Hon Anne Tolley
Minister for Social Development

17 May 2017 Media Statement

Benefit valuation confirms long-term welfare dependence reducing

Social Development Minister Anne Tolley has welcomed the latest benefit valuation, which confirms long-term welfare dependence is reducing, particularly among sole parents.

“Welfare reform and the hard work of Work and Income staff has had a significant impact in helping more people into work while also saving taxpayers money,” says Mrs Tolley.

“Our focus on providing targeted support and more intensive case management for those most at risk of welfare dependence has helped reduce the liability by $1.7 billion.

“Over $1 billion of this reduction in the last year is due to more sole parents moving off benefits, with fewer people returning to benefits making up most of the remaining reduction.

“Both sole parents and young beneficiaries are now predicted to spend nearly three years less on a benefit compared to 2012.

“Supporting these two groups has been a priority for us because we know helping them off benefits will transform their and their families’ lives.

“Almost half of children who grow up in a benefit dependent household end up on a benefit before the age of 23, which is why we’ve invested millions in providing intensive support and training as well as help with study and childcare so sole parents can go into work.

“With the number of sole parents on a benefit decreasing 32 per cent since 2012 and nearly 60,000 fewer children living in benefit dependent households than in 2011, it’s clear this investment is helping break the cycle of intergenerational welfare dependence.

“The valuation also shows an increase in the proportion of young beneficiaries going off benefits following the introduction of the Youth Service in 2012.

“Those who have been on a benefit before the age of 20 make up about 75 per cent of current liability, with teen parents having some of the highest lifetime costs of any group on welfare.

“Our investment in the Youth Service is supporting these young people into education and training and giving them the tools they need to prepare for employment.”

The current lifetime liability of the benefit system is $76 billion. External economic factors such as interest rates and the Government’s $25 a week increase in benefit rates for families added around $8.7 billion in the year to June 2016.

The valuation shows a $13.7 billion reduction over the last five years in the benefit system’s future lifetime cost due to welfare reforms and Work and Income’s actions, which equates to clients spending 1.3 million fewer years on main benefits over their working lifetimes.

Although previous valuations have identified a range of risk factors that contribute to benefit dependence, this is the first time social housing has been included in the analysis. The report shows that almost half of those living in social housing are receiving a benefit.

Risk factors identified in previous valuations include child protection history, criminal history, educational status and intergenerational benefit receipt.

“These valuations help us understand who’s at risk of staying on a benefit long-term so we can provide the right support to those who need it most,” says Mrs Tolley.

The full valuation report is available at https://www.msd.govt.nz/about-msd-and-our-work/newsroom/media-releases/2017/2016-valuation-of-the-benefit-system-for-working-age-adults.html

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