Break for beneficiaries in welfare reforms

Social Development Minister Carmel Sepuloni. Photo NZ Herald
Social Development Minister Carmel Sepuloni. Photo NZ Herald
Key points

 - Working group recommends complete overhaul of New Zealand's welfare system, saying it is no longer fit for purpose.
 - Government immediately commits to three changes, and says further changes likely
 - Changes include allowing beneficiaries to earn more before having welfare reduced, scrapping penalties for mothers who don't name father of their child, and more support to get beneficiaries into permanent jobs.
 - Some controversial policies unchanged, including requirement for solo parents to return to work

Beneficiaries will be able to earn more without having their welfare cut under reforms announced by the Government today.

It is one of three changes which the Government announced this afternoon, immediately after the release of a major review of the welfare system which concluded that it was no longer fit for purpose.

People on benefits will also get more support in moving into work, with 263 more staff to be employed at the Ministry of Social Development to help them.

And mothers who refuse to name the father of their child will no longer have their welfare cut - a change which the Coalition Government had already committed to when it came to power.

The Welfare Expert Advisory Group recommended a complete overhaul of New Zealand's welfare system, saying it no longer met the needs of the more than 600,000 Kiwis it was supposed to support.

"The level of financial support is now so low that too many New Zealanders are living in desperate situations," the report's authors said.

"Urgent and fundamental change is needed."

It recommended a significant increase to main benefit payments, up to 47 per cent higher than current levels. That would mean a couple on jobseeker support would get $268 each a week rather than $192 each a week.

It was highly critical of the more punitive parts of the welfare system, saying that most sanctions should be dropped because there was little evidence that they worked and were more likely to compound social harm.

It also said the amount of benefit fraud was relatively small and the Ministry of Social Development should only pursue investigations as a last resort.

It recommended getting rid of a large number of obligations and sanctions, including penalties for beneficiaries who fail drug tests or have a warrant for arrest, mandatory assessments for people with disabilities, and requirements for solo parents to return to work when their youngest child is 3.

Social Development Minister Carmel Sepuloni said the Government would make three immediate changes, and further changes were planned.

"Our welfare system is not providing the right support for people in need," she said.

"This is contributing to issues of inequality and hardship which have been long-term problems for New Zealand that this Government is committed to fixing."

At this point, the Government only confirmed it would get rid of one sanction - the penalty for mothers who didn't tell authorities the name of the other parent.

"Around 24,000 children will be significantly better off as a result of this change, with many sole parents' incomes increasing by an average of $34 a week," Sepuloni said.

The change would come into force in April next year and would cost $113.4 million over four years.

Immediate changes

At present, people on the jobseeker benefit can only earn $80 a week before their pay is docked at a rate of 70 cents per dollar earned. That threshold has not changed for 20 years, and the Government said it was a disincentive to work.

The abatement rate will be lifted over the next four years in line with minimum wage increases, and will benefit 73,000 low income individuals and families. It will cost the Government $97m over four years.

Another $76m will be spent on 263 new front line staff to help more beneficiaries into "meaningful" work.

The Government did not commit to rolling back some of the most controversial reforms by the previous National Government, such as making solo parents return to part-time work when their youngest child was 3.

The working group recommended that the threshold be lifted to 6 years old, and that parents be supported but not required to return to work.

There was also no immediate commitment to lift benefit payments, despite the report finding that they did not cover beneficiaries' basic needs.

The overhaul of the welfare system is part of the Coalition Government's confidence and supply agreement with the Green Party.

The Greens wanted all excessive sanctions to be removed - a policy championed by former co-leader Metiria Turei before her resignation in the heat of the election campaign.

Co-leader Marama Davidson said the report created a "roadmap for significant change".

The changes announced today would provide "a solid start on that journey", she said.

"After three decades of neglect, today's announcements are small but necessary steps toward fixing our broken welfare system.

"We know people are struggling and we have a duty to ensure everyone's needs are properly met, and that no one is trapped in poverty."

Children's Minister Tracey Martin said New Zealand needed a welfare system that was fair to everyone and supported child wellbeing.

"We need to ensure all parents and caregivers have the resources and ability to provide the best possible care for their children," she said.

Not fit for purpose

The expert advisory group, which was chaired by former Children's Commissioner Cindy Kiro, criticised nearly every part of the welfare system.

"The current system is based on conditionality including sanctions and is tightly targeted, with inadequate support to meet even basic needs," the group's report said.

"The experience of using the system is unsatisfactory and damaging for too many of the highest need and poorest people. We heard overwhelmingly during our consultation that the system diminishes trust, causes anger and resentment, and contributes to toxic levels of stress."


The system. Is that frontline staff of MSD implementing policy? High needs clients can take a support person. There's undue hostility toward public servants at 'Winz' offices.