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Fundamental Change Signalled in Welfare Recommendations

[Full report: WWGFinalRecommendations22February2011.pdf]

Media Statement Embargoed to Midday, 22 February 2011

Fundamental Change Signalled in Welfare Reform Recommendations

“The social and economic costs of the current New Zealand welfare system are unacceptably high and the potential benefits of reform are so significant that fundamental change is needed,” says Welfare Working Group Chair Paula Rebstock.

The Welfare Working Group, which was established by the Government, today released their report Reducing Long Term Benefit Dependency detailing practical recommendations on how to improve outcomes for people on a benefit and New Zealanders as a whole.

“The Welfare Working Group is confident that if the reform package is implemented effectively, it will have a positive impact on many individuals, their families and the wider community,” says Chair Paula Rebstock.

Key to the recommendations is a shift to a stronger focus on paid work.

“There are currently few incentives and little active support for many people reliant on welfare to move into paid work. Long term benefit dependency can be avoided if investments are well targeted and timely. Enabling people to move into paid work reduces poverty and improves outcomes for key at- risk groups, including young people, sole parents, disabled people and those who are sick.

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“The Welfare Working Group has proposed eight major reforms to the welfare system.

A stronger work focus for more people – Sending early, strong signals about the importance of paid work and assuming most people of working age can work. This requires a proactive approach focused on providing active support as well as financial support.

Reciprocal obligations - Most working age people successfully provide for their own wellbeing through paid work. Individuals who enter the system who can work should take all reasonable steps to secure paid work and they should be supported and encouraged by policy settings and a responsive service delivery agency to find paid work. Individuals, Government, whānau and family, employers and the broader community can all contribute to achieving positive outcomes for people seeking to move into paid work.

A long-term view – The welfare system needs to recognise the value of investing early to reduce the long-term social, economic and fiscal costs of welfare dependency. Adopting an actuarial approach to measuring the forward liability will therefore be an important feature of any reform.

Committing to targets – The Working Group proposes a target of reducing welfare recipients by 100,000 by 2021. Setting an achievable numerical target for reducing the number of people dependent on welfare will assist in directing attention to the scale of the problem, ensures a sharper focus across Government and the community on outcomes from reform, and to provide a clear yardstick for measuring progress.

Improving outcomes for Māori – The social and economic costs of having 31 per cent of working age Māori on welfare are intolerable. It is imperative that all available options and opportunities are utilised, including partnerships with Māori leadership, greater accountability for delivery to Māori, and commitment to lifting Māori education, training and employment outcomes.

Improving outcomes for children – The social and intergenerational consequences of having 222,000 children growing up in benefit dependent households are deeply concerning. Welfare reform options must explicitly consider the potential impacts on the well-being of children. Reducing the unacceptably high incidence of child poverty in New Zealand through a particular focus on at-risk jobless households and whānau must be a high priority of reform.

A cross-Government and community approach– Many of the solutions to reducing long-term welfare dependency lie outside the welfare system. Cross-Government and community leadership, focused on prevention and early intervention, is critical. We are particularly concerned about the performance of the education system in meeting the needs of at-risk, under-achieving children and young people. Significant shortcomings in core health services such as mental health, in rehabilitation, and in generic managed health care providers and systems, must be addressed if injured and ill New Zealanders are to recover as quickly and as well as is possible and if any consequent morbidity is to be minimised. These health and education service shortcomings have a direct and adverse effect on welfare dependency.

More effective delivery – An outcomes-focused delivery agency is proposed that will use new skills and capacity to deliver effective services to people at risk of long-term welfare dependency. Responsiveness can be increased through a greater focus on community-based solutions (including for Māori, Pacific people, migrants, refugees and young people). Contracted not-for-profit and private sector providers also need to be part of the solution and such contracts need to be rigorously designed and managed. The delivery agency needs to be accountable for reducing the forward liability and the associated reduction in long-term welfare dependency.

The proposed reforms are underpinned by:

• The establishment of a new single work-focused welfare payment to replace all existing categories of benefit called Jobseeker Support.

o All people who enter the welfare system will apply for Jobseeker Support.

o People who are on Jobseeker Support will be either Jobseekers, transitioning to work or receiving long-term support.

o This is a critical component of the reforms as the number of people who will be encouraged to move into work will increase from 37% to 77%.

• The establishment of a delivery agency, Employment and Support New Zealand, which will implement the new approach.

o This delivery agency will be responsible for achieving better long-term outcomes and will be accountable for reducing the forward liability.

o The proposed reforms will require the delivery agency to work with more people than it currently does, including people that the welfare system has previously not worked with, and invest in a timely manner.

“Currently around 360,000 working age people are on a benefit, with 175,000 of those having been on a benefit for at least five of the last 10 years. Analysis indicates that if the reforms proceed, there could be up to 100,000 fewer people on the benefit and in employment. This would result in a reduction of the forward liability from $47 billion to $34 billion by 2021.

“The Welfare Working Group would like to thank the many New Zealanders who took the time to make submissions on this important piece of social policy. The submissions played an important part in shaping the final recommendations for a welfare system that will deliver better outcomes for all New Zealanders,” concluded Ms Rebstock.

The report can be found at


[Full report: WWGFinalRecommendations22February2011.pdf]


Key Conclusions and Recommendations from the Welfare Working Group

This document sets out a summary of the key conclusions of the Welfare Working Group, and the recommendations contained in the body of this Report.

