Group proposes radical welfare reform

12:58, Nov 24 2010

Strict time limits on benefits, work-for-the-dole and forcing solo mothers to work based on the age of their oldest child are among a raft of radical suggestions for reforming the welfare system.

In a report released this afternoon the Government-appointed welfare working group, led by former Commerce Commission boss Paula Rebstock, has outlined dozens of "options'' for a modernised system "with a greater focus on personal responsibility''.

Prime Minister John Key has already said that at least some of the group's final recommendations would be adopted.

In an issues paper published in August, the group called New Zealand's welfare system "unsustainable, outdated and fragmented''.

If changes were not made, the 356,000 working-age adults on a benefit would eventually cost the country $50 billion.

The group will make its final report to the Government next February and will not recommend any options over others until then.

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However, many of the measures in today's report focus on getting beneficiaries back into work, with more punitive measures for those who don't comply.

Successful reform would mean "some tough decisions and judgements'', the group said.

"Our assessment was that the current system was insufficiently focused on helping people into paid work and was failing to deliver the economic and social outcomes that the community and taxpayers expect.''

Some of the most radical options include:

* A six-month time limit before people on an unemployment benefit would be required to do either paid or voluntary work to continue receiving pay-outs.

* Forcing parents on the domestic purposes benefit back to work when their youngest child is one, or tying benefits to the age of the oldest child rather than the youngest.

* A five-year time limit on the unemployment benefit.

* An ACC-style "social insurance'' scheme, where workers would be assessed on their future unemployment risk and levied part of their wages, in return for "full coverage'' if they lost their job.

* A guaranteed minimum income that every adult would receive, regardless of work status, that would replace all benefits and supplements.

Changes were also needed to help long-term beneficiaries gain work skills and make it easier for employers to give them a job.

The group says the welfare system was designed to be a temporary safety net for people in times of crisis or hardship, but too many people now saw it as an entitlement.

In June 2009, there were over 170,000 people who had spent more than five out of the past ten years on a benefit.

"This long-term benefit dependence has led to intolerable social costs for the individuals themselves, their children, the broader community, employers and taxpayers,'' Ms Rebstock said.

"The resulting unintended consequences have been intergenerational benefit receipt, high rates of poverty, poor child outcomes and poor physical and mental health.''

The report also suggested changes to the "complex'' system of supplements and grants - including rolling everything into a single benefit payment.

Public feedback on the latest report is open until December 24.

The Dominion Post