Second stage of welfare reforms introduced

  • Paula Bennett
Youth Affairs Social Development

Social Development Minister Paula Bennett today introduced the second stage of legislation to comprehensively reform the welfare system.

“In line with our manifesto commitments, the Government is taking an active, work-based approach,” says Mrs Bennett.

The Social Security (Benefit Categories and Work Focus) Amendment Bill includes simplified benefit categories, a greater work focus, new expectations for partners of beneficiaries, work preparation activities.

As recently announced the Bill will also require Jobseekers to be drug-free, it will allow benefits to be stopped for outstanding arrest warrants and includes social obligations to ensure children access health and education services.

Three new benefit types will replace the seven current benefit categories, in addition to the new Youth Payment and Young Parent Payment introduced in August. The new categories included in this Bill are:

• Jobseeker Support for those actively seeking and available for work

• Sole Parent Support for sole parents with children under 14 years

• Supported Living Payment for people significantly restricted by sickness, injury or disability.

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.

“From October this year, sole parents are 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. Like most New Zealanders, I think that’s absolutely reasonable.”

This Bill will see those with children under 14 years receive Sole Parent Support and those with children older than 14, receive Jobseeker Support.

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.

These changes will result in a significantly larger number of people on Jobseeker Support (135,000) than the Unemployment Benefit (50,000).

The current 12 month reapplication for the Unemployment Benefit will apply to all those on the new Jobseeker benefit.

“Benefit rates will remain unchanged and there will be extra support for those who want to work but need more help to get them ready,” says Mrs Bennett.

Those currently receiving Women Alone or Widows Benefit will retain their higher rate of benefit when they transfer to Jobseeker Support and along with those on the DPB, they’ll also retain current part-time benefit abatement rules.

An actuarial valuation based on the expected durations of all current beneficiaries shows the lifetime costs to be $78 billion.

The investment approach will target interventions to those who are likely to become welfare dependent long-term, without significant help.

“Budget decisions are yet to be made for 2013, but we remain in line with cost estimates of $520 million and savings of up to $1.6 billion over four years for the total welfare reform package.”

The changes in the Social Security (Benefit Categories and Work Focus) Amendment Bill will come into effect from July 2013. The Bill will be read for a first time in the coming weeks and go through a full select committee process.

Due to the comprehensive changes to the welfare system that are underway, benefit figures will be reported in full on a quarterly basis. This will provide a more meaningful and in depth time series than monthly updates can deliver.