Responsibilising young benefit recipients: Income management and financial capability in New Zealand

Abstract

New Zealand recipients of the Youth Payment and Young Parent Payment, who are disproportionally Indigenous Māori and sole mothers, must participate in ‘Money Management’. This form of income management restricts spending, monitors financial transactions and requires compulsory budgeting education. Drawing on interviews with Money Management participants, Youth Service mentors and policymakers, this article argues that Money Management aims to responsibilise young people through conditional welfare, rather than improve their long-term financial capability as articulated. This becomes obvious through analysis of how Money Management ignores: 1) New Zealand financial literacy education policy developments, 2) the literature on best practice in financial literacy education and how values about money and wealth are shaped by 3) Māori world views and 4) gendered norms. The article concludes that states should take more responsibility, by increasing social security incomes and better regulating the financial, labour and housing markets, to ensure the financial capacity of their citizens.

Keywords

financial capability income management Māori responsibilisation women youth

Introduction

Income management is a form of conditional welfare, quarantining part of a social security benefit so recipients cannot purchase adjudged non-essential goods such as alcohol and cigarettes. Compulsory income management for benefit recipients was first introduced as a highly racialised policy targeting Indigenous Australians in 2007, before being extended to a broader range of Australians (Humpage et al., 2022). This article focuses on New Zealand, which adopted compulsory income management in 2012 for 16–19 year-old parents who receive Young Parent Payment (YPP) and 16–17 year-olds who cannot live with or be supported by their parents/guardians and thus receive the Youth Payment (YP). |Of 1338 people on YP/YPP Payments in March 2021, 53% were Indigenous Māori and 92% were women (Ministry of Social Development – MSD, 2021).

There has been remarkably little debate about the racialised and gendered nature of this policy, which is underpinned by concern about presumed ‘problem’ behaviours amongst benefit recipients, including a weak work ethic, and modelling ‘welfare dependency’ to their children (Humpage et al., 2022). Like many conservative governments around the world, New Zealand’s National Party-led government used the Global Financial Crisis to justify not only significant social security reform from 2008, but strengthened targeting of young people – including their financial behaviours, as seen in an enhanced focus on financial literacy education (FLE) – despite the young being at far greater risk of income poverty than older people (Humpage et al., 2022).

According to Paula Bennett (2012: 2865), the then Minister for Social Development and Youth Affairs, “[o]f the estimated 14,000 young people Not in Employment Education or Training (NEET) … up to 90%” will access social security payments as adults. Claiming it was “backing those young people” at risk of ‘sinking’ rather than ‘swimming’ (Sabin, 2012: 2884), the National Party-led government implicitly framed the parents of YP/YPP recipients as poor role models and their children as financially inept, with no evidence offered to support either view. Ironically, many young people transition from state out-of-home care to YP/YPP; thus the ‘parent’ to blame is the state itself. Furthermore, Ware et al. (2017: 510) note that the combination of “adolescence, poverty, parenting” and Māori ethnicity has been used to rationalise state interventions that are often not deemed necessary for other welfare recipients.

As with other forms of welfare conditionality, Money Management (MM) attempts to incentivise certain behaviours through obligations and financial sanctions, locating the responsibility for behavioural change at the level of the individual. Non-government Youth Service providers are contracted to help young people access their entitlements and support them into education and training; notably, full-time work is not the goal for these young benefit recipients. YP/YPP recipients who meet all educational, budgeting and (where relevant) parenting obligations set by MSD attract $10 per week incentive payments; conversely, those who do not are subject to financial sanctions. YP/YPP recipients meeting obligations have up to $50 per week deposited in their bank account, rent/board and utility bills are paid directly by non-government Youth Service providers, and any remaining entitlement is quarantined on a Payment Card (Humpage et al., 2022).

This article draws upon New Zealand interview data, collected from 20 YP/YPP recipients, 16 Youth Service provider employees and six policymakers in 2018 as part of a mixed-methods research project comparing compulsory income management in New Zealand and Australia. This project received human ethics committee approval in both countries. To ensure anonymity, all interview participant names have been removed. Reflecting national figures where Māori and women disproportionally receive the YP/YPP benefits subject to MM, the sample of MM participants included 12 Māori and only one male participant. Twelve of the 20 interviewed were sole mothers receiving YPP. Since all MM participants cited here are women, we use only benefit type and ethnic group to provide demographic context for their quotes.

Our analysis of this data focuses specifically on the financial literacy components of MM. The first section of the article highlights how these reflect a broader responsibilisation discourse framing financial difficulties as an individual problem to be resolved through adequate financial literacy education (FLE). The second and third sections argue that MM ignored FLE policy and best practice, while the fourth and fifth sections demonstrate how MM also insufficiently acknowledges how Indigeneity and gender shape our values about money and wealth. Concluding that both MM and FLE are fundamentally flawed, the article calls for states to take more responsibility for the complex structural factors that explain ongoing financial disadvantage for Māori and sole mothers.

