26 February 2015

Reforms helping our most vulnerable succeed

Social Development Minister Anne Tolley has welcomed the latest valuation of the benefit system showing welfare reforms are having a tangible effect on the future costs of benefits.

“The June 2014 valuation shows the current lifetime liability of the benefit system is $69 billion.

“Our efforts to reduce long term benefit dependency are bearing fruit with a $7.5 billion reduction in liability.” Mrs Tolley says

Of the $7.5 billion reduction, $2.2 billion is due to welfare reform and Work and Income’s support of beneficiaries, particularly its focus on intensive case management for those most prone to becoming dependent on benefits. This is particularly true for sole parents whose liability has decreased by $3.3 billion

“In fact, welfare reform has reduced the expected future time on main benefits by an average of 1.2 years for sole parents and 2.8 years for youth beneficiaries,” says Mrs Tolley.

The reductions we’re now seeing will mean fewer people on benefit in the years to come which means we’re going to see healthier, more prosperous households. This is why we are extending our Better Public Service Result 1 target.

Mrs Tolley said the new BPS Result 1 target is:

· A 25 per cent reduction (from 295,000 people as at June 2014 to 220,000 as at June 2018) in the total number of people receiving main benefits and a $13 billion reduction in the long-term cost of benefit dependence, as measured by an accumulated Actuarial Release, by June 2018.

This replaces the current target of a 30 per cent reduction - 78,000 people to 55,000 people – in the number of working-age recipients of Jobseeker Support who have continually received benefits for more than 12 months.

“Youth Services is successfully turning lives around. It is projected that 51% of young people on the Youth Payment at 17 years will be off benefits when they turn 19 compared to just 31% three years ago. We want to keep that momentum going,” says Mrs Tolley.

The report shows 9 out of 10 people who went on benefits as young people also lived in benefit-dependent homes as children. This reinforces the importance of work in breaking the cycle of inter-generational welfare dependence.

For the first time, a detailed regional comparison has been added to assess how regional economic conditions and demographics may impact the type of benefits people need and the length of time they need support.

“Each valuation has offered new insights into patterns of benefit receipt and helps ensure we get the right help to the right people at the right time.

“This valuation shows New Zealand is on the right path in reducing the human and financial costs of long term welfare dependency.” says Mrs Tolley.

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