Address to ACT Helensville luncheon; Allely House; State Highway 16, Kumeu; 12.30pm.

You ask me what is ACT's role in parliament? ACT is the party that tells it like it really is. Your insurance that in parliament there is one party of economic realism.

I believe that ACT's message this election is how to fund significant tax cuts for every working family and company, which in this country means small business. The answer is cut out welfare abuse.

Conservatively welfare abuse amounts to $1 billion a year. I believe the real figure is over $2 billion.  That is a mind-boggling amount of money.

To give you an idea of the sort of tax cuts cutting out welfare abuse could finance here are some examples:

To reduce the 39% tax rate to 33% it would cost $690m.

To reduce the company tax rate from 33% to 24% the cost would be $1.8b

In fact we could reduce both the 39% and 33% personal tax rates to 24% for just $2.5b and that is without touching the Government's $7 billion surplus.

Everyone knows there is massive welfare fraud in New Zealand.  Let me run you through the figures.

First the Unemployment Benefit.  In New Zealand today if you are fit and able to work there is a job for you.  I have met employers who have told me they will employ anyone whose blood is warm.  When I challenged an employer, he replied, "we just need a person to stand and open that the gates. They don't even need to speak English.  We have told the Labour Department that we will employ anyone.  Yet there are still people receiving the Unemployment Benefit in our town."

Today there are some 75,000 adults being supported by the Unemployment Benefit at a cost of over $800 million a year.

There are some people who are having some genuine difficulties, but my view is there can be no justification for paying young able-bodied men who are just work-shy the Unemployment Benefit. There is overseas evidence to suggest that the New Zealand Unemployment Benefit costs would halve on the first day a requirement that everyone on the Unemployment Benefit do a 40-hour week was introduced. So we could say there is at least $400 million dollars available, which is tied up in Unemployment Benefit abuse.

I am justified in calling it benefit abuse.  When a 40-hour a week work requirement was introduced in Wisconsin, the Unemployment Benefit fell 50% on the first day.  The officials were astounded.  They did some research and found that there were people working in the black economy, mowing lawns for cash and doing similar cash work, who were on the Unemployment Benefit.  When the 40-hour week requirement came in they had to choose between their cash job and working for the benefit and eventually all chose the cash job, and went off the benefit.

I have people coming to my home all the time offering to work for cash.  If people are prepared to rip off the Inland Revenue Department, where is the moral difference to ripping off the welfare department?  There is none.  The IRD regularly reports the black economy in New Zealand is over $10 billion a year.  It's not big business that is ripping off the tax department but the same people who are ripping off welfare.

We all know of people on the Unemployment Benefit who should be working. I have always refused to allow my children to go on the Unemployment Benefit yet they have told me of friends coming from wealthy families who have taken a year off, on the benefit to surf, improve their golf or just hang out. When everyone is doing it public morality is corrupted and those who do not rip off the system feel like they are mugs.

The next biggest rip-off in welfare is by those who are on a Sickness Benefit who are not actually sick.  Every time I say this I get attacked in the media but it is true.  There are 50,000 adults supported by the Sickness Benefit today.  Over half of them should not be there - that is a medical not a political statement.

It is simple to prove.  In 1970, there were around 7,000 adults who were on a Sickness Benefit.  The Health Department tells us that we are healthier today as a nation than ever before in our history.  But if there had been no medical advances at all in the last 30 years, and then adjusted for the 44% population increase there should be around 10,000 thousand people supported by the Sickness Benefit.

Where have the extra 40,000 thousand people come from?  Well they are people who are not sick.  You too can go on the Sickness Benefit for the rest of your life providing you are prepared to drink two bottles of whiskey today and go to your local GP and tell him that you are hopeless alcoholic.  He will write you a medical certificate which you take to the Social Welfare Department who basically say to you that providing you keep on drinking alcohol the taxpayer will go on giving you a benefit until you turn 65 at which point you can switch over and go on to national superannuation.

I am willing to see some of my taxpayer money go to help people who are alcoholics dry out, and drug addicts get off the drugs. What I do not agree with is our taxpayer money being used to subsidise drug and alcohol abuse.

There are a number of other people on the Sickness Benefit who have got there by simply telling the doctor that they don't feel very well.  As my grandfather used to say, "Most of the world's work is done by people who don't feel very well."  Just simply requiring everyone on the Sickness Benefit to get a medical a certificate from the welfare department's doctor would reduce the number of those on a Sickness Benefit dramatically.

The Sickness Benefit cost $540 million this year. On the basis that the Sickness Benefit should only have grown in proportion to the population increase of 44% it is reasonable to estimate that there is $400 million of Sickness Benefit abuse this year.

Amazingly, there is also evidence of serious abuse by those on an Invalids Benefit.  You are not supposed to be able to get an Invalids Benefit unless you are permanently disabled. 

In 1970 there were 10,000 thousand people on the Invalids Benefit.  A population increase of 44% from then to now would mean the number on an Invalids Benefit should be 14,500, yet it is 85,000 today!

A simple program requiring everyone on an Invalids Benefit to get a new certificate from a doctor chosen by the welfare department would result in very significant savings.

Taken together, in 1970 there were around 7,000 adults supported by a Sickness Benefit and 10,000 by an Invalids Benefit, a total of 17,000. Today, there are over 135,000 adults supported by these benefits.

Again taking into account a population growth of 44% since 1970, the number of people being supported by Sickness and Invalids Benefits should be 25,000, not 135,000. 

The criterion for being on the invalids and sickness benefits has not changed enough to explain this explosion in numbers. Yes medical science is keeping some people alive like a relative of mine who we were told would not live to be an adult and is now in her thirties, permanently disabled on the Invalids Benefits. Countering that are the advancements in medicine that have given back to many their health.

