• Roger Sowry
Social Welfare

The creation of a one-stop-shop to deliver income support and employment services will make a tremendous difference to New Zealanders looking for work or moving from welfare towards work, the Minister of Social Welfare said today.

The Minister along with Minister of Employment, Hon Peter McCardle today announced Cabinet's decision to meet the commitment outlined in the Coalition Agreement to integrate Income Support, the New Zealand Employment Service and the Community Employment Group.

"The single highest priority of Government policy is to sustain strong economic growth as a secure basis for on-going job growth and rising living standards for all New Zealanders.

"Achieving that requires continuous emphasis on education and training to provide New Zealanders with a means to achieve their own personal goals, through employment.

"Our aim is to create new opportunities to help unemployed New Zealanders to move from dependence to participation in the paid workforce.

"Mr McCardle and I have worked side by side throughout this entire process which is clearly one of the Coalition Government's major achievements of 1997. It is also one of the largest changes to the public sector in the past 10 years.

"This is a bold move by the Coalition Government but at the same time a logical move which customers will welcome.

"New Zealanders applying for income and employment assistance have for many years dealt with two separate agencies. The creation of a one-stop-shop will enable customers to get all income support assistance and employment services from one focussed agency.

"It is also the Government's intention that the new agency will take over responsibility for administering and delivering student loans and allowances.

"All working age beneficiaries are covered by the new agency. This is to ensure that all customers have access to all appropriate assistance.

"This Government believes that a central principle of welfare is to link work and income support when a person has some work capacity.

"We currently lead the world with our welfare delivery and one-to-one case management, so this approach will continue to be a focus for the one-stop-shop."

The Department of Social Welfare's Welfare to Well-being strategy and focus on Strengthening Families will continue into the new agency.

"The ultimate objective of the agency is to provide people with the tools they need to find work.

"I welcome the creation of the one-stop-shop and feel confident that it has the potential to make a real, positive difference to many unemployed and low income New Zealanders," Mr Sowry says.


Media queries, contact: Marnie Woodd, Press Secretary, phone 04 471 9365 or cell 025 440 405


Background Information
Summary of Employment Policy
Government employment policy will pursue two outcomes. The key outcome is the reduction in the percentage of long-term unemployment amongst all working age beneficiary groups. The complementary outcome is maximising the involvement of job seekers in community work and training.

A number of strategies underpin the Government's desired outcomes:

the integration of the New Zealand Employment Service (NZES), Income Support (IS), Community Employment Group (CEG) and Education, Training and Support Agency (ETSA) services to job seeker beneficiaries (or communities) seeking access to employment assistance, income maintenance, and education and training referral assistance, with the objective of delivering seamless assistance to all clients;

participation of job seekers in community work and training;

replacement of the Unemployment Benefit with a community wage;

greater regional accountability and responsiveness to local labour market needs; and

a focus on all working age beneficiaries.

reinforcing parental responsibilities.
Decisions Cabinet has agreed to:

the full structural integration of NZES, IS and CEG into a single stand-alone organisation under one Minister by 30 September 1998; and

split Training Opportunities Programme resources between Vote: Education and Vote: Employment on the basis that Vote: Education retain 35% of the funding (being the equivalent of the average proportion of trainees aged 16 and 17) and the balance (65%) to transfer to Vote: Employment.
General Information

How will the new agency benefit customers of Income Support (IS), the Employment Service (NZES) and the Community Employment Group (CEG)?
For all working age beneficiaries, the new service will provide a "one-stop-shop" for all their income, employment and training referral needs. Once the process of integration has been completed, they will receive registration, eligibility and work capacity assessment, placement and support services in the one place once the process of integration has been completed. Communities and organisations will continue to receive support to facilitate opportunities for employment.

What changes will customers of the Employment Service, Income Support and the Community Employment Group notice between now and September?
Immediately, none - it will be business as usual. Initially NZES, IS and CEG will continue to work independently but it is intended that urgent steps be taken to integrate NZES and IS business processes. Customers should see improvements in service delivery reasonably early in the New Year as processes are combined. It is expected that the relocation of offices will take up to two years to accomplish.