Chapter 1: Introduction


The objective of welfare for people of working age is to provide assistance to those who have no other means of support and are temporarily or permanently unable to be in paid employment. People who can support themselves and their families through paid work should do so.

There are major deficiencies in New Zealand’s welfare system that need to be addressed. This is particularly apparent for some groups, including Māori, young people with few qualifications, disabled people, those who are sick and many sole parents. Addressing these issues requires fundamental change to the welfare system rather than further piecemeal change.

Recommendation 1: Key principles underpinning the provision of welfare

The Welfare Working Group recommends that the design and provision of welfare for people of working age is guided by the following principles:

a) recognition of the value and importance of paid work to social and economic well-being;

b) provision of financial support to people not in employment when no other income is available;

c) fostering strong social outcomes including improved physical and mental health outcomes and more positive outcomes for children;

d) respect for the dignity of people;

e) promotion of reciprocal obligations and accountability;

f) promotion of personal responsibility;

g) efficiency and freedom from misuse;

h) affordability and sustainability; and

i) practicality, being able to be implemented and having a low risk of unintended consequences.

Chapter 2: A new model for welfare


The norm for people of working age is that they support themselves and their families through paid employment, and the welfare system must be focused to support this as far as possible. The performance of the system needs to be measurable and focused on addressing the needs of the most disadvantaged. This reform is founded on a greater work focus for more people, reciprocal obligations, a long-term view (investing early to reduce the risk of poor long-term outcomes for many people), commitment to targets, better outcomes for Māori, improved well-being of children, a cross-sector approach and more effective delivery. A delivery agency with new capability and improved accountability is required to ensure that a work-focused welfare system is delivered effectively.

Recommendation 2: A work-focused welfare system

The Welfare Working Group recommends that there is a new work-focused approach to welfare for working age people, which has the following key elements:

a) an increased emphasis on prevention, through access to appropriate and effective cross sector services, including health and education, so that fewer people need to use welfare;

b) replacing existing benefit categories with a single payment called ‘Jobseeker Support’;

c) reform of second and third tier assistance provisions that discourage recipients from moving into or remaining in paid employment or lead to other poor outcomes;

d) increased, clearer expectations for more people in the welfare system to look for paid work;

e) low-cost assistance and clear expectations to help those who are work ready;

f) more active delivery and up front investment for those most at risk of avoidable long-term welfare dependence, in order to minimise the long-term costs of welfare;

g) better support for people with no ability to work;

h) focus on improved outcomes for children; and

i) more effective delivery and expanded use of private and community, not-for-profit sector agencies to deliver employment services.

Recommendation 3: Targets for welfare reform

The Welfare Working Group recommends that in order to improve social and economic outcomes, especially for welfare recipients and their children, taxpayers, employers and the community, Government set a target of at least 100,000 fewer working age people receiving welfare by 2021, which would imply the need to reduce the number of Māori on welfare by between a third to a half, resulting in:

a) a reduction in the number of people applying for welfare because of stronger prevention activity; and

b) a reduction by at least 28 per cent in the long-term cost of welfare, as measured by the forward liability.

Recommendation 4: A shared commitment between Māori and the Government

The Welfare Working Group recommends that the Government initiate a formal partnership with Māori leaders, with associated goals and strategies, designed to result in enduring increases in Māori employment.

Chapter 3: Active work-focused expectations


A work-focused welfare system starts with the presumption that until determined otherwise each person is able to work, and therefore is expected to look for paid work when they seek welfare assistance. These work expectations will be temporarily deferred in certain situations, such as while caring for a young child, but there will continue to be expectations of preparing for work. There should be no work expectation for people for whom it would be unreasonable to apply work obligations because of the nature of their illness or because of permanent and severe impairment, or for those caring for disabled children or the sick or infirm.

It is important that everyone understands the concept of reciprocal obligations. People take on obligations when they receive welfare in exchange for the responsibility Government has in providing appropriate support. These obligations need to reflect the norms of behaviour of the wider population. Recipients also need to know the consequences of not meeting these obligations.

Recommendation 5: Work expectations for carers of children

a) The Welfare Working Group recommends, given the responsibilities for children involve both parents even when they are separated, that:

i. any changes being considered to child support must reinforce the obligations on non-custodial parents or parents in shared custody arrangements to financially support their children; and

ii. any changes being considered for child support not diminish the financial returns to being in paid work for sole parents moving out of the welfare system.

b) The Welfare Working Group recommends:

i. subject to the Government addressing issues with the current availability and affordability of childcare and out-of-school care which we recommend are urgently addressed, that sole parents receiving welfare:

a. be required to seek part-time paid work of at least 20 hours per week once their youngest child is three years of age;

b. be required to seek paid work at least of 30 hours per week once their youngest child is six years of age;

c. who have a child under three years of age:

- be required to undertake activities which prepare them for a return to paid work, such as developing a return to paid work plan and undertaking employment coaching and other job-related training;

- be able to opt to receive additional transition to work assistance if they agree to look for employment;

d. be exempt from a requirement to seek paid employment where they are providing full-time care and attention at home for a disabled child or an adult who is sick or infirm, such that they would otherwise require hospital or residential care;

ii. that, the work expectations of partners of welfare recipients mirror those of sole parents recipients where there are children; and

iii. that work expectations for carers of children, where those carers are in receipt of welfare payments, be regularly reviewed and updated to broadly reflect wider community parental employment patterns.