Responsibilisation and young people

Responsibilisation “discursively denigrates dependency and practically negates collective provisioning for existence” (Brown, 2015: 133), rendering individuals responsible for activities for which states were historically responsible (Peters, 2017; Rose, 1999). In a politico-economic context where failure to financially flourish is viewed as a failure to embody the neoliberal values of entrepreneurship and self-investment, responsibilisation signals “a regime in which the singular human capacity for responsibility is deployed to constitute and govern subjects and through which their conduct is organized and measured, remaking and reorienting them for a neoliberal order” (Brown, 2015: 133). In the case of social security recipients, the deployment of a responsibilisation discourse justifies welfare conditionality measures pressuring people to conform to market expectations as a way to reduce reliance on social security payments and thus reduce a significant cost to the state (Bielefeld, 2018).

Forms of welfare conditionality, like MM, and FLE respond to national governments shifting away from a long-standing role in subsidising mortgages and tertiary education, as well as regulating financial and labour markets. These policy changes, alongside the increased role of the financial sector in national economies, have contributed to a rapid increase in borrowing to finance consumer spending. Yet information asymmetries often disadvantage consumers in the modern financial services market-place (Atkinson et al., 2007). For instance, many New Zealand families with limited income/assets and high levels of problematic debt cannot access mainstream sources of credit and are therefore targeted by predatory third tier lenders and mobile traders (Families Commission, 2012; Torrie and Baillie, 2017). These factors all contribute to increased income inequality, poverty, high levels of household debt and low levels of household savings in countries like New Zealand (Crossan et al., 2011; O’Connell, 2009; OECD, 2021).

Instead of understanding such structural problems as stemming from neoliberal policy settings and, more broadly, free market capitalism, a responsibilisation discourse frames poor financial outcomes as emerging from individual choices and behaviours (Klein, 2016; Williams, 2007). Both MM and FLE suggest that young people’s financial knowledge is deficient and that they will do ‘the wrong thing’ without intervention. Neoliberal values of individual autonomy and consumer sovereignty often frame citizens as best governing themselves because they possess information needed to make judgements of risk (Rose, 1999). However, responsibilisation is also a moralised discourse whereby citizens must regulate their own conduct to demonstrate their worth as economically self-sufficient and responsible citizens (Klein, 2016; Peters, 2017). This includes ensuring their own short-term and long-term financial wellbeing (Pinto, 2012; Williams, 2007).

In a politico-economic context where citizens are obliged to unceasingly undertake training, skilling and reskilling (Rose, 1999), unsurprisingly FLE received increased political attention internationally following the 2008 Global Financial Crisis (Pinto, 2012). Low national levels of financial literacy were said to result in lower savings, less capital available for expansion, greater inequality in wealth distribution and reduced workplace productivity (Frijns et al., 2014; OECD, 2005). New Zealand policy makers, like their overseas counterparts, have thus become concerned about a purported deficit in financial capability, and sought to responsibilise people in response. Between 2018 and 2019, the Commission for Financial Capability (CFFC) surveyed 15,519 adult New Zealanders finding 65% of respondents did not think much, or at all, about how much money is needed for retirement and only 29% could access three months’ income in an emergency (Galicki, 2020a). Following the one-month national COVID-19 lockdown in 2020, savings increased and fewer people felt embarrassed talking about finances, but 31% of respondents used savings to pay for basics and 24% missed at least one bill/loan payment (Galicki, 2020b: 1). Poor financial literacy in New Zealand is argued to be linked to young age, being of Māori or Pasifika¹ ethnicity or female, having a low income and/or rental tenure, living in a provincial/rural area, and having lower educational attainment (Crossan et al. 2011; Frijns et al., 2014; Galicki, 2020a).

There is concern that young people, specifically, are making more financial choices earlier and are presented with greater opportunities to borrow money and apply for credit than their parents (Cameron et al., 2014), raising the risk of long-term financial vulnerability or exclusion due to impaired wealth accumulation (Cameron et al., 2014; Lusardi and Mitchell, 2007). Findings from the Programme for International Student Assessment (PISA) 2012 survey of financial literacy suggest that New Zealand 15-year-olds, overall, perform well internationally, with a higher average score and a higher proportion with advanced skills and knowledge in financial literacy compared to the OECD average (Whitney et al., 2014). However, “[r]elative to students in other participating countries, New Zealand students did better in the money and transactions content area than in planning and managing, risk and reward, and financial landscape” (Whitney et al., 2014: 3). This suggests more focus on the here-and-now than future planning. The relationship between student socio-economic background and financial literacy is also stronger in New Zealand than other participating countries, which is likely part of the reason Māori and Pasifika students achieve lower financial literacy scores than New Zealand’s average, particularly in advanced skills (Whitney et al., 2014). The same PISA data found little difference in the average financial literacy scores of boys and girls, with both above the OECD average. However, boys were more likely to have either poor or advanced skills/knowledge, leading Whitney et al. (2014) to conclude that girls may need targeted support to acquire advanced skills/knowledge. Other studies have reported similarly mixed findings about financial literacy amongst New Zealand’s young people (Cameron et al., 2014; Neill et al., 2014; Stangl and Matthews, 2012).

