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Official Welfare Reform Fact Sheet

Want to know more about the National Party’s proposed Welfare Reforms?

Here’s a copy of their official fact sheet.

1 November 2011

Welfare Reform Fact Sheet

Over the next three years New Zealand’s welfare system will be reformed with new benefits that recognise that most beneficiaries can and do want to work.

The new system takes a long term investment approach to getting people off welfare and into work.  This means more intensive support will be provided to people who are capable of working but who are likely to remain on benefit long term without that support.

The Government’s expectation is that most people on a benefit are able to work, that they will make an effort to get work and they will have to show they are trying to get work.

12 percent of New Zealand’s working age population are on a benefit.

Under the new system three benefits will replace all of the main benefit payments by 2013.  Benefit rates will remain at current levels and continue to be increased annually for inflation.

Jobseeker Support includes:

  • Unemployment Benefit
  • Sickness Benefit
  • DPB Sole Parents – with youngest child 14 years and older
  • Widow – with youngest child 14 years and older
  • DPB Women Alone

Sole Parent Support includes:

  • DPB Sole Parents with children younger than 14 years
  • Widows with children younger than 14 years

Supported Living Payment includes:

  • Invalid’s Benefit
  • DPB Care of sick and infirm

Jobseeker Support

Jobseeker Support widens the population of people who are available for full-time and part-time work.

The Government’s expectation is that most sole parents with children over the age of 14 years are able to undertake full-time work as children over 14 can be left without parental supervision.

People too sick or disabled will be assessed on their capacity to work based on their individual circumstances.  Sick people can be exempted from the work test until they are well enough to work.  This could be part-time or full-time.  GPs will continue to be involved in medical assessments for the first few months.

Sole Parent Support

Sole Parent Support will include sole parents 19 years and over on DPB Sole Parent and widows with children younger than 14 years.

People will be required to look for part-time work when their child turns 5 years and full-time work as their youngest child turns 14 years when they will transfer to Jobseeker Support.  Parents with children under 5 years will be expected to prepare for work.

If a person has an additional child while on Sole Parent Support, they will be given an exemption from work testing for 12 months.  This aligns with parental leave provisions.

After 12 months work obligations will be reset based on the age of their youngest child when they came on to benefit.  For example, a beneficiary with a seven year old, who has another child, will be part-time work tested when their child turns one.  A sole parent of a 14 year old who has another child will return to a full-time work expectation after one year.

The Government recently increased funding for OSCAR services and further work is underway to ensure there is enough access for sole parents to Early Childhood Education services.

Supported Living Payment

The Supported Living Payment will include people currently on Invalid’s Benefit who have been assessed as permanently and severely restricted in their ability to work.

The new payment will also now include carers of people needing hospital level care (currently DPB – Care of Sick and Infirm).

For people who are disabled or whose ill health means they have limited prospects of working, the benefit remains the same.  This includes people who are permanently and severely disabled, severely mentally ill, or terminally ill.

Improved assessments will ensure that people who have some capacity for work, now or in the future will have work expectation depending on their assessment.

Improving work assessment and services for sick and disabled people will require different skills and expertise, for example occupational therapists and mental health professionals.

An expert Health and Disability panel has been established to provide advice on ways to strengthen employment assessments and services for people who are sick or disabled.

New incentives for people without work expectations

People on the new Sole Parent Support or Supported Living Payment who don’t have work expectations but go off benefit into work will be able to retain some of their benefit in the first few weeks.  The payment will reduce by $100 each week until it reduces to zero.

The payment recognises the additional barriers to work and the extra costs parents and sick and disabled people may face in the first few weeks of working.

New expectations for parents

All parents on benefit may also be expected to participate in work preparation, training, parenting or budgeting programmes regardless of whether they are expected to be available for work.  This will be backed by sanctions for non-compliance.

For parents of children aged 3-4 years, the focus will be on getting people ready for part-time work when their youngest child is 5 i.e. up-skilling programmes.

For expectant parents and parents of children under 3, they may be required to participate in budgeting or parenting programmes that will improve the wellbeing of their children.

New employment support and training services

A more diverse range of people having obligations requires a wider range of services.

Employment Services and supports will be targeted differently.  Instead of working mainly with Unemployment Benefit clients, everyone will get employment services.  However more resources will be targeted to those with the greatest risk of being on a benefit long term without such help.

We will be talking with service providers about how we can get different programmes that meet the different needs of unemployed people and those preparing for work.

This includes job training, search and placement support, increased money management and budgeting services, and more childcare and OSCAR services.

There will also be better access to health services, including drug and alcohol rehabilitation.

Questions and Answers

Why is the Government reforming the welfare system?

There are about 328,000[1] working age people currently receiving a benefit inNew Zealand – that’s more than 12% of the working age population.