It is reasonable to say that there is at least a billion dollars worth of abuse on the sickness and invalids benefit.

We know that in order to make the unemployment figures look good, Labour has encouraged the department to migrate the long term unemployed on to the Invalids Benefit. The number of people claiming to have backs so bad that they need to be on the Invalids Benefit is a major epidemic. We all know of people whose backs are good enough to go fishing but when they see a job of work they are suddenly in great pain.

My own father was wounded in the Normandy invasion that left him with a serious back injury. He has never let that stop him working as he explains the best thing for a back is to keep it warm by activity.  

Then we come to the third benefit the Domestic Purposes Benefit.  DPB numbers have gone from just 16,000 in 1970 to 108,000 today. There is absolutely no doubt the State, by subsidising the break up of marriages, has caused a huge increase in single parent households.  This has been a major tragedy.  A single parent now heads the majority of Maori households. Again this is something people do not like to hear but it's still true.  While there are many solo parents who do a great job, on average, children from two parent households achieve a higher educational level, are much more likely as adults to be in employment and are much less likely to be sent to prison.  Put the other way, on average children raised in a single parent household do not do as well at school, are much more likely themselves to be on a benefit and are much more likely to be involved in violent crime.

We should be taking steps to change this.  There is an old maxim that you should not finance what you don't want more of.  That means today the State is financing lower educational outcomes, more beneficiaries and increased prison numbers.

A simple change to the Domestic Purposes Benefit would dramatically lower the number of people who take it as a lifestyle option.  I mean the last statement.  Men tell me how their partners suddenly demand back the child that they have abandoned so they can go onto the DPB. I've had lawyers tell me of clients who admitted they have got pregnant deliberately just to go on the DPB. I have had women come to see me in my parliamentary office just to check the figures, that if they kick out their husband they will be better off on a benefit. Today women initiate over 80% of divorces.

The reality of life for the vast majority of married couples in New Zealand is that the mother must work for the family to be able to pay off the mortgage and have a reasonable standard of living.  The only women who do not work these days are the rich, families who are making a great sacrifice in their standard of living and those who are on the DPB.

A simple requirement that woman on the DPB be required to work from the time their child goes to school would reduce the attractiveness of that benefit.  In the State of Wisconsin that's already a requirement.  If we introduced the same thing in New Zealand it would result in the number of people on the DPB falling significantly.  Lets be conservative and just say that it would fall 20%.  That's $300 million dollars a year.

That's a total of well over $1 billion a year of welfare abuse over just three welfare benefit areas.  That does not include abuse of the $1 billion we spend on ACC compensation per year, or misuse of the $500 million welfare programs allocation on things such as hip hop tours.

It would be possible to eliminate a billion dollars of abuse very quickly. I believe that a further billion dollars could be removed in three years. New Zealand would be a healthier country. Countries that have tackled welfare abuse have seen a significant fall in alcoholism, drug abuse, marriage break ups, delinquency and crime. They have also been able to have tax cuts for working families.

You will notice that I have not referred to the National Superannuation Benefit.  Although politicians talk a great deal about the future cost of National Superannuation, the real explosion has been in the three welfare benefits areas, the unemployment, the sickness and invalids and the Domestic Purposes Benefits.

All the other political parties know everything I have said in this speech is absolutely factual.  Only ACT is prepared to speak out against welfare abuse. Muriel Newman has spoken out against welfare abuse each week in parliament. Rodney Hide has exposed the culture of waste that permeates the government's tax and spend welfare policy.

If ACT was not in Parliament then we can safely say that the numbers on the three welfare benefits will increase.  Indeed we can say that the numbers will increase by 22,000 in the next few years.  Those are not my words. In this year's budget the Treasury estimated that the Sickness, Invalids and Unemployment benefits will increase over the next three years by a total 22,000.

It doesn't have to be that way.

If you prefer your politics to be warm and emotional rather than rational, then you should still vote for ACT. Just think of the thousands of young children that other parties' policies are condemning to grow up in fatherless families.  Just think of the awful life it is to be addicted to drugs and alcohol. The loss of dignity in being a malingerer pretending to have a bad back.

We human beings need to work for our own human dignity.  Labour thinks that it is somehow being compassionate to have over 70,000 able-bodied adults on the Unemployment Benefit.

The compassionate caring policy is to firmly and fairly stop welfare abuse.

It's time somebody cared for the working family.  On average if you work for a living in New Zealand you and your family are no better off today after tax than you were six years ago when labour came to office.  The country as a whole is enormously better off.  The government's got a $7 billion surplus but the average family is no better off, and my authority for saying that is answers given by Dr Cullen to Parliamentary questions from Rodney Hide.

Put that into a family's terms.  This is a family who hasn't been able to buy music lessons for the children, coaching for their maths, an extension to the house or real family holiday because politicians are insisting they pay higher taxes because they don't have the guts to tackle welfare abuse.

No one believes that either of the two old parties will reform welfare. New Zealand First, the Greens and the Maori Party have campaign promises that will make welfare abuse worse.

Nobody doubts ACT's courage.

There is only one way to end welfare abuse and ensure that there are significant tax cuts for ordinary New Zealanders and that is to ensure that ACT is in Parliament.

ENDS

Richard Prebble CBE                    
richard.prebble@parliament.govt.nz
Phone: 04 470 6638  /  021 753 128
Fax:  04 473 3532
Michelle Brooker, Press Secretary
michelle.brooker@parliament.govt.nz
Phone: 04 470 6644  /  021 99 5601