How many customers does this decision involve?
Nine hundred thousand (900,000) customers of Income Support and the New Zealand Employment Service will be receiving services from the one-stop-shop. In addition, 1100 community organisations and networks will continue to receive support such as they receive today from the Community Employment Group.

Why is the entire Income Support operation being integrated into the one-stop-shop when the Coalition Agreement refers only to the Unemployment Benefit resources being integrated into the new agency?
Government has decided that the focus population for the Employment Strategy will include all working-age beneficiaries. This is consistent with the Coalition government's view that for all working-age beneficiaries, re-entering the workforce where appropriate is a key route to financial independence and income support should be seen as providing transitional assistance whilst a person is without work.

Which beneficiary groups make up "all working-age beneficiaries?
Virtually all beneficiaries. War pensioners and superannuitants do not form part of this group.

Does this mean that currently non-worktested beneficiaries will be worktested?
Decisions with regard to work-testing issues are not part of today's decision.

Explain how the transfer of TOP funding from Vote Education to Vote: Employment links into the decision to form a one-stop-shop.
Sixty five percent (65%) of TOPs funding ($121 million) which is currently handled by ETSA will be transferred to the new agency from 1 October 1998. Officials will make recommendations to Ministers on the relationship between ETSA and the new agency next year.

Contracts for Training Opportunities Programme (TOP) training for 1998 are already in place and will be honoured. Responsibility for TOP funding will be split between Vote: Employment (65%) and Vote: Education (35%) from the 1998/99 financial year. For calendar year 1999 purchasing, $24 million of the Vote: Employment portion of Training Opportunities funding will be available to Regional Employment Commissioners to spend on other types of interventions to achieve employment outcomes for the new agency's clients. The balance of $97 million will still be spent on TOP type training in 1999.

When and how will the name of the one-stop-shop be decided?
The name of the new agency will be decided next year, and in time for the start up of the new agency on 1 October 1998. Officials are likely to make recommendations to Ministers on a new name based on a number of factors, including research with customers. The final decision will be for Ministers to make.

What will be the structural form of the new organisation; e.g. crown entity or department?
Officials are still considering this issue. Advice on this issue is likely to be provided to Ministers in early 1998.

Who will be the Minister responsible for the one-stop-shop?
That appointment will be made by the Prime Minister in due course.

When is the one-stop-shop expected to be fully operational, and how will the transitional phase be managed?
The new agency is expected to be fully operational from 1 October 1998.

The process of merging the existing entities will be managed under a chief executives' steering group, which will comprise the State Services Commissioner as chair, the chief executives of the Departments of Labour and Social Welfare, and the Secretary to the Treasury.

A transition unit of officials will report to that group, and the transition unit will be lead by a transition manager, who reports to the steering group. The transition unit and transition manager will be responsible for developing detailed design of the new agency and merging the agencies.

In the interim, chief executives of the two departments remain the employers of the staff in their departments, and their staff continue to be responsible to their existing managers.

A similar transition process has been applied in the merger of the Ministry of Forestry and the Ministry of Agriculture, which is underway now.

What will clients experience in the transition to the one-stop-shop?
The Transitional Management Unit will determine the phases of the transition, including any changes to customer services. However, the continued emphasis will be on ensuring all customers receive improved services with as little disruption as possible.

What will the relationship be between the one-stop-shop and the proposed Regional Employment Commissioners?
Regional Employment Commissioners will perform a regional management function within the new agency.

Will the focus on Welfare to Well-being continue with the one-stop-shop?
Yes. The Government has agreed that the one-stop-shop will support the Welfare to Well-being and Strengthening Families initiatives.

In some instances, the Employment Service and Income Support have similar focused programmes. Where this occurs, what programme will take priority?
The Transition Unit will need to make a thorough assessment of areas of complementarity and duplication. It is not possible to determine priorities at this point.

