Poverty trap cannot be abolished—Cullen

Press, 22 July 1989, Page 9

Poverty trap cannot be abolished —Cullen

Wellington reporter The belief that the poverty trap in the social welfare system could be abolished was a myth, said the Minister of Social Welfare, Dr Cullen, yesterday. The poverty trap — the relationship between benefit and wage levels — is seen by many to act as a disincentive to enter the work force. Dr Cullen said that the issue was difficult because it was tied up with the equally thorny problem of benefit abatement.

He rejected claims that the poverty trap could be abolished, saying this could only be done by greatly lowering benefit levels.

“In other words the only real alternative to a so-called poverty trap is poverty. “As soon as we accept the responsibility of a modern civilised society to ensure that the sick, the disabled, the unemployed and others have the same reasonably adequate level of income, at some point we run into the trap problem.”

Dr Cullen also attacked benefit fraud and abuse.

“It is nothing more than theft from the public purse,” he said. Each' dollar “ripped off” was a tax dollar which could have been spent on health or education.

While abuse levels were not as high as some people believed, it was the biggest single thing undermining the ordinary person’s faith in the social welfare system.

“They make the word, ‘beneficiary,’ a term of abuse in too many eyes when it should not be at all,” he said. "The person who is disabled, the person who is off work from sickness, the solo parent struggling to bring up kids, the person made redundant as a result of restructuring — all have a right to dignity and a claim upon public respect as great as you or I.”

Dr Cullen said moves to reduce benefit abuse, to be made soon, were crucial to a restoration of faith in the Welfare State.