In the context of an increasing proportion of older citizens to employed workers (OECD, 2005), concerns about youth financial literacy align with a broader responsibilisation of young people through policy focused on the transition from compulsory education to post-secondary education or employment, particularly those categorised as NEET (OECD, 2020). New Zealand’s Youth Service targets NEETs with the aim of ensuring that all young people successfully transition to paid work. From 2012, the National Party-led government also adopted actuarial risk modelling, which identified those entering the welfare system at a young age and sole parents as having the highest level of liability of remaining ‘welfare dependent’ and thus posing the greatest economic cost to the state over their life course (Ministry of Social Development and Treasury, 2013). This primed young benefit recipients as a target for responsibilisation through MM, whose extensive surveillance and monitoring reinforces the construction of young people as an ‘at-risk’ population, and is “premised on a colonial gaze about appropriate life course trajectories and good parenting practices which marginalize young Māori parents” (Ware et al., 2017: 510). Despite critiquing MM when it was introduced, the Labour-led government in power from 2017 did not abandon this policy nor most other forms of welfare conditionality, indicating the dominance of the responsibilisation discourse in New Zealand politics (Humpage et al., 2022).

Ignoring FLE policy

MM purportedly aims to improve financial capability, yet this section argues that it was not informed by emerging FLE policy in New Zealand. Since 2008, New Zealand’s National Strategy for Financial Literacy (now Capability) has focused on everyone ‘getting ahead financially’, including saving and investing, managing debt, having a current financial plan, being prepared for the unexpected, learning about financial capability and being comfortable talking about money (CFFC, 2021a). In 2018, the CFFC began rolling out a four-year ‘Sorted in Schools’ programme to all secondary students that integrates financial capability education across the English and Māori language curriculums (CFFC, 2021a). Key themes are ‘financial identity’ (managing money, debt, savings, goal setting) and ‘financial sustainability’ (KiwiSaver, retirement, insurance, investment) (CFFC, 2021b). A 2020 evaluation of the curriculum was broadly positive, noting that Māori medium education resources use concepts reflecting a Māori worldview (MacDonald et al., 2020).

Although the Youth Service targets a similar teenage cohort, our interviews with policy makers suggest no interaction between MSD (which developed the Youth Service), the Ministry of Education (which implements the FLE curriculum) and the then Commission for Financial Literacy and Retirement Income about how MM might fit with the broader national strategy. This is despite MSD replacing its contracts for Budgeting Services with new Building Financial Capability services from 2016, purportedly shifting from a deficit-focus on budgeting to a strengths-based focus of financial capability through formal and peer mentoring programmes and financial planning for those in need, including benefit recipients (Torrie and Baillie, 2017).

MM was not built around the same strengths-based approach and does not employ many key aspects of FLE said to be associated with positive outcomes. Of the four themes covered in New Zealand’s financial capability curriculum, MM focuses largely on ‘financial identity’ goals and does not routinely address ‘financial sustainability’. While one provider uses ANZ’s (2015) MoneyMinded, which covers similar themes as the national curriculum, YP/YPP recipients we interviewed attended budgeting courses focused largely on savings goals, distinguishing between wants and needs and comparing costs. Some thought the content useful but others “found it was all like common knowledge for me. It was stuff that I already knew” (Pākehā² YPP recipient). As one interviewee explained: “I had had that life experience of working, paying your own bills and stuff like that, it didn’t really give me anything more” (Māori YPP recipient). This finding is consistent with the UK, where FLE is usually focused on managing money, despite high levels of reported financial management capability (Atkinson et al., 2007). It suggests that responsibilisation rhetoric in this context serves no practical purpose, though it does serve a political one of framing young people as in deficit and thus in need of intervention.

While the Financial Literacy and Savings Partner Working Group (2014) indicates this short-term focus is common in New Zealand’s FLE, the budgeting courses YP/YPP recipients attend are mandatory – yet Youth Service providers are not required to follow the national curriculum, and can choose courses offered by existing budgeting providers or develop their own. Our interviews with 16 Youth Service providers revealed only one trained staff in ANZ’s (2015) MoneyMinded programme, while others do not require their mentors to hold or gain FLE qualifications, even those the FLSPWG (2014) indicates specifically address Māori needs. While the Youth Service employees lamented the lack of training, they simultaneously appreciated the flexibility to tailor courses to local needs. However, the type and quality of FLE may vary significantly depending on where the young person lives and to which Youth Service they have been mandatorily assigned. Youth Service mentors we interviewed said they modified budgeting courses for adults, which focused on saving for retirement or buying a house, because they felt they were inappropriate for young people’s current level of financial engagement. By excluding education about long-term financial capability, however, these MM budgeting courses may reinforce the existing inequalities in advanced knowledge and skills highlighted by PISA, particularly amongst girls (Whitney et al., 2014).