Is there any intention to increase contestability in the delivery of employment and income maintenance services?
Officials are doing further work on this issue with an intention to report back to Ministers in 1998.

How many staff work for NZES, IS and CEG?
New Zealand Employment Service 1034

Community Employment Group 91

Income Support 3469

Total 4594

How many offices does each agency currently operate around the country?
NZES 97 employment centres and 4 regional offices

CEG 5 regional offices and 62 locally based field staff

IS 131 offices

How many Employment Service and Income Support offices are already located together in the same premises?
Thirty (30)

How many staff are employed at the head office level in each agency?
New Zealand Employment Service 180

Community Employment Group 30

Income Support 300

Total 510

What proportion of the public service does this decision involve?
14% of the public service workforce.

Will staff be made redundant?
Any decision concerning staff numbers will be the responsibility of the Chief Executive of the new agency.

Where will non-working age beneficiaries continue to receive income support services?
An analysis of programmes for such groups will be made prior to 30 September 1998 to see whether they should form part of the new agency's services or whether alternative delivery options should be considered.

In the meantime, war pensioners and superannuitants continue to receive service as usual from Income Support.

What legislative changes will be required for the one-stop-shop to take effect?
Legislative amendments are primarily required in the Social Security Act 1964. There will also be legislative changes flowing from the form which the new agency takes, whether that is a department or a crown entity. More work is underway now on the potential legislative changes. In addition, an Order in Council will need to be promulgated to establish the organisation either as a department or as a Crown entity.

What will happen to the remaining functions of the Departments of Labour and Social Welfare?
It is the responsibility of the Chief Executives of the Departments of Labour and Social Welfare to determine whether any reorganisation within their departments is necessary for continued effective operation.

Were options other than full integration considered by Government, and why was full integration the preferred option?
After considering a wide range of options, officials developed two models more fully for Ministers' consideration; namely 'virtual' integration (alignment of business processes without changing structural forms) and full structural integration.

In making a choice between virtual and structural integration, Ministers balanced three key issues:

Effectiveness - whether virtual integration or full structural integration of NZES, CEG and IS will be more effective in delivering the Government's employment outcomes;

Cost - of virtual integration and full structural integration; and

Management of Risk - the transitional issues and risks associated with both virtual integration and full structural integration.

It was considered that a single organisation, with clear accountability and no duplication or overlap of activities is the logical extension of the convergence of areas of focus between NZES, CEG and IS. The single organisation is considered to be more likely to give effect to the employment outcomes sought by the Government and should provide a better customer focus.

What is the cost of integrating NZES, CEG and IS into a one-stop-shop?
There will be an immediate net cost, in 1998-99, of about $36.7 million in establishing the new agency, and a further net cost of $11.3 million in 1999-2000. This is split as follows: in 1998-99, operating net cost of $8.7 million and capital cost of $28 million (although some capital cost may be incurred prior to 30 June 1998). In 1999-2000 the cost is split into an operating net benefit of $20.7 million and a capital cost of $32 million. All dollar values here are calculated in 1997 dollars and represent cash costs.

What savings does the Government ultimately expect from integrating the three agencies into a one-stop-shop?
In subsequent years there are expected to be savings from establishing the new agency. The new agency is expected to cost the Government about net $20 million less per annum than the existing structures.

What public consultation took place in developing policy options for integrating employment, training referral and income related services?
The Employment Implementation Steering Group undertook public consultation amongst customer groups and strategic partners during the development of options for reorganisation.

What staff consultation took place in developing policy options for integration?
Both the Departments of Labour and Social Welfare talked formally and informally with staff. The Department of Labour used an independent research company to canvas the policy options under consideration.

When are announcements expected on the remaining aspects of the Government's Employment Strategy?
It is expected that announcements about the establishment of Regional Employment Commissioners and the replacement of the Unemployment Benefit with a community wage will be made by March 1998.