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Supporting the return of beneficiaries to work

16 October 2008 Media Statement

Social development policy supports the return of beneficiaries to work

Prime Minister Helen Clark and Social Development Minister Ruth Dyson today released Labour’s social development policy which includes changes to the benefit system to allow people receiving a benefit to keep more of what they earn and help them move into work.

Helen Clark said that under Labour New Zealand has experienced both low unemployment and high levels of participation in the workforce.

“Labour policies have lifted over 130,000 children out of poverty and reduced the total number of people on benefits with over 140,000 fewer people relying on a benefit as their main source of income. Labour is committed to providing the safety net of welfare assistance for the nation’s vulnerable.

“We have also worked to avoid trapping families in welfare dependency by ‘making work pay’, including through the In Work Tax Credit, childcare assistance, measures to ease the transition back into work, and better arrangements around seasonal work.

“Today I am announcing how Labour will give further support to the transition of beneficiaries back into work. Labour will set a clear timetable for lifting the amount beneficiaries can earn before abatement to the equivalent of ten hours pay at the adult minimum wage rate within five years. After the five years, the earnings threshold will continue to increase in line with minimum wage changes.

“Labour’s path for increases to the weekly earnings threshold is as follows:

- By 1 April 2010, the weekly earnings threshold at which benefit abatement begins will be lifted to $100 from the current $80
- By 1 April 2011, the abatement threshold will be lifted to $120
- By 1 April 2012, the abatement threshold will be lifted to $140

“The abatement rates and thresholds have not been adjusted since July 1996, and the rationale behind these levels has faded over time. Increasing the abatement threshold will ensure that there is a stronger incentive to move off a benefit altogether.

“It is estimated that around 50,000 New Zealand households who are supplementing their benefit income through part-time work would be able to work longer hours and keep more of what they earn as a result of these proposed changes. Increasing the threshold for benefit abatement in this way is estimated to cost approximately $133 million over the period 2009/10-2012/13,” Helen Clark said.

Labour’s social development policy also includes commitments to:

- continue to adjust NZ Superannuation to ensure that the rate for a married couple is equivalent to at least 66% of the net average ordinary time wage
- change the treatment of ACC payments for those receiving benefits so that they are treated as income, rather than directly deducted from the benefit
- expand access to training and vocational support for people who aren’t on benefit but want to return to the workforce
- continue to support and expand Heartlands Services
- expand the number of community partnerships with Enterprising Communities Grants over the next term
- continue the implementation of Pathway to Partnership so that by 2012 all essential services for children, young people and families will be fully funded.


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