Recommendation 6: Work expectations for people who are sick or disabled

The Welfare Working Group recommends that work expectations for:

a) people who are sick or disabled should be based on the presumption, until determined otherwise, that people can undertake paid work;

b) people who are sick or disabled should be based on an assessment of their current and expected future work ability and have tailored expectations for people to prepare for and enter paid work;

c) people with permanent and severe impairment should be based on their aspirations and capacities to enter paid work and benefit from community participation; and

d) people with terminal illness, carers of the sick and infirm and people with demonstrable impairment, should be fast tracked to a long-term support stream.

Recommendation 7: Assessing what a person can do

The Welfare Working Group recommends:

a) that medical certificates issued by general practitioners be replaced with ‘fit notes’ that should focus on information about what work the person can do and that:

i. guidance be provided to general practitioners regarding criteria for certification;

ii. an independent review of the match between ‘fit notes’ and general practitioner records be required to assist general practitioners to provide better information and ensure the integrity of the information provided in ‘fit notes’; and

b) the assessment system is developed to make use of the existing and developing information systems and other infrastructure within the health and ACC system, including the single electronic transferable patient record, which can be used pro-actively to identify issues that might impact on employment, subject to appropriate confidentiality requirements being met.

Recommendation 8: Conditions for young people receiving assistance

The Welfare Working Group recommends:

a) that all young people 16 and 17 years of age who receive assistance would be required to be fully engaged in either education, training or paid work, or a combination of these;

b) that there be sufficient availability of teen parent units, or other suitable supported education services, to ensure all teenage mothers continue with their education;

c) that young people under 18 years of age who are eligible for assistance:

i. be required to live with a responsible adult or in an adult supervised setting;

ii. for 16 and 17 year old sole parents, be required to undertake parenting and budgeting programmes and that their welfare payments be managed as part of this process until these programmes have been completed and participants have demonstrated that they can manage their budget themselves and support their children; and

iii. for 16 and 17 year olds who are not sole parents, their welfare payments would be paid to the responsible adult, or agent (such as a community organisation).

Recommendation 9: Signals, expectations and consequences of not meeting obligations

a) The Welfare Working Group recommends that the system of reciprocal obligations be improved to better support a focus on paid work by:

i. making clear information publicly available about the expectations within the welfare system to encourage people to help themselves get into employment, rather than seek welfare assistance;

ii. providing clearer information to recipients at all stages of interaction with the system about their job search and other obligations; and

iii. providing clearer communication about the consequences if recipients do not meet their obligations.

b) The Welfare Working Group recommends that:

i. recipients who do not meet their obligations would be subject to:

a. graduated reductions in their welfare assistance of:

- 25 per cent of their payment for a first failure;

- 50 per cent of their payment for a second failure;

- 100 per cent of their payment for their third failure; and

- a 13-week stand-down for a fourth or any subsequent failure;

b. a minimum stand-down period of two weeks for each failure, before payment be restored after re-compliance activity has been undertaken;

ii. obligations be effectively enforced, with transparent monitoring and reporting of the number and duration of stand-downs and reductions imposed;

iii. for recipients with dependent children, additional monitoring be undertaken and there be requirements to ensure the interests of children are safeguarded; and

iv. a credible work for welfare scheme be established, in order to test the willingness of a small group of recipients to comply with their job search obligations, such as in situations of six months on welfare for no apparent reason, or earlier if there are successive work test failures. The work for welfare scheme could require a recipient to engage in a compliance activity for a period. Criteria need to be developed to guide the application of this policy.

Recommendation 10: Substance abuse

The Welfare Working Group recommends that:

a) either failing or refusing to take an employment related alcohol or drug test be regarded as not complying with the job search obligation, with associated consequences, and that this expectation be clearly communicated;

b) subject to the Government addressing long-standing issues with the availability of drug and alcohol services (which we recommend be addressed as a matter of urgency) a person who fails or is likely to fail a drug or alcohol test due to drug or alcohol dependence, be offered the option of voluntarily agreeing to drug and alcohol treatment. Refusal to accept this offer would be a failure to meet job search obligations; and

c) in circumstances where a person’s drug or alcohol dependence is endangering his or her well-being or the well-being of children, management of their welfare payment be put in the hands of a responsible third party, or another form of income management, until the drug or alcohol issue is resolved.

Recommendation 11: Addressing incentives for parents to have additional children while on welfare

a) The Welfare Working Group recommends that ready access to free long-acting reversible contraception be provided for parents who are receiving welfare.

b) The majority of Working Group members recommend that where a parent has an additional (second or any subsequent) child while receiving assistance from the welfare system (except where they are pregnant at the time of coming into the welfare system):

i. expectations to look for work should begin once the youngest child reaches 14 weeks old, in line with current paid parental leave provisions and subject to the availability of affordable childcare and out-of-school care, except where there is already a child under three years of age. In that case the person’s job search obligations would be determined by the elder child’s age; and

ii. Government monitors the effect of this policy. If it is not effective, Government should consider whether further financial disincentives are necessary, including that parents not qualify for any additional financial assistance through the welfare system for any additional children born whilst in receipt of welfare, other than access to emergency assistance.