Ignoring FLE best practice

Given its lack of integration with New Zealand FLE policy initiatives, it is perhaps not surprising that MM also ignores FLE best practice guidance, as this section highlights. It is important to first acknowledge the lack of consensus regarding the effectiveness of FLE guidance (Torrie and Bailey, 2017; Brimble and Blue, 2013; Frijns et al., 2014; Lusardi and Mitchell, 2007; O’Connell, 2009; Williams, 2007). Although a meta-analysis by Miller et al. (2014) reported that 140 of 188 studies found FLE improved financial outcomes, it also noted numerous studies finding no or little impact. Other scholars contend that there is no demonstrable causal link between FLE and improved financial literacy or financial wellbeing (Families Commission, 2012; McCormick, 2009). Thus, even if FLE education methods were improved, at best, we might be able to say that “financial education improves financial literacy in some way for some people” (O’Connell, 2009: 39; see also Crossan et al., 2011; Williams and Satchell, 2011). Nonetheless, it is useful to examine MM in light of FLE best practice guidance for two reasons: first, it challenges a key assumption underpinning responsibilisation discourse – that individuals act rationally and consistently once given the right knowledge and skills – and, second, it highlights how FLE programmes typically aim to change behaviour without resorting to the level of coercion associated with MM (Klein, 2016; Torrie and Baillie, 2017).

To begin, it is believed that experiential learning – gained by people paying their own bills or seeing interest accrue in their own bank accounts – is particularly useful for youth who have less personal experience managing their finances than adults (Whitney et al., 2014: 3; see also Cameron et al., 2014). Yet Youth Service providers, rather than young people themselves, are required to establish redirections for rent/utilities to ensure young people always have a roof over their heads. We interviewed several YP/YPP recipients who did not fully understand that such bills were being paid or the total value of their benefit, given that only $50 went into their account. Others liked essential bills being paid by Youth Service providers because it was easier to avoid temptation. As one person explained: “in the past where I’ve boarded or rented, and you get paid and the money comes into your bank and you’re like ‘I want this’ or things like that then you’re not so tempted just to take out $3 or something” (Pākehā YPP recipient). However, the experience of one Māori YP recipient returning to MM suggests that removing temptation alone does not build financial capability: “I jumped off it for a few [weeks] but I couldn’t – didn’t know how to budget properly so I jumped back on it.”

Bill redirections not only reduce the likelihood of such young people developing the skills needed to keep paying basic bills once they exit MM, but also inhibit learning through negative experiences; for instance, not having enough money for an essential bill or being charged penalty fees (Stangl and Matthews, 2012). While again rationalised as ‘protecting’ young people from financial instability, infantilising YP/YPP recipients in this way ignores that negative “financial experiences make people more receptive to financial education programmes, and improve financial literacy and financial behaviour” (Frijns et al., 2014: 128). Importantly, learning does not have to happen through our own mistakes. Notably, Stangl and Matthew (2012: 17) found that young people who saw their parents as poor money managers had significantly higher financial literacy scores than those who viewed their parents as good money managers. A Māori YPP participant who said she consciously did not act like her parents went on to argue that statistics used to rationalise MM are:

from the older generation, and they’re implanting that on the younger generation … and then making it seem like we’re the bad guys .… the adults are shit. They couldn’t even teach us …[yet] we’re the ones on the Money Management, why didn’t they experience it?

In addition to MM being based on unevidenced assumptions about the impact parental financial behaviours might have on young people, our interviews and MSD’s own evaluation (Momsen, 2021) found that the Payment Card and slow set up of redirections created debt for some young people. While possible to argue that young people could learn from this negative experience, having to meet educational obligations while being discouraged from seeking full-time work, as many young people desired, impeded opportunities for reducing the debt created by MM.

Requiring FLE when young people engage with the benefit system can be said to follow Arnold and Rhyne’s (2016: 4) claim that FLE should reach consumers at ‘teachable moments’, preferably when about to make an important financial decision or use a financial service because “information provided just in time is more likely to be retained and to influence behaviour.” This includes focusing services towards people in situations that have specific financial implications – including welfare recipients (Arnold and Rhyne 2016: 4). However, Willis (2008: 254) contends that:

Applying teachable-moments theory to financial-literacy education seems intuitively sound, but consumers who participate in financial-literacy programs at teachable moments do not appear to become any more financially literate …. Teachable moments may be merely reachable moments.

Indeed, attempting to teach young people new knowledge and skills at a time of significant stress and vulnerability in their lives (having a first baby or experiencing family breakdown – both key criteria for accessing YPP and YP) may be counterproductive. Our interview data highlight that many young people were too busy just surviving, including finding stable and affordable housing, to have the mental bandwidth to take on new FLE information and skills. One Māori YPP recipient described how meeting obligations was extremely difficult, stating: “During that time in my life it was just good enough for me to even get up and go do what I had to do for the day.”

