Hon Steve Maharey
12 September 2000 Speech Notes

Social Security Amendment Bill first reading

Mr Speaker, I move that the Social Security Amendment Bill be now read a first time.

Following the first reading, I will move that the Bill be referred to the Social Services Committee.

Mr Speaker, this Bill is part of the Government's overall re-invention of the welfare states which includes:

 changes to the delivery system through regionalisation and new technology for the Department of Work and Income;
 development of new opportunities to lift the skills of New Zealanders and ensure they get real jobs with real wages;
 partnerships with the community;
 the Closing the Gaps programme focussed on Maori and Pacific Island peoples; and
 changes to social assistance to create a single, flexible, tailored benefit system linked to our overall aim of making work pay.

Mr Speaker, this Bill represents the first step in the Government's reshaping of social assistance. It promotes this Government’s broader goal of encouraging social and economic participation.

A significant proportion of the working aged population is in receipt of a benefit, even at a time of economic growth. Many are re-cycling through the system, having difficulty staying in sustainable paid employment.

Some segments of the population are socially excluded. By that I mean they are unable to participate fully in the economy and their community. I believe we should aim to have more people in sustainable full-time employment.

Mr Speaker, we should also help those people whose circumstances mean that paid employment is not a realistic objective or outcome. While there are multiple causes to these problems, the design and delivery of social assistance is one area where Government can make a difference.

The present system is difficult to understand, to access and to deliver.

Some people are unnecessarily locked into the system, are not encouraged to take opportunities or to develop their own abilities. Others are locked out of the system because they do not know how to get support that is available. It is part of a system that should be simpler, reward effort, and be both more responsive to local realities and more tailored to individual circumstances.

The changes represented in this bill are the first steps of a new system that builds people’s abilities and will support them into paid employment, where possible.

Mr Speaker, over the past decade, there has been a more punitive approach to the unemployed based on the philosophy that unemployed people did not want to work. The Labour-Alliance government believes that most unemployed people do want to work. People would take a job if a suitable one was available or if they had the opportunity to improve their education and skills in order to get a job. The changes in this Bill reflect this philosophy.

Mr Speaker, this Government’s approach is about investing in New Zealanders. This investment benefits the individual because they are more likely to gain a sustainable job. It benefits the country because the life-blood of a modern economy is its skilled workers.

It is the job of the government to provide security for those who need it and opportunity for those who can take it. It is not about wasting precious resources policing make-work schemes like community work.

Mr Speaker, this Bill makes changes to the Social Security Act in three areas.

The first of these changes, and the main amendments in the Bill:

 replaces the community wage with a separate unemployment benefit and a separate non-work tested sickness benefit;
 refocuses the current work-test; and
 simplifies the sanction regime for work-tested beneficiaries.

At the same time, the Bill formally ends the work capacity assessment for applicants and beneficiaries with a sickness, disability or injury. Finally the Bill increases the income thresholds for the disability allowance.

From 1 December participation in community work will no longer be compulsory and the sanctions that surrounded the community work scheme will be removed. Beneficiaries will be able to choose, or even be asked, to undertake an activity in the community or voluntary work as part of their work test responsibilities. Participation in a community activity will be on a voluntary basis and sanctions will not apply.

Large-scale “make work” schemes as initiated by the previous Government do little to assist the unemployed to gain sustainable paid employment.

Beneficiaries will be able to undertake voluntary work and have this work recognised as meeting part of their work-test responsibilities. This will formally recognise the valuable contribution that many beneficiaries are already making to their communities. For many, participation in voluntary work will help the unemployed gain valuable skills that will assist them in their efforts to obtain paid employment.

Mr Speaker, from 1 July 2001 a number of other significant changes will take place. The unemployment benefit and a separate non work-tested sickness benefit will be re-established. There will be no change to the existing eligibility criteria or the rates of payment that currently apply. Job seekers who are in employment related training will be able to get the unemployment benefit.

People receiving the community wage at 1 July 2001 will be transferred to either the unemployment benefit or the sickness benefit depending on their circumstances. Hardship categories for both the unemployment and sickness benefits will remain for people who do not meet all the standard eligibility criteria.

