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Flexibility for sole parents to move into work

3 December 2001 Media Statement

Bill gives more flexibility for sole parents to move into work

New Government legislation tabled in Parliament today abolishes the work test for sole parents on the Domestic Purposes and Widows Benefits.

Social Services and Employment Minister Steve Maharey said the Social Security (Working Towards Employment) Amendment Bill delivers on the Government’s commitment outlined in Pathways to Opportunity released earlier this year to develop a social security system that responds better to the needs of individuals and their families.

“The current work test fails to recognise the different circumstances that families are in. The bill provides that it will be removed from 26 August 2002.

“From this date the age of the youngest child in a family will no longer determine whether sole parents on DPB and widows benefit are required to work, and whether they work part time or full time.

“Instead, everyone on these two benefits regardless of the age of their children will be required to plan for their future and to move into work as their individual and family circumstances allow. They will be assigned a Case Manager who will actively work with them to assess immediate issues affecting them and their family as well as developing longer term aspirations and plans.

“People on DPB and widows benefits will develop an individual ‘Working towards Employment Plan’ with the assistance of their Case Managers. The Plans will include goals and the steps to achieve those goals.

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“Case Managers will be trained and well connected with their local communities to work with people on benefits to identify practical steps and opportunities to get into paid employment.

“The removal of the work test is also accompanied by a change in the abatement rate. Currently the abatement rate is attached to the age of youngest child with a higher abatement rate for those with no children or a youngest child over 14yrs. The single abatement regime for all people on DPB and Widows Benefit will mean those with no children or a youngest child over 14yrs will be able to keep more of their earnings and be better off in paid work.

“All DPB and Widows beneficiaries will have their income abated at the same rate regardless of the age of their children. Income between $81 and $180 will be abated at only 30% allowing people on these two benefits to retain a greater share of their earnings.

“These changes represent social development in practice. They are based on the principles of investing in people, working together and using a broader range of support and assistance to achieve sustainable outcomes. They introduce an improved and more flexible service that caters for beneficiaries’ individual needs.

“This approach has taken the effective aspects of other welfare models and woven them into a social development model, which is unique to NZ,” said Steve Maharey.


A fact sheet on the Social Security (Working Towards Employment) Amendment Bill is attached.

Fact sheet: Social Security (Working Towards Employment) Amendment Bill

Who are these changes for?
These changes are for DPB and WB recipients who are sole parents or women alone. These changes do not include people receiving the domestic purposes benefit who are caring for a sick or infirm person. Neither do they include sole parents on UB, SB or IB.

What are the changes?
- The big change is a shift away from these beneficiaries being work-tested based on whether they have children or not and the age of youngest child to a facilitative approach that recognises family responsibilities and individual circumstances.
- This approach will include enhanced case management, a better balance between family and work responsibilities, and support for moving towards and into work as family responsibilities and individual circumstances allow.
- The approach will apply across the board to all sole parents beneficiaries, irrespective of the age of their children.

What stays the same?
- Earning income through paid work is still the main way in which beneficiaries can improve their financial situation.
- Each beneficiary will still have a case manager.

What is different?
- The age of youngest child will no longer determine the requirement to work and the hours of work required of a beneficiary. Instead, each beneficiary will be required to plan for their future.
- A MSD case manager and a beneficiary will work together to assess the immediate issues and longer term hopes and dreams.
- Together they will develop an individualised plan for the future. This will be a Working towards Employment Plan. The plan will include the goals, which the beneficiary wants to achieve in the short term and long term, and the pathway to achieving these goals including, as appropriate, movement into paid work. The plan will also include the steps both the case manager and the beneficiary will take to achieve the goals.
- MSD case managers will have the skills to not only provide accurate information about benefit entitlements but also to provide information to help address a person’s individual needs and support to improve their circumstances.
- MSD case managers will also have lower case loads and therefore more time to work with each beneficiary supporting sole parents and former carers into work as their family responsibilities and individual circumstances allow.
- They will know of other services in the community which the beneficiary could find helpful and will refer beneficiaries to them.
- A single abatement regime for all these beneficiaries will mean that they will be able to keep more of their earnings and be better off in paid work.

Why do we need these changes?
- The approach of work testing sole parents and women alone who have been former carers is not flexible enough to take into account of the complexity of sole parent’s lives, their different starting positions in relation to paid employment, and the balancing that is required between work and family responsibilities. Neither does the work-test regime cater for the individual circumstances of older women without dependent children receiving the DPB or WB.
- Beneficiaries receiving the DPB and WB are a diverse group. Most want to work and will move into work when they are ready. What counts as “ready” involves a complex mix of factors that include work skills and experience, health and housing issues, financial and family considerations as well as individual beliefs about the importance of caring for children versus work. They therefore need different forms of assistance and support at different times.
- Paid work is the best way to get ahead in life and yet many sole parents and women alone face constraints (e.g. poor health, lack of education, lack of appropriate childcare) that limit their potential for paid work. The focus will be on making sure that each sole parent and woman alone is given the right information and support in the right way and at the right time so that they can make the move into paid work as soon as their family responsibilities and individual circumstances allow.

What is Enhanced Case Management?
- The proposed enhanced case management model is designed to cater for this diversity through flexibility and individually tailored assistance. It builds on the success of the existing COMPASS scheme and aims to promote goal setting, planning and increased opportunities for sole parents. It is a way of working with beneficiaries that is most likely to be effective in facilitating the movement into ongoing paid employment, while allowing sole parents to make decisions about their family responsibilities and assisting them to lift their capabilities.
- An enhanced case management model will provide:
- choice to each beneficiary as to how to balance work and family responsibilities;
- acknowledgement of the particular constraints faced by recipients of the DPB and WB which may affect labour market participation;
- immediate support with the most appropriate available intervention;
- recognition and understanding of the specific strengths that each beneficiary has, which can be built on;
- incorporation of the concept of ‘awhi’ (walking alongside) in relation to working together with the beneficiary to encourage people towards interdependency and self-support;
- continuation of service provision from entry onto benefit through to transition into sustained employment; and
- comprehensive advice to the beneficiary on benefit entitlement and access to training and employment assistance - the right assistance at the right time.

What is a Working towards Employment Plan?
- A WTE Plan will be different for each beneficiary. It will contain a set of goals across aspects of a person’s life which she or he wants to change, including the pathway they will follow to move into paid work.
- The goals will have a set of actions attached to them. This will include the actions that will be taken by both the beneficiary and their MSD case manager to facilitate the achievement of the goals.
- The plan will also include the assistance that MSD will provide, for example, information on training and education opportunities, in-work assistance, the Training Incentive Allowance (TIA), the Childcare Subsidy.

What will a Case Manager do?
- Effective case management requires case managers to have enough time to spend with each beneficiary so case managers working with DPB and WB recipients will have fewer people to deal with than they do at present.
- They will identify and meet clients’ immediate income and social needs and, where these are outside core MSD business, make referrals to appropriate agencies.
- They will work with clients to develop their WTE Plans and attend to the Ministry’s obligations in respect of these plans.
- They will ensure continual revision of the plans through regular, frequent contact with clients.
- The case manager will be expected to develop a professional relationship with the beneficiary based on mutual trust and focused on encouraging and supporting beneficiaries to plan for their future.

How will a beneficiary be better off in work?
- At present when a beneficiary has no children or a youngest child aged over 14years and is full-time work tested their income is abated at 70% for every dollar earned over $80. This will be changed to match with the abatement rate applied to those with younger children so that all DPB and WB recipients have their income abated at the same rate. Income between $81 and $180 will be abated at only 30% leaving more of their earnings available for the beneficiary and making them better off.

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