MM also fails to focus on active, rather than passive, learning (Arnold and Rhyne, 2016). While providing Youth Service mentors to help guide financial decisions could be viewed as encouraging active yet supported learning that is customised to the individual, combining this mentoring with the surveillance and monitoring required for incentive payments and sanctions likely diminishes the effectiveness of the mentoring. Indeed, in a context where most FLE programmes internationally are voluntary (Williams and Satchell, 2011), placing all YP/YPP recipients on MM, regardless of their level of financial capability – and without even assessing such capability prior to income quarantining – suggests New Zealand’s approach is not customised. As one Pākehā YP recipient explained: “I just think it’s unfair to put everyone underneath that category of you’re not capable of managing your money.” While New Zealand’s national curriculum does now ensure young people must study FLE at some point, only those on YP/YPP are financially penalised if they do not participate. Moreover, school students must complete only one module over the first two years of their secondary schooling but the experience of being on MM is indefinite; YP and YPP recipients are subject for at least six months (unless they ‘age out’ and move to an adult benefit) and we interviewed many who had been on it for much longer. Youth Service mentor interviews revealed that some remove clients from MM as soon as they meet minimum criteria, while others require or strongly encourage them (sometimes by not indicating that exit is an option) to stay on MM if they believe the young person will spend inappropriately. It is also notable that YPP recipients (mostly young women) cannot transition to the adult Sole Parent Support until 19, while YP recipients (mostly young men) can transition to Job Seeker Support at 18, meaning there are gendered differences in the maximum length MM can be applied (Social Services Committee, 2012).

There is also little evidence that MM makes FLE fun, despite research showing “that humour activates the brain’s reward system, which is linked to both motivation and long-term memory” (Arnold and Rhyne, 2016: 5). While some Youth Service mentors we interviewed used games and other tools to make budgeting courses more enjoyable, evidence suggests that most MM participants did not enjoy having their spending monitored by Youth Service mentors. As one person explained: “I’m trying to find a job because I actually hate being on Money Management. I hate being here” (Māori YP recipient). Other MM participants talked about the stigma associated with using the Payment Card, which is a distinctive green colour: “It’s embarrassing because everybody knows what it is. I actually hate pulling out my Payment Card …. [people think] ‘oh yep, you’re on the benefit’” (Māori YPP recipient). Those who identified as Māori and/or sole mothers particularly felt the card reinforced existing stereotypes about ‘welfare dependency’ amongst these groups.

Nor does MM attempt to ‘make FLE social’, which is surprising given that a person’s culture, community and family can influence financial habits (Arnold and Rhyne, 2016). Peer or family support is not a formal part of MM, despite it being part of MSD’s FLE programmes for adult benefit recipients (Torrie and Bailey, 2017). This is concerning given the importance of peer socialisation for young people and since the next section highlights that Māori world views emphasise relational forms of learning and association (Houkamau et al., 2019).

Ignoring Māori world views

MM, like most programmes aiming to change financial behaviours, is underpinned by the view that “consumers are … wealth maximizers, looking out for their own financial interests rather than shared societal and civic goals” (Willis, 2008: 285). This ignores how prioritising saving and individualised retirement plans is not value-neutral but reflects western, individualist understandings of wealth (Brimble and Blue, 2013; Pinto and Coulson, 2011; Houkamau et al., 2019). In a political context where there is an official policy of biculturalism (Humpage et al., 2022), it is notable that the disproportionate number of Māori YP/YPP recipients subject to MM did not trigger specific consideration of how Māori values might shape their financial behaviours. This is particularly concerning given the National Party had a supply and confidence agreement with the Māori Party; although the latter has articulated a belief that dependence on welfare contributes to Māori poverty and the ability of Māori peoples to govern themselves, its lack of criticism of MM was more likely a strategic move to ensure gains in other policy areas (Humpage et al., 2022).

Indeed, the Māori Party supports views that prior to colonisation, Māori participated in non-monetary, subsistence and collectivist economies based on the land and natural environment, so “capitalist values, which are inherently individualist and materialistic, cannot be simply generalised to Māori” (Houkamau et al., 2019: 144). Evidence of poorer savings levels amongst Māori compared to Pākehā New Zealanders (eg. Galicki, 2020a; Torrie and Baillie, 2017) are thus commonly explained not only by the overall lower incomes earned by Māori but also their collective commitments, particularly to whānau (extended family). These commitments continue to be more important than the needs of individuals, with monetary obligations to whānau often priortised over household obligations. For instance, a study involving sole parents, many of whom were Māori, found that 57% of the 105 respondents had family members who asked respondents for money, while 41% of respondents asked family members for money (ANZ, 2015). This reliance on others is not ‘poor budgeting’ but instead reflects obligations based in tikānga Māori (customary practices) or other collectivist cultural values (Wood and Mika, 2018). These facts help explain why “Māori and Pacific Peoples are more likely to have limited emergency savings, compared to other ethnic groups” (Galicki, 2020a: 22) and why long-term saving, such as for retirement, “seems to be a distant worry” for many Māori (Wood and Mika, 2018: 12).