The benefit system now costs New Zealanders around $8 billion each year. On top of the financial cost is the very real social cost of benefit dependence. There are well established links between people receiving benefits and poverty, poor health, and many other poor social outcomes.

The Government wants more people to find work.

Will benefit rates be cut?

No, the rates will remain the same and continue to increase each year with inflation.  However as they do now, some people’s benefit payments may change slightly as they move into a new category, in the same way that transferring between benefits now affects a person’s payments.

When will the changes come into effect?

Legislation will be introduced early in 2012.  Changes will begin to be implemented from July 2012 and all changes will be in place by late 2013.

There are no immediate changes to the current system.

How many people will have work expectations under Jobseeker Support?

135,100 people will have work expectations under Jobseeker Support.  This includes:

  • Unemployment Beneficiaries – about 57,000
  • Sickness Beneficiaries – about 58,000 will be assessed and can receive a temporary exemption until they are able to work part or full-time.
  • Sole parents DPB whose youngest child is 14 years or older – about 11,000
  • Widow’s Beneficiaries and DPB Women Alone whose youngest child is 14 years or older, or who have no children – about 9,100.

How much is the reform going to cost and save over time?

These changes are expected to result in up to 46,000 fewer people on benefits and between 7,000 and 11,000 beneficiaries working part-time.  On top of that, the Pre-Election Economic and Fiscal Update also forecast around 20,000 fewer beneficiaries by June 2016 as the economy grows.  It is also expected that fewer people will come onto benefits as incentives and obligations change.  The reforms will cost $130 million a year, with an expected saving of $1 billion over four years.

Are there sufficient jobs for beneficiaries to go in to?

The number of people in jobs increased by nearly 43,000 jobs in the year to June 2011 and jobs advertised online increased by nearly 25% over the past year.  The global recession impacted on jobs, but the economy has now grown in eight of the past nine quarters.  The economy is expected to grow at an average of almost three percent a year over the next four years.

Will people lose their benefits because they can’t get a job?

No.  People are expected to be trying to get work and they will need to show what efforts they are making.  They will only face sanctions if they make no effort.

What sanctions apply to people who don’t meet their work obligations?

The same graduated sanctions will apply under the new system as they do now. Jobseekers will be expected to be available for and looking for work unless they have a temporary exemption.  Those who do not make the effort will face sanctions.

How will people be assessed if they are sick or disabled?

There will be a stronger focus on what people can do, not what they can’t do. Health professionals will provide information to allow Work and Income to determine what kind of work a person can do and how long they should be exempt from work expectations. Those who are permanently or severely disabled, severely mentally ill or terminally ill, will be fast tracked into Supported Living Payment.

An expert Health and Disability Panel has been established to provide specialist advice to MSD on developing new assessment processes.

Are you going to make people on Invalid’s Benefit move to Jobseeker Support?

People who are genuinely unable to work or whose ability to work is severely limited will continue to receive the Supported Living Payment. Most Invalid’s Beneficiaries have regular assessments, and people will only be moved if an assessment indicates they are able to work.

What if someone is too sick to look for work?

Medical professionals will still assess whether someone is too sick to work.  If that’s temporary, they will be exempted from work obligations while they are on Jobseeker Support until their Doctor says otherwise.  If their illness or disability is serious and permanent they will be fast tracked onto the Supported Living Payment.  Those who say they are too sick to work and that is not backed up by a doctor will face work obligations and sanctions if they fail to meet them, as a matter of fairness to taxpayers who fund this system.

How will exemptions work?

People on Jobseeker Support will be expected to be looking for and available for work, except where there is a temporary exemption. Individual circumstances will be taken into account.  Exemptions will vary to recognise a range of situations for example leaving a violent relationship, a bereavement or temporarily unable to work because of illness.

What is the Government doing about providing more childcare?

The part-time work expectation will apply to parents whose youngest child is aged five years.  This may affect the demand for Out of School Care and Recreation provision (OSCAR).  The Government has recently increased funding for OSCAR and changes are being made to make it easier for organisations to become OSCAR providers.

The Ministries of Social Development and Education are working on proposals to ensure that Early Childhood Education keeps pace with the expected increase in demand.

What is meant by a long term investment approach in welfare?

This is a new approach to welfare.  It is aimed at making long term costs transparent and investing upfront to improve employment results and reduce long term welfare dependency.  For example, with an investment approach, beneficiaries are assessed in relation to how long they are likely to remain on a benefit.  Decisions can then be taken as to which people would benefit most from specific early intervention support that is most likely to get them into work.  Achieving success with these beneficiaries will make a huge improvement in their lives as well as reducing welfare costs in the long term for taxpayers.


[1] Primary working age beneficiaries as at the end of June 2011.