Chapter 4: Active and co-ordinated support


Most people in the welfare system will be able to find paid employment with minimal support. For others, the type and level of services and support they need will depend on the employment related barriers they may face. The level of support that should be available depends on what is shown to be effective, and for whom. Our preliminary estimate is that about 10 per cent of people are at high risk of long-term welfare dependency and should be provided with more intensive support.

An active work-focused welfare system recognises the importance and value of being in a job, and that people should take responsibility for finding and remaining in paid work. Consistent with this, people receiving welfare who undertake substantive tertiary study should be supported through the student support system.

Supports and assessment processes need to be responsive to Māori if they are to be effective. They also need to cater for other groups in the community, but especially for those who are disadvantaged or over represented in the welfare system, including Pacific people, migrants and refugees.

Recommendation 12: Encouragement to maintain or locate paid work rather than receive a welfare payment

The Welfare Working Group recommends that the welfare system:

a) before people need to apply for a welfare payment:

i. make more information available to general practitioners about the benefits of work in recovery and rehabilitation;

ii. adopt an approach modelled on ACC’s Better@Work scheme for people in paid work who become sick; and

b) when people apply for welfare assistance and before payments commence, through a combination of job search expectations and support, focus on applicants finding paid employment in the first instance, rather than automatically receiving assistance (except where the expectations are modified in line with Recommendations 5 and 6 above).

Recommendation 13: Assessing ability to work and accessing necessary supports

The Welfare Working Group recommends:

a) that the work-focused welfare system be supported by a new assessment process:

i. which involves a simple tool to assess immediate work expectations and guide investment in supporting people out of the welfare system;

ii. which streams:

a. most people who enter the welfare system to a ‘jobseeker stream’ which focuses on self-directed job search;

b. smaller numbers into either a ‘transition to work stream’ through which they could access a continuum of employment support services from ‘light-touch’ to intensive; or

c. those assessed as permanently having no employment expectations into a ‘long-term support stream’;

iii. which provides a more comprehensive assessment for jobseekers who have not located work after six months, using detailed functional and vocational information about their work ability, in order to determine whether they require additional support;

iv. where comprehensive work ability assessments are being used to determine the appropriate service response for people with the most complex impairments or serious ill-health;

b) that assessment processes be responsive to Māori, by being culturally appropriate, holistic in design and have whānau-driven solutions where possible; and

c) that assessment processes be sensitive to the diverse characteristics and cultural backgrounds of New Zealanders including Pacific people, migrants and refugees, and to the importance of family/whānau structures.

Recommendation 14: Public and private sector employment support

The Welfare Working Group recommends that:

a) employment support and programmes be rigorously selected on the basis of improving employment outcomes and therefore reducing long-term cost (the forward liability), and expenditure be continually re-directed to programmes that are most effective in meeting this objective;

b) funding be increased for active partnerships between employers and delivery agents (for example, through the Industry Partnerships and other effective private and non-for-profit sector models) and consideration be given to:

i. incentives to encourage employers to provide on-the-job training, such as through tiered training wages;

ii. short-term subsidies for long-term welfare recipients;

iii. facilitating employers to work with education providers to provide NZQA approved training programmes that combine classroom time with on-the-job training alongside experienced older employees; and

c) these partnerships with employers also be used to create opportunities for disabled people to enter paid work.

Recommendation 15: Areas where there are few jobs

The Welfare Working Group recommends:

a) that the existing Limited Employment Locations policy be maintained and implemented effectively so that people with job search obligations cannot move to specified areas if there is little prospect of finding paid work;

b) that the provision of positive incentives (for example, meeting relocation costs) to encourage people to move from low employment to high employment regions should be trialled and evaluated in some areas to assess their effectiveness; and

c) that if these positive measures prove to be unsuccessful, then the policy on addressing unemployment in areas where there are few jobs should be revisited.

Recommendation 16: Support to undertake tertiary study

The Welfare Working Group recommends that the current disincentives arising through the difference in accommodation assistance between the student support and welfare systems for sole parents be addressed, to enable them to move out of the welfare system and undertake tertiary study through the student support system.

Recommendation 17: More targeted approach to early childhood education (ECE) and childcare funding

The Welfare Working Group recommends that:

a) the current Taskforce on Early Childhood Education consider ways to improve the availability and affordability of childcare and early childhood education services for lower paid families and people on welfare, including reprioritising some of the existing ECE expenditure;

b) the provision of ECE services support carers of children within the welfare system to enter paid work by ensuring the total hours of fully subsidised care reflect the hours people work (see Recommendation 5) and the time to travel to and from work. This would often exceed 20 hours; and

c) consideration be given to encouraging development of childcare services that provide flexible hours and arrangements (including home-based services, sole parent co-ops and after-hours services) to make it easier for parents within the welfare system to enter paid work.

Recommendation 18: Expansion of out-of-school childcare services

The Welfare Working Group recommends that:

a) the Ministry of Education urgently develop proposals to facilitate the expansion of out-of-school services on school property, including during school holidays;

b) the Ministry of Education adopt out-of-school programmes which provide educational enrichment activities, including literacy and numeracy programmes for under achieving students, for example interactive computer-based programmes specifically designed to improve literacy and numeracy; and

c) the OSCAR subsidy be increased for low income parents with children over six years of age, in order to reduce the cost of out-of-school care, including in school holidays.

