Benefits generate beneficiaries?

Press, 4 February 1987, Page 29

Benefits generate beneficiaries?

PA Wellington Welfare programmes often generate the very conditions they are designed to eliminate, said a Canterbury economist, Mr Alan Woodfield.

Addressing a New Zealand Centre for Independent Studies seminar in Wellington, Mr Woodfield said the payment of unemployment benefits induced more people to become unemployed, and the subsidisation of medical costs induced a higher demand for medical services by those subsidised.

Because welfare programmes were created by politicians, and politicians wanted votes, there was little incentive to exclude people from receiving welfare benefits, he said. One of the great advantages of private insurance over public welfare was that insurance companies could offer different policies to high-risk and lowrisk customers, so that everyone paid according to their own risk class. Mr Woodfield emphasised that privatising welfare “does not Imply self-help and rugged individualism as an efficient outcome.”

On the contrary, by allowing the insurance market to function, the Government allowed a system that was less expensive, and fairer to everyone, to operate, he said.