Research with eight Māori whānau living on low incomes also found they rarely defined themselves as poor (Houkamau, 2016). This was both because they paid attention to what they could control in their lives (ie. how they responded to their poverty) and because:

Participants considered “wealth” to be something that could be measured in non-materialistic terms: happiness was about family connection (whānaungatanga), pride in yourself and internal happiness, not money or a new car. A good life was one where their children were happy (Houkamau, 2016: 1).

In this context, saving or spending income within the nuclear family could lead to guilt and other uncomfortable feelings (Houkamau et al., 2018). This is not to say that Māori never value financial resources and the skills needed to build them; a study of financial capability amongst Māori entrepreneurs found that money and wealth were often viewed as enabling Māori to uphold their cultural values and improving whānau and community wellbeing (Wood and Mika, 2018). However, financial performance was not the sole reason for doing business and financial success, with compromising culture, identity and wellbeing considered unsuccessful in a Māori context. Māori financial attitudes and behaviours no doubt intersect with class and lower socio-economic groups may also share resources (within or beyond families) to get by (Torrie and Bailey, 2017; Whitney et al., 2014). Yet this study with entrepreneurs highlights that collective understandings of ‘relational wealth’ shape not only the FLE behaviours of poor Māori.

As such, New Zealand developed a Māori financial literacy strategy in 2010 and the national FLE curriculum placed importance on Māori values. In failing to align with the curriculum or the strategy, MM misses opportunities to draw on FLE resources specifically designed for Māori, such as the Ngāi Tahu tribe’s Tairākau online financial literacy digital resource and smart phone app or the Māori Women’s Development Inc’s Te Kora business programme for young people (FLSPWG, 2014). The FLSPWG (2014: 27) further stresses the importance of making “financial literacy an acceptable and normalised ‘kitchen table discussion’ …. to incorporate positive financial behaviour into their daily routines”. Only two interview participants indicated they took FLE learnings home to family; yet the whānau of YP/YPP recipients could have been invited to join financial literacy workshops to learn with them or mentors could have encouraged YP/YPP recipients to join collective savings schemes to purchase an asset shared between households (Houkamau et al., 2018). Similar collectively-based programmes already adopted by members of the Ngāi Tahu tribe contribute to higher levels of financial literacy than amongst Māori overall (Crossan et al., 2011). Using such resources would go some way to encourage “a mind shift towards viewing money management/pursuing and saving money as a source of personal empowerment, tino rangatiratanga (self-determination), rather than a betrayal of Māori values” (Houkamau et al., 2018: 18). The neoliberal emphasis on responsibilisation frames a young person sharing money with whānau (rather than saving) as poor financial literacy yet this behaviour can be interpreted as an (implicit or explicit) challenge to Pākehā cultural normalisation. Bargh (2007: 2) observes that: “Resistance and challenges to neoliberal practices … come simply from Māori living and maintaining alternative world views.”

While the tender for Youth Service providers did prioritise those who had already worked with Māori, providers left to their own devices did little to meet the needs of young Māori. Only a small number adapted budgeting courses for Māori, for instance holding them on a marae (Māori meeting place). Youth Service mentors have an opportunity to develop kanohi-ki-te-kanohi (face-to-face) relationships, which Families Commission (2012) research suggests could help to build the high level of trust needed if FLE messages are going to be effectively heard by Māori. However, our interviews with young people, welfare advocates and Youth Service employees themselves frequently found that such relationship-building was limited by geographical distance or lack of time (where texts became the main means of communication) and sometimes by high turnover in mentoring staff.

Overall, therefore, we argue that MM reflects a broader deficit approach towards Māori common in other policy areas (Houkamau et al., 2019). Framing the sharing of benefit income with family as poor financial behaviour excludes family members from the financial education of young people. Ironically, the loss of autonomy over income associated with the Payment Card saw many YP/YPP recipients rely more on family or friends, whom they allowed to use the card to buy groceries so they could receive the equivalent amount in cash. Policy makers regard this activity as ‘breaking the rules’, rather than an act of resistance against the latest of the state’s culturally damaging policies (Klein, 2016). Historically these have included land confiscation, war and assimilation policies inhibiting the maintenance and development of cultural, spiritual and language resources (Houkamau et al., 2018) but today includes MM. For instance, tangi [funerals] are an important cultural obligation but at least two Māori participants we interviewed were unable to attend because the Payment Card cannot be used to buy petrol and the $50 cash payment was insufficient to cover this cost. While some Youth Service employees advocated on the behalf of YP/YPP recipients to highlight such issues, ultimately they were paid to implement the MM policy and, in many cases, personally endorsed the responsibilisation agenda it embodies.

Ignoring gendered norms

Despite women playing a significant role in New Zealand politics and the existence of a small Ministry of Women’s Affairs at the time of MM's implementation, there was also little discussion of the gendered impact of MM. Patriarchal gender norms result not only in a gender pay gap but also in women with children having weaker ties with the labour market than men with children. This has long-term impacts on both day-to-day income and long-term retirement savings and asset building (OECD, 2013). By ignoring such differences, FLE “perpetuates the false impression that men and women experience economic participation, decisions and outcomes in the same ways” (Pinto, 2012: 177). However, women are often the primary carers for children, not only transmitting financial habits and skills to them but also making important and daily decisions about the allocation of household resources (OECD, 2013).