Recommendation 19: Transitional support for childcare

The Welfare Working Group recommends that a time-limited transition to work payment aimed to cover the costs of childcare and other costs for the first six months of work, or two years of study or training that leads directly to employment, be provided to:

a) sole parents with a child under three years who opt to engage in paid work or are in training or study as part of a plan preparing them for work; and

b) sole parents with a child over three years who are assessed as being at high risk of long-term dependence. This payment might form part of a wider package of intensive support available to these sole parents to address significant labour market disadvantage.

Chapter 5: Jobseeker Support


The way the current benefit system is structured in terms of discrete benefit categories creates barriers to addressing long-term welfare dependency. The different expectations which are attached to each category do not reflect current social and labour market trends. We therefore recommend replacing the categorical benefits with a single payment, called Jobseeker Support, set at the single, couple and young person rates for the Unemployment Benefit.

The Welfare Working Group notes that the current payment rates structure is itself problematic. We consider that further reform is needed of the additional amounts that are currently paid in the main benefits, however, consideration of benefit rates is outside our Terms of Reference. We recommend re-structuring the rates so that additional cost components that reflect circumstances currently in the main benefit (for example, for sole parents, people caring for the sick and infirm, widow’s, women alone and for people on the Invalid’s Benefit) be made supplementary payments. This will not change the amount recipients receive, but it will improve transparency and could be adapted in the future to more appropriately reflect additional costs and promote movement into paid work.

In accordance with our Terms of Reference we have reviewed the current supplementary payments – the second and third tier payments. We recommend that, along with the additional cost components that are being brought into the second tier, the current supplementary payments:

• be simplified;

• be more focused on paid work;

• have reduced incentives for couples to separate or increase costs of accommodation to gain higher payment; and

• be more focused on addressing underlying hardship.

We recommend a new unified payment for people needing help with disability costs be developed. We also recommend that consideration be given to replacing the accommodation supplement with a regional supplement, and to replacing the existing range of hardship support (the third tier) with capped discretionary funds targeted at those who have taken all reasonable steps to manage their costs. For third tier payments, we note that the current rule-bound process is bureaucratic and results in payments that are seen as part of an on-going entitlement, rather than an emergency payment to deal with unforeseeable additional costs. This has the unintended consequence of reinforcing benefit dependency.

Recommendation 20: Jobseeker Support

The Welfare Working Group recommends:

a) replacing the existing categorical main benefits, the first tier (Unemployment Benefit, Sickness Benefit, Invalid’s Benefit, Domestic Purposes Benefit, Widow’s Benefit, Independent Youth Benefit and associated emergency benefits) with a single Jobseeker Support payment;

b) that there be a presumption, until determined otherwise, that people receiving Jobseeker Support are required to be actively seeking and available for paid employment, with more tailored expectations where people have significant vocational or non-vocational barriers;

c) that Jobseeker Support:

i. be paid at the current rates of the Unemployment Benefit for single people, couples and people between the ages of 18 and 25. The additional cost components of the current Invalid’s Benefit, Domestic Purposes Benefit, Widow’s Benefit and sole parent rates should be converted into supplementary payments (referred to in Recommendation 21 below). These changes will restructure current rates, but in a manner which retains their total value;

ii. not be available to 16 and 17 year olds. Those 16 and 17 year olds currently eligible for a benefit should instead be supported through assistance paid to their parents or a responsible adult unless they are a sole parent who has demonstrated that they can manage their finances and support their children (in accordance with Recommendation 8);

d) that the way Jobseeker Support is reduced as more income is earned (abatement) be better aligned with paid work expectations. Consideration should be given to:

i. there being as small as possible abatement-free zone (for example $20) for those with paid work expectations;

ii. there being a single abatement rate which cuts out at approximately 30 hours paid work at the minimum wage for a single recipient (for example, a rate of 55 cents in the dollar);

iii. jobseeker incentives (such as tax credits or other in-work financial support) to work 20 hours or more per week, for people with temporary exemptions from work expectations or who have part-time work expectations, such as some sick people or disabled people and sole parents with children under six years;

iv. how the proposals will interact with Working for Families, and ensure that the incentives for people to work 20 hours or more per week are increased; and

v. there being a larger abatement-free zone (for example $150 per week) for those with permanent and severe disabilities to have no work expectations.

Recommendation 21: Supplements

The Welfare Working Group recommends:

a) that the value of additional cost components in current base benefit rates which reflect particular costs associated with disability, sole parenthood, caring, widowhood and being a women alone, be made into second tier supplements as a transitional measure until further policy work is done to simplify rates;

b) that the welfare system move towards having a second tier Disability Payment that combines the current Disability Allowance with the existing additional cost component within the current Invalid’s Benefit rate, comprising:

i. a cost-based Disability Payment for people with part-time work expectations, who have disability related costs; and

ii. a higher, flat-rate Disability Payment for people with a permanent exemption from work expectations, who have disability related costs;

c) that a payment for Carers of the Disabled replace the existing additional cost components of Domestic Purposes Benefit – Care of Sick and Infirm, and the Child Disability Allowance;

d) consideration be given to replacing the existing accommodation supplement for working age welfare recipients, with a regional supplement which:

i. has a higher rate related to accommodation costs for first the six months a person receives Jobseeker Support; and

ii. is then paid at a flat rate that is higher in areas where there are more jobs and housing costs are higher; and

e) consideration is given to replacing the existing third tier payments (including Temporary Additional Support, Special Need Grants and other one-off emergency loans and payments) with a regional capped discretionary fund.

