Extensive welfare shake-up needed: report

PAULA REBSTOCK: The working group chairwoman said the present high levels of welfare dependency meant major changes were needed.
PAULA REBSTOCK: The working group chairwoman said the present high levels of welfare dependency meant major changes were needed.

More than three quarters of all beneficiaries will be forced to seek work or face cuts to their payments under sweeping recommendations from the Government's Welfare Working Group.

Sole parents, beneficiaries aged under 18 and those with drug and alcohol problems would be subject to the strictest controls if the plans are implemented in full, with harsh financial penalties for failure to comply.

The group has proposed a single 'Jobseeker Support' benefit that would replace the dole, domestic purposes, sickness and other benefits and require all but the most seriously ill and disabled to look for work.

JOHN KEY: Said any welfare changes were unlikely to be in place before the election.
JOHN KEY: Said any welfare changes were unlikely to be in place before the election.

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The system would increase the proportion of beneficiaries presently subjected to work testing from 37 per cent to 77 per cent.

That would more than double the numbers required to look for work from 133,200 of the 360,000 people presently on a benefit to 277,200.

The new system would be overseen by a new agency tasked with cutting the numbers of people on benefits by 100,000 by the year 2021.

Controversial proposals include requiring sole parents to look for a job once their youngest child turns three and harsh new work tests for domestic purposes beneficiaries who have additional children.

Under the working group's proposals, women who had more children when they were already on the benefit would be expected to look for work when the baby was 14 weeks old - though Prime Minister John Key said that recommendation would be ignored.

''Personally I feel a bit queasy about that. I think that's a step too far. I think most New Zealanders would think that's a little on the extreme side.''

However, the Government is poised to bring in welfare reforms on the back of the group's report, though Key said they were unlikely to be in place before the November 26 election.

Working group chairwoman, economist Paula Rebstock, said the present high levels of welfare dependency meant major changes were needed.

''There are currently few incentives and little active support for many people reliant on welfare to move into paid work. Long term benefit dependency can be avoided if investments are well targeted and timely. 

"Enabling people to move into paid work reduces poverty and improves outcomes for key at-risk groups, including young people, sole parents, disabled people and those who are sick.''

The 43 recommendations in the report include:

* Requiring single parents to look for 20 hours work a week once their youngest child is three and 30 hours a week when the youngest turns six;

* Tying the benefit to a requirement that solo parents ensure their children go to school and get regular health checks;

* Requiring all 16 and 17-year-olds in receipt of a benefit to be ''fully engaged'' in education, training, paid work or a combination of the three;

* Ensuring sufficient teen parent facilities so all teenage mothers continue their education;

* Requiring beneficiaries aged under 18 to live with a responsible adult or under adult supervision;

* Cutting benefits for people with drug and alcohol problems who refuse to attend treatment and counselling services;

Beneficiaries who do not meet work test, drug and alcohol and other requirements would have their payments cut for two weeks by 25 per cent for the first breach, 50 per cent for the second and completely for the third.
A fourth failure would result in a 13-week stand-down.

The report says the new work testing requirements would have to go hand-in-hand with a major boost to investment in early childhood education and after-school care and drug and alcohol rehabilitation services, which it says should be addressed urgently.

Its proposal for a single Jobseeker Support benefit would see all beneficiaries paid the same rate, with the extra presently received by those in categories such as sickness, invalids and domestic purposes paid as supplements. That would mean overall payments for beneficiaries in different circumstances would not change.

The system would be overseen by a new agency called Employment and Support New Zealand.

It would have a target of cutting benefit numbers by 100,000 between 2013/14 - when it would begin operating - and 2021.

Achieving the target would cut the expected benefit liability from 2021 from $47 billion to $34 billion.

The Government last year introduced a system of cuts for unemployment beneficiaries who do not meet work test rules, but it applies only to the dole.

Mike O'Brien of the Child Poverty Action Group said some of the recommendations would add to New Zealand's already high child poverty rates.

"The last two decades have seen a gradual erosion of the income support provisions for children. The reduction of support for children has not reduced child poverty. On the contrary, it has increased it.

"The tightening of support for families outlined by the WWG ignores the complexities of people's lives and their relationship to the current labour market.

"The data very clearly shows that beneficiaries including sole parents will take up paid work when it is available. However, the last Household Labour Force Survey showed that the part-time jobs parents might be able to do while caring for their children are rapidly vanishing."

Social Development Minister Paula Bennett said the report was an opportunity to change the welfare system and would feed into Government work in the area.

"This Government certainly believes a radical shift is needed, to put the focus on what people can do, not what they can't do," she said.

"We have more than 350,000 New Zealanders on benefits and we can do much better by many of them, by backing them into work.

"This will be policy for a recovering economy, we're planning ahead so that when the jobs become available, people will be ready for them."