Major welfare reform resets expectations

  • Paula Bennett
Social Development and Employment

Social Development Minister Paula Bennett has today confirmed the Government’s intention to comprehensively reform the benefit system.

“It’s not socially or financially sustainable to continue to spend eight billion dollars a year to pay benefits to 12 per cent of working age New Zealanders.”

There are clear links between welfare, poverty and poor health. Evidence shows children are better off when their parents are in work, not on welfare.

“We have greater aspirations for New Zealanders and their children, which are achieved through work, not welfare,” says Ms Bennett.

“People currently on Unemployment and Sickness Benefits and those on Widows, Women Alone and DPB with children 14 and over, or with no children, will be included in a new Jobseeker Support benefit.”

The changes announced today are expected to result in up to 46,000 people off welfare and another 11,000 working part-time within four years.

This is on top of the Pre Election Fiscal Update forecast of 20,000 fewer on welfare by 2016, through current policy settings such as Future Focus.

“Given we’ve reduced the Unemployment Benefit by 10,000 in the last year alone, I’m confident we can continue to get many more off welfare into work.”

“The policy will cost around $130 million a year for the first four years, made up of new and reprioritised funding for more childcare, extra staff and IT costs.

“We expect to make savings of $1 billion over four years.”

Changes announced today include:
• A new work-focused benefit called Jobseeker Support
• A part-time work expectation for sole parents with children over 5 years
• A full-time work expectation for sole parents with children over 14 years
• The new Sole Parent Support to replace DPB
• The new Supported Living Payment to replace Invalid’s Benefit and DPB care of sick and infirm
• An investment-based approach to the benefit system.

The investment based approach will tailor support to beneficiaries based on their likelihood of becoming long-term welfare dependent.

Expectations will centre on each individual’s capacity to work rather than ‘entitlements,’ shifting the focus to what people can do, not what they can’t.

Individuals receiving Jobseeker Support will have work expectations set depending on their capacity – full time, part time or temporarily exempt.

“Jobseeker Support will include those capable of work and those who are temporarily exempt, but will soon be able to work,” says Ms Bennett.

“Sole parents will be expected to be available for part-time work when their youngest is school-age and available for full-time work when their youngest turns 14, and like most New Zealanders, I think that’s absolutely reasonable.”

Those with children under 14 years will receive Sole Parent Support and those with children older than 14 will go onto Jobseeker Support.

“Sole parents who have another child while on a benefit will be exempt for one year, in line with parental leave, before work obligations resume.”

Those currently on the Sickness Benefit will be included in Jobseeker Support and, according to work capability, will have a part-time or full-time work expectation or a temporary exemption until they are work-ready.

“The Sickness Benefit should be temporary but 40 per cent have been on it as long as four years, so these changes reset expectations of a return to work.”

The Supported Living Payment replaces the Invalid’s Benefit for those who are permanently and severely disabled, severely mentally ill or terminally ill.

“This benefit is for those who’re unable to work at all and the name change reflects the fact the term ‘invalid’ for many, is offensive and outdated.”

An investment approach guides how support is tailored to get the best results based on an individual’s likelihood of becoming long-term welfare dependent.

“For example, it makes sense to put more resources and support into helping a teen parent with no education, than to help a university graduate who is between jobs,” says Ms Bennett.

“Underpinning the investment based approach is a focus on the long-term social and financial cost of welfare dependency, not just on numbers.”

“170,000 New Zealanders spent the majority of the past decade on benefits, that’s bad for children, families, individuals and the economy,” says Ms Bennett.