Recommendation 22: Social housing

The Welfare Working Group recommends that the final design of changes to the social housing sector arising from the 2010 Housing Stakeholders Advisory Group report (which would see the current delivery model for social housing transformed so that it is better able to help those most in need) considers the interface with housing assistance provided through the welfare system.

Recommendation 23: Implementing Jobseeker Support

The Welfare Working Group recommends that the detailed design of the new system needs to consider:

a) how existing welfare recipients are transitioned into the new system; and

b) simplifying the supplementary payments so they are more transparent and provide for clearer work incentives.

Recommendation 24: Reducing fraud and abuse

The Welfare Working Group recommends that specific consideration be given to ways to ensure the integrity of the welfare system, and to reduce fraud and abuse, including:

a) a publicity campaign aimed at reducing public tolerance of fraud and abuse, including promoting awareness of the existing Benefit Fraud Hotline;

b) exploring further electronic methods of verifying information;

c) regular reassessments to reduce fraud;

d) clarifying rules about partnership status; and

e) a review of current penalties for fraud and abuse, which date back to 1993.

Chapter 6: Support for sick or disabled people with long-term needs


Many people who enter the welfare system because of illness or disability can engage in paid work, but need support to address their health issues or disability barriers so that they can move into or return to employment. Early access to appropriate health services can facilitate a faster return to paid work. Shortcomings in these health services result in significant welfare costs.

However, a small group of people do have significant ongoing barriers to employment and participation in the community more generally. For this group, reform of disability support services within the welfare system should be consistent with the Ministry of Health’s proposed new model for supporting disabled people. There should be a stronger focus on information and personal assistance through co-ordinators that help disabled people build up and access natural and other supports. There should also be greater emphasis on access to funding, rather than a focus on services, in order to provide more choice and control by the disabled person over the support that is purchased. This will need to be supported by strong accountability arrangements.

Recommendation 25: Support for sick or disabled people with permanent exemptions from work obligations

The Welfare Working Group recommends that:

a) a new model of disability support services within the welfare system should be based on:

i. individualised support plans focused on outcomes;

ii. services allocated with respect to a person’s needs as identified in individualised plans;

iii. more choice for service users of both the types of services and the range of providers, and better information to inform that choice;

iv. greater individual control over what services are purchased and how services are provided, based on a person’s specific requirements rather than being limited by what the service offers;

v. transparently reported outcomes of paid work, participation and well-being;

b) the new individualised support planning process should be consistent with mainstream services and flexible enough to include mainstream services, so that disabled people can opt into mainstream services to support their needs;

c) this model be further developed in partnership with disabled people and employer organisations, including the Employers Disability Network; and

d) the Government should review the allocation of funding for Vocational Services for People with Disabilities and the Mainstream Supported Employment Programme in order to support the provision of disability support services as set out in a) to c) above.

Chapter 7: Promoting the well-being of children


Assistance through the welfare system should aim to improve the well-being of children. Any future policy advice on changes to the welfare system should take account of its impact on child well-being. Once implemented, the actual impact should be monitored and evaluated.

Whilst most parents who receive welfare take their parenting responsibilities very seriously, the Working Group is concerned that a small number do not, and that this puts the well-being of their children at risk. There is a need to ensure that all parents receiving assistance through the welfare system meet their parental obligations which promote the well-being of their children. Increased support, including early intervention programmes, should be available to at-risk families to help parents who are struggling. At the same time, people should be clear that having additional children while on welfare should be discouraged.

For parents who are repeatedly having difficulty managing their budget, using income management by an agent or a payment card to temporarily manage a recipient’s assistance may be warranted, as long as there is a clear objective of assisting the person to manage their income independently in the future.

Recommendation 26: Identify the likely impact of welfare reform on the well-being of children

The Welfare Working Group recommends that there be ongoing assessment of the impact of the welfare system, including any changes in welfare policy, on the well-being of children.

Recommendation 27: Parenting obligations

a) The Welfare Working Group recommends that every recipient receiving a welfare payment who is caring for children be required to meet the following expectations:

i. ensure their children are attending school when they are legally required to;

ii. ensure their children participate in approved early childhood education once their child reaches three years of age; and

iii. ensure their children complete the 12 free Wellchild/Tamariki Ora health checks, which include completion of the immunisation schedule, unless they make an informed choice not to;

and that failure to meet these expectations after efforts to address reasons for non-compliance would result in the recipient’s income being managed by a third-party or some other means, such as a payment card; and

b) The Welfare Working Group recommends that systems be put in place to measure and monitor the compliance with the expectations set out in a) above.

Recommendation 28: Support for at-risk families

The Welfare Working Group recommends that:

a) all teenage parents under the age of 18 and other parents of at-risk families be required to participate in an approved budgeting and parenting programme and that access be provided to these programmes free of charge;

b) an assessment of risk to the well-being of children should form part of a more systematic assessment of long-term risk of welfare dependency and provide a basis for intervention through participation in intensive parenting support;

c) at-risk families and whānau with complex needs be provided with wrap-around services, preferably by single, integrated providers which address family and whānau needs as a whole. These programmes need to be responsive to Māori through culturally appropriate, holistic, and whānau-centred solutions. In addition, they need to meet the needs of other parts of the community, such as Pacific, migrant and refugee communities; and

d) at-risk families participating in an intensive early intervention parenting programme have access to quality early childhood education and childcare services from 18 months of age, as currently provided through Family Start.

