Better Public Services: Reducing long-term welfare dependence
Result 1: Reduce the number of people who have been on a working age benefit for more than 12 months.
Lead Minister: Hon Paula Bennett
Lead CEO: Ministry of Social Development, Chief Executive Brendan Boyle
Why is this important for New Zealand?
Most people who receive a benefit, do so for only a short period. However, there are other people who are missing out on the opportunity to better their lives, and those of their families, through work.
Being out of paid work and on a benefit for extended periods increases the risk of poverty, social dislocation and deteriorating overall health. It can also have negative effects on the children of people on a benefit long-term.
The cost of paying benefits to working-age people is now over $8 billion a year, with much higher lifetime costs. The cost alone is concerning, but it is only a portion of the entire economic and social price New Zealand pays as a result of lost productivity and negative social impacts.
Reducing long-term welfare dependence is about supporting people to better their lives, managing the Government’s future financial liability and supporting our economy by ensuring we have a skilled and productive workforce.
How will we know we are achieving this result?
As part of Welfare Reform, a new work-focused benefit category called Job Seeker Support (JSS) will be introduced from July 2013. The Government’s target is to:
reduce the number of people continuously receiving these working-age benefits, which will become the new JSS, for more than 12 months by 30%, from 78,000 in April 2012 to 55,000 by 2017.
This goal would see over 20,000 fewer people reliant on a JSS benefit long-term by June 2017. Progress will be monitored using one key measure – the number of working-age people continuously receiving JSS for more than 12 months.
As at December 2012, 79,054 people had been receiving the benefits that will make up JSS for more than 12 months. This was made up of:
40,926 (approximately 52%) receiving Sickness Benefit
22,678 (approximately 29%) receiving Unemployment Related Benefits
11,864 (approximately 15%) receiving DPB sole parent whose youngest children are over 14 or DPB Women Alone
3,586 (approximately 5%) receiving Widow's Benefit with no children or whose youngest children are over 14.
On introduction of JSS, all of these client groups will have a full-time or part-time work expectation (unless granted a temporary deferment).
As noted in the Result Action Plan for Reducing Long-term Welfare Dependence, a breakdown of client groups most at risk of staying on a benefit for longer periods has been provided, as at December 2012:
5,797 Pacific people
Figure 1 below shows JSS equivalent beneficiaries with a continuous duration of 12 months or more, as at the end of the December 2012 quarter.
What the data tells us
The target group increased over the quarter by 927 clients. However compared with a year ago, the target group has reduced in size (a reduction of 1,004 since December 2011).
The quarterly increase is largely seasonal, and reflects a short-term increase in Sickness Benefit and Unemployment Benefit clients, that occurs between September and December every year. There were reductions over the quarter in DPB and Widow's Benefit clients.
Note that JSS will be introduced in July 2013, bringing a strong and consistent work focus for the target group. We expect to see the trajectory beginning to drop over 2013.
What are we doing to achieve this result?
As part of Welfare Reform, the Government will actively promote participation in paid employment and give people the support they need to take on paid employment.
In addition to a stronger work-focus for more people, achieving this result will require an integrated cross-agency approach that addresses the causes of long-term welfare dependence.
We have three overarching strategies for reducing long-term welfare dependence:
we will work with a wider range of clients to break the pattern of welfare dependence
we will invest our resources smarter to get the best results
we will improve the model of service delivery.
Read the Reducing Long-term Welfare Dependence Result Action Plan at www.msd.govt.nz/about-msd-and-our-work/work-programmes/better-public-services/long-term-welfare-dependence/index.html