Given these facts, MM should acknowledge that “girls and women experience financial literacy education differently from men” (Pinto, 2012: 179). For example, “[w]omen often have less financial knowledge and less confidence in their financial competencies and skills than men” (OECD, 2013: 10). This may be linked to both young women having less confidence in their abilities generally and having been historically deterred from studying or doing well in mathematics, a subject correlated with improved FLE performance. This may explain why the average FLE scores of New Zealand boys and girls PISA are similar yet the latter are less likely to demonstrate advanced FLE skills (Whitney et al. 2014). Mather and Lighthall (2012: 37) also found that “stress affects decision strategies differently for males and females, with behavior diverging under stress when decision making involves immediate risk taking.” In particular, women are more likely to adopt lower risk options than men. This is important because a New Zealand study by Cameron et al. (2014: 20) found “high school students who are less risk averse are also less able to apply their knowledge to personal financial situations.”

Although our interview data suggest both poor and high levels of financial literacy amongst female YP/YPP recipients, motherhood was a mediating factor that made them more risk-averse but in a way that supported MM goals. A small number of YPP recipients thought MM was useful; one who chose to stay on it said that previously “I’d probably rather go buy smokes rather than nappies you know? Now I’m more responsible” (Māori YPP recipient). The rest were adamant that they already put their children’s needs first, as the following participant explains:

I’ll go and buy my cigarettes, but I’ve always got food. I’ve always got power. My daughter’s always got what she needs. My sister’s [who was in her custody] always got what she needs … But all I want is a cigarette and a cup of tea in the morning (Māori YPP recipient).

Many of the women we spoke to wanted policy makers to understand “that as soon as you have a kid you’re forced to grow up and you’re not actually a normal 16-, 17-, 18-year-old – well, for most cases you’re not. You have to grow up, you just have to” (Pākehā YPP recipient). Just like other citizens, they found their decisions had consequences. When asked about redirections to pay for her rent, another young woman said she would still prioritise paying rent if MM was removed because “I know if I don’t pay it I’d have to move out, you know, it’s pretty straight forward” (Pākehā YPP recipient).

Despite high compliance with the types of responsibilised behaviours MM aimed to encourange, MM restricted the young mothers’ ability to adequately care for their children. For instance, it placed most of their discretionary income on a Payment Card that could not be used at shops that sell baby clothes and other baby products and hindered their ability to buy expensive items like baby seats or furniture either online or at secondhand shops. Although some changes were made retrospectively, policymakers had clearly not accounted for the parenting needs of YPP recipients when designing MM; Ware et al. (2017) suggest historical tropes stigmatising (Māori) teen mothers dominated, despite evidence suggesting that teen pregnancy does not always have negative effects on a child and mother.

Without specific regard for young mothers, MM reflects Pinto and Coulson’s (2011: 75) claim that FLE is presented as a “gender-blind, neutral construct”, assuming “that all individuals come to financial life on an equal playing field” instead of acknowledging “the very different circumstances which cause individuals and groups to experience personal finance in very different ways” (Pinto and Coulson, 2011: 55–56). Specifically, the evidence presented here suggests that avoiding erroneous assumptions about the causality of financial disadvantage amongst Māori and sole mothers requires an understanding of how contemporary and historical contexts shape financial outcomes, and acknowledgement that caring for others (children, whānau) is a form of responsibility simply not valued within FLE frameworks.

Conclusion: Responsibilising states

MM was purportedly established to help young benefit recipients develop the financial capability skills assumed to be lacking in their parents, with the aim of reducing so-called long-term ‘welfare dependency’. This article has argued that, while MM purportedly aimed to improve financial literacy, it ignores emerging FLE policy and is a long way from best practice. Overall, the research evidence suggests that financial problems are a complex phenomenon arising from multiple factors and not always a lack of knowledge (Pinto and Coulson, 2011; Torrie and Baillie, 2017). Worse than simply overlooking this fact, MM attempts to responsibilise individuals by removing financial autonomy and applying financial penalties, which further constrain the ability of young people – particularly sole mothers and Māori who demonstrate relational understandings of wealth and responsibility – to achieve financial capability. MM is thus best understood as a form of welfare conditionality rather than an FLE programme, a claim supported by the fact that the New Zealand government showed no interest in rigorously measuring the impact of MM to refine its FLE elements (Arnold and Rhyne, 2016). The first review of MM, conducted nine years after it was established, did not even attempt to measure its effectiveness in improving financial outcomes (Momsen, 2021).