Recommendation 29: Mandatory reporting of child abuse

The Welfare Working Group strongly supports the Government’s decision to introduce legislation to strengthen obligations to protect children, including a new offence of failing to protect a child, and recommends that the Government enacts the legislation to put this into effect as quickly as possible and then monitor the responsiveness of Child, Youth and Family to notifications, and give consideration to making reporting of child abuse mandatory.

Recommendation 30: Income management and budgeting support

The Welfare Working Group recommends that in situations where a parent receiving welfare has shown they have a clear need for budgeting support due to repeated difficulties in managing their budget, such that their child or children’s well-being is put at risk:

a) the person be given access to budgeting support services;

b) Government consider using a third party to manage the person’s income, on the understanding that that this income management would cease once the person has demonstrated their capacity to manage their assistance; and/or

c) this may entail provision of a ‘payment card’ programmed for use only on essential items, to ensure that children’s needs are properly met.

Chapter 8: Implementing work-focused welfare


We propose a new delivery agency, Employment and Support New Zealand, to:

• improve outcomes for those at risk of long-term welfare dependency and reduce the costs of welfare dependency (as measured by the forward liability);

• focus on reducing the number of recipients of welfare assistance by at least 100,000 by 2021;

• provide effective support to people at risk of long-term welfare dependency through the use of contracted private and not-for-profit providers, including Iwi, Māori service providers, employers and whānau-centred approaches where these lead to better outcomes; and

• operate respectfully within a clearly defined set of rules about what support welfare recipients and their children can expect to receive and provide access to strong external dispute resolution processes.

The Ministry of Social Development would continue to provide advice on strategic welfare policy, evaluate the effectiveness of welfare settings and monitor the performance of Employment and Support New Zealand. It would also oversee the independent calculation of the life-time cost of welfare (the future liability) and have a crucial role in negotiating across Government to ensure services provided by agencies such as health and education support welfare recipients into paid work.

Recommendation 31: Actuarial assessment of the future costs of welfare receipt

The Welfare Working Group recommends that the new work-focused welfare system should:

a) manage the performance of the system using a regularly estimated actuarial calculation of the forward liability;

b) explore the setting up of a distinct welfare fund to cover the costs of the welfare system, with the ultimate possibility of partially funding the system; and

c) manage the Crown’s contribution to such a fund on a contractual basis that specifies the outcomes expected from any investment.

Recommendation 32: The establishment of Employment and Support New Zealand

The Welfare Working Group recommends that Employment and Support New Zealand be established as a Crown entity to implement the new welfare system, and be:

a) accountable for improving work outcomes for people of working age at risk of long-term welfare dependency and reducing the long-term costs of welfare dependency (as measured by the forward liability);

b) measured against the achievement of a reduction of at least 100,000 people on welfare through increased employment by 2021 (including achieving significant improvements for Māori), a significant reduction in numbers moving onto welfare and an equivalent reduction in the forward liability;

c) required to provide effective, tailored and innovative support to those people at risk of long-term welfare dependency through the use of contracted private, not-for-profit and community responses;

d) expected to develop efficient, effective contracting arrangements for the delivery of support to welfare recipients based on the principles of contestability, focus on outcomes and strong accountability arrangements that reallocates services away from providers who under-perform;

e) expected to provide comprehensive assessments of individual’s work ability, particularly for sick people or people with impairment, and to identify and tailor support and expectations to individuals’ needs; and

f) required to adopt a respectful approach, within a clearly defined set of rules about what support welfare recipients and their children can expect to receive, and provide access to strong external dispute resolution processes.

Recommendation 33: The role of the Ministry of Social Development

The Welfare Working Group recommends that strategic policy and evaluation functions would reside in the Ministry of Social Development, which would also be responsible for:

a) oversight of the independent assessment of the forward liability;

b) monitoring the performance of Employment and Support New Zealand against the forward liability;

c) evaluating the effectiveness of welfare policy settings and administrative performance;

d) leveraging cross-Government initiatives to reduce the need for individuals to use welfare; and

e) providing policy advice to Government on how future policy changes will affect the achievement of the reduction in working age New Zealanders on welfare by 100,000 people by 2021.

Recommendation 34: Employment services

The Welfare Working Group recommends that:

a) employment services be based on contestable, outcome based contracts; and

b) contract referral processes and contract payment structures be designed to financially incentivise contractors to achieve positive outcomes for those with greatest risk of long-term dependency.

Recommendation 35: Developing risk sharing approaches

The Welfare Working Group recommends that:

a) Employment and Support New Zealand pilots and evaluates contracting with consortiums of Iwi, voluntary and private sector organisations to provide payment and employment services in some areas; and

b) these contracts use the forward liability approach to share the risks between Government, employers and local organisations.

