always and everywhere provides ‘better outcomes’; it is work that makes us feel valued and appreciated as individuals. Maybe the future of social assistance will mean formally recognising unpaid work through the localised provision of goods and services, for example community gardens being used to help feed volunteers and local families.

Climate change sceptics, and their peak oil mates, often dismiss both issues with non-arguments such as ‘do they want us to all go back to living in villages’. Well, maybe. And what, exactly, is wrong with that? There is no evidence that our ever-increasing consumption of stuff has made us happier, but people often express regret that they don’t know their neighbours, or they don’t have time to garden or raise chickens. Would a more time-rich, more local existence perhaps help us reconnect with our communities? There’s nothing that says people won’t be able to travel, move, or commute (assuming the government doesn’t dust off the old Laws of Settlement[v]).

In the meantime, pretending that the laws of physics can be wished away will be very damaging indeed. The crunch is some years away – but not as many as we think – so this is time to debate what sort of society we want in the future. There are choices, so we must not be persuaded by vested interests that the only option is the status quo. This is our collective problem, and helping people maintain a basic standard of living will require a collective, community-driven solution. Welfare in the 21st century will be shaped by energy constraints and climate change. Let’s start dealing with it intelligently while we have the luxury of time.

Last word: As I complete this there is a news item about who has the right to extract oil from under the Arctic. At issue is who controls the North-West Passage, which is open for shipping for the first time. The reason it is open to shipping is that global warming has melted the ice that previously blocked the passage of ships.

Footnotes

[i] Social Security (New Work Tests, Incentives, and Obligations) Amendment Act 2010. Available http://www.legislation.govt.nz/act/public/2010/0105/10.0/DLM3170303.html.

[ii] Dale, M, D Wynd, S St John, and M O’Brien. 2010. What work counts? Work incentives and sole parent families. Auckland: Child Poverty Action Group (Inc).

[iii] http://www.stuff.co.nz/dominion-post/4138008/Our-lurch-from-sphere-of-grief-to-miseries-of-life.

[iv] Roberts, P. (2004). The end of oil: the decline of the petroleum economy and the rise of a new energy order. London: Bloomsbury.

[v] Laws that authorised parish officers to regulate parish immigration. They were designed to keep unemployed persons ‘chargeable to the parish’ out, but were also used to keep limit immigration to the parish generally. The prospect of not being able to get unemployment support in other parishes also kept many labourers in their own parish even though work could be found elsewhere.

© Donna Wynd
2010

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Donna Wynd is chief research and policy analyst for the Child Poverty Action Group. She was co-editor of CPAG’s cornerstone report Left Behind: How social and income inequalities damage NZ children (2008) and the author of CPAG’s report on foodbank use in NZ, Hard to Swallow, along with many other submissions, articles and presentations for CPAG and others.

She has a background in law and economics, and also represented New Zealand in cycling at the 1996 Olympics.