One of the most difficult areas to understand in the New
Zealand economy comes from the numbers of people on benefits
and what sort of benefits they are receiving.
New Zealand is going through a transitional period with the
first stage of the Government's welfare reform programme
being implemented and the second stage yet to begin. Social
Development Minister Paula Bennett has attracted both praise
and condemnation for the way she is actively working to make
people less reliant on benefits in the long term. The
minister has said the number of people on benefits in New
Zealand is the lowest it has been at the end of a December
quarter since 2008.
The number of beneficiaries fell by nearly 12,000 in the past
12 months. But with 339,095 people on benefits in New
Zealand, there is much more work to do.
According to figures released by Ms Bennett, 13,600 fewer
people are on benefits than two years ago, which means, on
average, benefit numbers reduced by 131 every week for the
past two years. At present, 53,747 people are on unemployment
benefits but more than 10,000 people went off this benefit
into work in the three months ending December. Large numbers
of students finishing their studies just before summer add
volatility to the unemployment numbers in December - 3000 in
the current quarter in review.
The number of sole parents on the DPB dropped 1.6% in the
quarter to 95,138 and 3221 sole parents went off this benefit
into work in the same period. Changes to the benefit system
implemented from October last year mean sole parents with
children aged over 5 are expected to work part time and those
with children aged 14 and over are expected to find full-time
work. In October, Ms Bennett commented on a small rise in the
number of people receiving benefits in the September quarter.
At that stage, the number of beneficiaries had been holding
between 319,000 and 321,000. Already, the disparity is
One of the concerns of Opposition parties is whether welfare
changes are preventing New Zealanders getting the help they
need. Green Party co-leader Metiria Turei says the latest
benefit figures show that while there was a seasonal increase
in unemployment, fewer people were on the unemployment
benefit compared with last year. It is unusual, she says,
that at the same time that the number of people who are out
of work is rising, unemployment benefit numbers are falling.
The figures may also indicate more families are under stress
as one partner loses a job but is ineligible for the benefit
because the other is working.
Unemployment data has also been confusing politicians,
economists, financial markets and analysts. When unemployment
has been expected to go down, it goes up. When it is due to
go up, it remains flat. Employers continue to talk about
finding it hard to hire skilled labour, yet the unemployment
rate hovers uncomfortably high.
Ms Bennett is adopting an investment approach to refocus the
entire welfare system. In September, the lifetime cost of the
current beneficiary population has been put at $78 billion.
The highest lifetime costs on welfare are those who go on
benefits before age 18. The reforms introduced are aimed at
giving support to those who are capable of working but are
most likely to become long-term welfare dependants without
The old welfare system passively expanded to meet demand,
with interventions aimed almost exclusively at those on
unemployment benefits. Creating jobs in an economy is not the
role of a government; but actively providing incentives to
look for work created by businesses in expansionary mode is a
path worth pursuing. Stronger work preparation provisions are
being applied to the new benefit categories, requiring people
to take reasonable steps to prepare for work and also be
required to undertake specific work preparation activities.
All beneficiaries can be required to participate in
assessments related to their work ability.
Taxpayers spend $22 million a day on welfare payments and
society needs to be reassured the Government is spending the
money where it will have the biggest impact.