Re-establishing separate unemployment and sickness benefits will reduce the benefit categories from the current seven within the community wage to five under the two separate benefits. A good step towards simplifying the current complex system.

Work-test responsibilities for those on the unemployment benefit remain. However, Mr Speaker, from 1 July 2000 these work test responsibilities will be incorporated in an individual job seeker agreement. This will replace the current general job seeker contract.

The new individual job seeker agreement will set out the specific actions required of the beneficiary to obtain paid employment and to improve employment prospects.

The Agreement will also set out the assistance that the Department of Work and Income will provide to help the beneficiary achieve these actions. This will recognise that the Department of Work and Income should provide beneficiaries with appropriate benefit and employment assistance to help them seek employment or improve their employment prospects.

The Bill replaces the concept of organised activities (which a work-tested beneficiary can, at present, be required to do) with that of job seeker development activities. These are activities such as employment-related training, job search skills programmes, and work experience, which are designed to improve a beneficiary’s prospects of gaining paid employment.

Mr Speaker, a work-tested beneficiary may voluntarily include such activities in their job seeker agreement. The Department of Work and Income may require a beneficiary to include a job seeker development activity in their agreement. However, if such a requirement is made, the beneficiary will be provided with a range of job seeker development activities from which they can choose the most appropriate option. The emphasis here will be on choice, not compulsion.

The assistance provided will be more responsive to the job seeker’s local environment and individual needs. The nature and availability of job seeker development activities will vary from region to region and over time.

From 1 July 2001, beneficiaries will also be able to choose to include participation in a recognised activity in the community and voluntary work as part of their job seeker agreement. This will enable some beneficiaries to improve their employment skills and give them an opportunity to contribute to their community.

From 1 July 2001 a revised sanctions regime that is targeted at serious instances of non-compliance will also be introduced. Beneficiaries who fail without good and sufficient reason to comply with their job seeker agreement will have their benefit suspended until such time as they re-comply with their obligations. Sanctions will not apply to activity in the community or voluntary work that has been included as part of a person’s job seeker agreement.

There will still be a sanction for persistent instances of serious non-compliance. While persistent non-compliance will result in a loss of benefit for 13 weeks, the Bill provides that a person who is subject to a 13-week non-payment period can regain immediate access to a benefit if certain conditions are met.

Mr Speaker, the simplified sanction regime replaces three complex existing sanctions regimes with one straightforward system. As a result, beneficiaries will have a clearer understanding of the consequences of failing to meet their responsibilities. The accuracy and consistency of decision-making within the Department of Work and Income will be improved. Providers of programmes such as training providers will no longer be expected to report minor instances of non-compliance.

Mr Speaker, the Bill also removes the assessment of the capacity for work of applicants and beneficiaries with a sickness, injury, or disability. The work capacity assessment trial was stopped in December 1999 after evaluation finding identified a number of concerns.

Finally, from 1 January 2001, the Bill increases the allowable income levels for the disability allowance by 4.25%. The need for this change arises from the April 2000 increase in rates of New Zealand superannuation and veteran’s pension, which resulted in the incomes of some superannuitants rising above the existing disability allowance entitlement thresholds.

This effect on the disability allowance was unintended. The changes will ensure that those affected will again be eligible for the disability allowance. As an interim measure a Ministerial Welfare Programme is being used to preserve superannuitant entitlement to a payment equivalent to the disability allowance.

Mr Speaker, this Bill is the first step towards building a modern social assistance system that is tailored to the needs of individual beneficiaries. The measures in this Bill offer people the chance to increase their skills and employability so they can get a job and stand on their own feet.

From 1 December this year participation in community work will no longer be compulsory. From 1 July next year there will be a separate unemployment benefit and a non-work tested sickness benefit – the first step towards simplifying the current complex system.

Also from 1 July next year each work-test beneficiary will have an individual job seeker agreement tailored to help that person to obtain paid employment and to improve his or her employment prospects. The agreement will also set out the assistance the Department of Work and Income will provide to help that person. The current system is focused very much around the obligations of the beneficiary. The changes in this Bill reflect the philosophy that these obligations are mutual – there are clear responsibilities placed on the beneficiary and the Department of Work and Income alike.

Mr Speaker, I commend this Bill to the House.

ENDS

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