We argue that focusing on individual financial behaviours simply diverts attention from the insufficient responsibility that states show when implementing policies that make work more precarious, increase housing costs, or deregulate the financial sector. It also ignores the role of (settler, gendered) states in producing the poverty that is typically disproportionately experienced by Indigenous populations and women. More specifically, states need to ensure benefit incomes are adequate to meet needs before blaming recipients for not spending their payments wisely. In New Zealand, there is a growing consensus that benefit incomes are too low, causing significant material hardship and requiring significant core benefit increases (Welfare Expert Advisory Group – WEAG, 2019). The Labour-led government elected in 2017 has indexed benefits to wages and increased benefits by small increments, but such tweaks are insufficient to ensure benefit recipients have the best opportunity to demonstrate financial capability. The Labour-led government has also yet to meet its election commitment to a ‘welfare overhaul’ (New Zealand Labour Party and Green Party of Aotearoa New Zealand, 2017), which the WEAG (2019) suggested should include abolishing MM.

In addition to reforming social security, Willis (2008) and Atkinson et al. (2007) argue for regulatory reform of the personal finance market so consumers can participate efficiently without risk of exploitation. Indebtedness and poverty are inevitable when capitalist competition encourage businesses to entice, confuse, manipulate and deceive potential consumers. States should require finance companies and banks to offer credit more responsibly and ensure individuals understand what they are signing (Families Commission, 2012). Willis (2008: 198) also promotes free financial advice. Thus YP/YPP recipients could be advised by financial experts, not untrained Youth Service mentors, without FLE education being tied to an obligation and sanction regime.

Ensuring real financial capability clearly also requires states to not only better regulate the labour and housing markets but also to address forms of institutional discrimination that drive disproportionate disadvantage amongst Māori and sole mothers. We believe such reforms to responsibilise states will more effectively ensure young people’s financial future than MM, which asks them to demonstrate financially-sound behaviours at a time when much of their control over their finances has been removed.

Footnotes

Declaration of conflicting interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The authors disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This work was supported by the Australian Research Council (grant number #DP180101252) and the University of Auckland Faculty of Arts Research Development Fund.

Notes

Author biographies

Louise Humpage is an Honorary Associate Professor in Sociology at the University of Auckland, New Zealand. Her research focuses on welfare reform; social policy; attitudes to the welfare state; Indigenous Affairs policy; refugee policy and settlement; and citizenship. Recent books include: Policy change, public attitudes and social citizenship: Does neoliberalism matter? (2015, Policy Press) and the co-authored Compulsory Income Management in Australia and New Zealand (2022, Policy Press). Address: School of Social Science, Faculty of Arts, The University of Auckland, New Zealand. Email: l.humpage@auckland.ac.nz

Shelley Bielefeld Before her employment at Griffith Law School and the Law Futures Centre at Griffith University as an ARC DECRA Fellow and Senior Lecturer, Dr Bielefeld was the Inaugural Braithwaite Research Fellow at the School of Regulation and Global Governance at the Australian National University, where she remains a Visiting Fellow. Recent publications include: ‘Administrative Burden and the Cashless Debit Card: Stripping Time, Autonomy and Dignity from Social Security Recipients’, Australian Journal of Public Administration 80(4) 2021: 891–911 and ‘Cashless Welfare Transfers and Australia’s First Nations: Redemptive or Repressive Violence? Griffith Law Review 30(4) 2021: 597–620.

Zoe Staines is a Senior Research Fellow with the School of Social Science, University of Queensland. She previously held research and policy positions in the public sector and, most recently, in the not-for-profit sector. She has researched and published on social policy, welfare conditionality, policing and rural/remote crime and governance, and was recently awarded an Australian Research Council Discovery Early Career Researcher Award to further her work into remote community experiences of social policy and crime. Books include Compulsory Income Management in Australia and New Zealand (2022, Policy Press) and Island Criminology (Bristol University Press, forthcoming 2023).

Greg Marston is Deputy Executive Dean, Faculty of Humanities and Social Sciences and Director of the Centre for Policy Futures at The University of Queensland. His research focuses on poverty and unemployment, work and technology and economic security. Prior to entering academic Dr Marston worked in the non-profit community services sector. He is the lead author of Compulsory Income Management in Australia and New Zealand (2022, Policy Press).

Michelle Peterie is a Research Fellow in the School of Social and Political Sciences at the University of Sydney, where she co-leads the Sydney Centre for Healthy Societies’ research theme on Work, Education and Welfare. She is the author of Visiting Immigration Detention (2022), the co-author of Compulsory Income Management in Australia and New Zealand (2022) and the co-editor of Emotions in Late Modernity (2019).

Philip Mendes teaches social policy and the welfare state and is the Director of the Social Inclusion and Social Policy Research Unit (SISPRU) in the Department of Social Work at Monash University in Victoria, Australia. His research areas include young people transitioning from out-of-home care, the welfare state including particularly forms of conditional welfare, supervised injecting facilities and social work and community practice. Recent publications include: ‘Ending Australia’s Status as a “Leaving Care Laggard”: The Case for a National Extended Care Framework to Lift the Outcomes for Young People Transitioning From Out-of-Home Care’, Australian Social Work 75(1) 2022: 122–132 and with co-authors ‘Indigenous youth transitioning from out-of-home care in Australia: A study of key challenges and effective practice responses’, Journal of Children’s Services 17(1) 2021: 16–32.

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