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Paula Bennett on Welfare Reform

Hon Paula Bennett
Minister for Social Development and Employment
Minister of Youth Affairs

4 November 2011

Welfare reform


E nga mana, e nga reo, e te iwi o te motu, tena koutou, tena koutou, tena koutou katoa.

In this great little country of ours we have 328,000 people of working age receiving a benefit – that’s around 12 per cent of the entire working age population.

More than half of these people have been on welfare for most of the past decade. We have 222,000 children being brought up in homes where the main income is the benefit.

We cannot afford to have one in eight people of working age on welfare. We cannot afford the lost opportunities and poor outcomes for all those people and for their children. The cost of doing nothing is simply unacceptable.

We’ve been through a lot in the last three years, from the global financial crisis through to the Canterbury earthquakes, and a number of people found they had to rely on the State for help. That’s precisely why we have a welfare system, to support those who genuinely need it when life has dealt them a blow

But even in the years before the global financial crisis there were still at least 250,000 New Zealanders on benefits.

For years, New Zealand has had arguably the most generous welfare system in the world. Currently, our welfare system is passive and demand driven. It simply writes a cheque to whoever turns up and leaves them to their own devices, uninterested in what happens to them.

Most beneficiaries are not expected to be available for work, or to take up work if it is offered to them. Naturally, some who could work don’t.

And not surprisingly, the cost to the country has grown steadily since the 1950s as what was designed as short-term assistance through difficult times has become a trap of long term welfare dependency.

Today taxpayers spend $22 million every single day on welfare payments.

Our benefit system lacks a focus on intervening early. It is not good at directing resources early on, to help prevent people from becoming trapped in long-term benefit dependency.

Clearly we can do this smarter and we will.

A key part of the changes the Prime Minister and I announced this week is the new Investment Approach to how we spend taxpayers’ money on welfare payments.

An investment based approach takes a long-term view of each individual entering the welfare system given their needs, challenges and prospects of a quick return to work. It forces the Government to spend taxpayers’ money where it will have the biggest impact.

It means intervening earlier, investing in more support for those who’re capable of working but are likely to remain on benefit long-term without this support.

For example, it makes sense to put more resources and support into helping a teen parent with no education than a university graduate who is between jobs.

The investment approach means we are going to introduce a much more active benefit system. We will be more hands-on, supporting people into work, and we make no apologies for that.

We will expect more people on a benefit to make themselves available for work. But at the same time we will do more to help them into work through things like childcare, training, workplace support, and access to health and disability support services.

All of that will cost money. In fact, about $130 million a year some of which will come from our operating allowance and some from reprioritisation of other expenditure.

But we are prepared to invest in these New Zealanders because the pay-off is a better life for beneficiaries and their children and, over time, a reduction in the long-term costs of welfare dependency.

Through our long overdue reforms, we expect to save taxpayers $1 billion over the next four years.

It is an ambitious goal, especially given the amount of work involved in bedding this new approach in. But I believe it is attainable, especially since we’ve managed to reduce the number of people on an Unemployment Benefit by 10,000 in the last year alone. That’s 10,000 people into work and better outcomes for themselves and their families.

People are individuals, with varying circumstances, so each will be treated according to their work capability. Those who need Jobseeker support because they simply can’t find work will be supported to get a job.

Those who are temporarily unwell or injured will be exempted from looking for work until they are well enough to work, after which point they will be intensively supported to get a job.

Those with children over 14 years old will be supported to retrain if necessary and get back into the workforce.

We’re starting with the default position that says you can work and you will work when you’re able, so let’s support you to get well so you can support yourself once again.

Of course, some people on a benefit will realistically never be able to work because they have a debilitating and long-lasting condition, or are terminally ill. The welfare system will always be there to support these people.

If we can spend money in the short term to reduce dependency in the longer term, it ultimately saves the government, and therefore taxpayers, significant costs.

And it will also lead to better outcomes and better opportunities for the people we invest in and their families.

That’s what our investment based approach is all about.


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