Recommendation 36: Implementation

The Welfare Working Group recommends that the reform of the welfare system be:

a) overseen by a Committee of Senior Ministers supported by:

i. a senior officials group with an independent chair; and

ii. an Advisory Board (involving expertise on social policy, welfare delivery, organisational design, managing a forward liability, and Māori and employer perspectives);

b) implemented in a staged approach with Employment and Support New Zealand, focusing initially on young people and working age people newly entering the welfare system;

c) that implementation commence as soon as possible, with the following indicative timeline:

i. establishment of Ministerial Committee and Advisory Board from May 2011;

ii. technical advice and Implementation design completed by September 2011;

iii. Employment and Support New Zealand being set up and expectations for new and re-entering welfare recipients established between July 2012 and January 2013;

iv. Employment and Support New Zealand taking progressive responsibility for all other working age welfare recipients January 2013 to end of 2014; and

d) that ‘grandparenting’ of payment levels be used where this helps implementation, but that work and parenting expectations not be ‘grandparented’.

Chapter 9: A Government and community-wide approach


Addressing long-term welfare dependence cannot be done by looking at issues within the welfare system alone. As well as making changes to welfare policy and delivery, there needs to be a concerted plan across a number of areas of Government activity.

Priority areas for attention include education and health. The number of people leaving school without the skills or aptitude to find or sustain employment is a major concern, and this needs to be addressed as a matter of urgency. Reducing teen births is a high priority, as is assisting teenage parents to give their children the best start in life and preparing the teen parent to move into the workforce. Similarly, reducing the number of people unable to work because of sickness points to the need to address areas within the health system where there are long-standing deficiencies in services. Gaps in mental health, rehabilitation services and managed care services create costs which inevitably show up in the welfare system, not to mention costs to individuals in terms of their well-being. Engagement in paid employment by previous offenders is a key strategy to reduce recidivism.

Stable economic policy and policies which support employment growth are critical, and will provide a platform for employers to play their part. There are strong examples of private sector leadership working with vulnerable groups to reduce barriers to employment which can be learnt from and built on.

Recommendation 37: A Government-wide plan to reduce long-term welfare dependence

The Welfare Working Group recommends a Government-wide plan aimed at reducing long-term benefit dependence be developed with clear targets and practical initiatives. Key aspects of the plan should cover education (including early childhood education and care) and training, health, housing, social services, temporary work and immigration, justice and economic growth. The plan should be developed in partnership with key stakeholders including employer organisations. It should be renewed annually, hold Government agencies clearly to account for performance and be based on evidence of effectiveness.

Recommendation 38: Youth should be a major focus of the Government-wide plan to reduce long-term welfare dependence

The Welfare Working Group recommends that the Government give a high priority to:

a) further investment in early intervention programmes for at-risk families that will reduce the risk of intergenerational benefit dependency;

b) policies that will tackle the high levels of under-achievement in schools, including best practice teaching methods for at-risk students, the development of full services schools, and funding mechanisms that ensure more choice and diversity to better fit children’s learning needs and lift their achievement levels;

c) creating a comprehensive database of at-risk young people aged 12 to 18 to ensure youth services are targeted and monitored appropriately;

d) place increased emphasis on vocational training for young people at risk of benefit dependency, including allowing education funding to more fully follow students; and

e) rationalising and reviewing youth programmes across all Government agencies so as to ensure that young people at risk of long-term benefit dependence receive appropriate support.

Recommendation 39: Reducing teen pregnancy

The Welfare Working Group recommends that the Government give a high priority to developing a programme of initiatives to reduce teen pregnancy, including provision of information about the consequences of teen pregnancy, better youth health services (particularly in schools) and better access to long-acting reversible contraception.

Recommendation 40: Offenders and ex-prisoners

The Welfare Working Group recommends that the Department of Corrections and Employment and Support New Zealand jointly purchase outcome-based services for all people finishing a prison sentence with a clear objective of early re-engagement of recently released prisoners into paid work.

Recommendation 41: Health services to support the new welfare system

The Welfare Working Group notes that significant shortcomings and lack of capacity in core health service provision are putting pressure on the welfare system and recommends:

a) Employment and Support New Zealand and the relevant health agencies ensure that people have access to timely health and disability services where these conditions impact on a person’s ability to work;

b) the Government reprioritise and address capacity shortages in mental health services, and in generic rehabilitation services and managed health care, so as to provide greater emphasis on early intervention and reduce significant unmet demand;

c) health services for young people, particularly around mental and sexual health, be given a priority; and

d) additional investment in drug and alcohol treatment services to support stronger requirements to address substance dependence for people on welfare.

Recommendation 42: Policies to support employment growth

The Welfare Working Group recommends that the Government:

a) ensure that stable macro-economic policy, employment-focused labour market regulation and policies which foster job creation and reduce skill mismatches in the labour market support a strategy of reducing long-term welfare dependency; and

b) undertake an investigation into whether labour marker barriers to employment need to be addressed as part of a strategy to reduce benefit dependency.

Recommendation 43: Promoting responsive workplaces

The Welfare Working Group recommends:

a) that an information package be developed in association with employers to showcase best practice in assisting people with employment barriers to enter and stay in paid employment, and that this include information about the benefits of investing in family friendly and healthy workforce policies;

b) that an investigation of how an early intervention approach that links a person with a illness or disability, with their family doctor and their employer, be carried out for use in the welfare system (similar to the ACC Better@Work scheme);

c) that access to practical advice and support for those leaving the welfare system and entering new workplaces is expanded to enable strong and sustained employment relationships through:

i. the provision of targeted in-work support for at-risk individuals and their employers; and

ii. an expansion in the Employers Disability Network and other services so as to better support employers who are implementing cost-effective health, disability, and family-friendly workplace policies.


[Full report: WWGFinalRecommendations22February2011.pdf]

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