Figure 1: child poverty (%) in New Zealand (before and after housing costs), 1982 – 2013
Source: Bryan Perry, Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2013. Ministry of Social Development (July 2014), Tables F.6 and F.7.
Figure 1: Net gain after income taxes, Social Security contributions and benefit reductions after a 5% minimum wage increase for a lone parent family
The welfare state has a long history of providing some of its support to the needy in kind rather than in cash. This can range from soup kitchens to public housing as well as food stamps.
In the USA, food stamps provide provide food-purchasing assistance for low- and no-income people living. Food stamps can only be exchanged for food.
Instead of requiring the poor and needy to attend a soup kitchen, they can be given vouchers to buy food at supermarkets and take it home and cook at themselves. These days some sort of debit card system can be used where purchases are restricted to food at supermarkets and other participating retailers.
A close parallel with food stamps, properly understood, is free school breakfast programs. The welfare state is providing in-kind support to hungry children. This is done at school, to ensure that the children eat the meals.
Rather than rely on their parents to spend their welfare benefits and income support on food for their children, the food is given directly to the children when they arrive at school in the morning. In New Zealand, these free school breakfast programs are restricted to schools in low income areas.
There is a Feed the Kids Bill in Parliament sponsored by the Green Party. I have frequently criticised this proposal as it doesn’t provide breakfast to needy children at the weekends and school holidays. They are left to go hungry. Abandoned by their so called social justice champions through lack of imagination and self-awareness.
If children are showing up at school without their breakfast on a regular basis, their parents should reported that the child protection authorities for intervention. This can start with budget advice and assistance with applying for any additional and emergency financial support they are eligible for from Work and Income New Zealand.
Soup kitchens not only provides people with food, it provides various other assistance to help people to get back on their feet.
If you were proposing a food stamps program in New Zealand because children are going hungry, you’ll be laughed at if you suggested it should only apply the part of the year such as during the school term.
That is precisely what the Greens are doing. The only difference is how they are organised the provision of in-kind support to children, this case, food. Instead of their parents collecting a debit card that can only be used to buy food, the food is eaten by their children at school.
I have reanalysed data published by the Peterson Institute on the true levels of social expenditure across the industrialised countries for the Anglo-Saxon countries.
Figure 1: gross public social expenditures in OECD countries, 2011
When you just look at gross public social expenditure, New Zealand is in the middle of the pack with the United Kingdom having the largest spending. There are not particularly large differences across social spending in the Anglo-Saxon welfare states.
Figure 2: Gross public social expenditure and the effects of taxation in OECD countries, 2011
There is not much change when you include the effects of taxation on consumption by benefit recipients.
Figure 3: Net after-tax public and private social expenditure in OECD countries, 2011
When private mandatory social spending is included, such as employer sponsored health cover, there is considerable change with United States leaping to the front and New Zealand dropping to the bottom. The USA has the largest and most expensive is health sector in the world so they are leaping of the front, either because healthcare is expensive in United States or people in the United States are not constrained by government rationing to spend less than they would prefer on their own healthcare. Let’s leave that war of ideas for another day.
Figure 4: Net after-tax total social expenditures in OECD countries, 2011
On the face of it, New Zealand has the smallest Anglo-Saxon welfare state while the United States has the largest. A more accurate measure of the relative sizes of these Anglo-Saxon welfare states would require the wisdom of Solomon in measuring waste and underfunding in the respective systems and more trust than you should have in services sector in purchasing power parity adjustments.
For those that are interested, the OECD-wide gross social spending and net after-tax total social spending are reproduced below in figures 5 and 6.
Figure 5: Net after-tax total social expenditures in OECD countries, 2011
The Figure 5 data on the OECD wide welfare state sizes shows that when you add private spending, including social spending mandated by law, the US has the second largest OECD social safety net as Kirkegaard said in his Peterson Institute paper:
Taking the full effects of tax systems and social spending from both private and public sources into account, the United States is seen to be devoting more resources toward social purposes than is generally acknowledged. In fact, only the French spend more than Americans, while the alleged welfare-addicted Scandinavians and Europeans spend less on average.
Figure 6: Gross public social expenditures in OECD countries, 2011
Via The US welfare state and safety net are bigger than you think. But who are they helping? – AEI | Pethokoukis Blog » AEIdeas and POLICY BRIEF 15-4: The True Levels of Government and Social Expenditures in Advanced Economies