Increasing workforce reduces benefit costs

The drive to get transfer more people from benefits to jobs has begun to pay dividends, Social Development Minister Paula Bennett has said.

Quoting the latest Welfare System Valuation Report, she said that the Government’s current lifetime liability stood at $76.5 billion as at June 2013, which was less by $10.3 billion compared to the previous year.

“Work & Income exceeded expectations by getting more people off benefit, and with less people coming into benefit the liability has been reduced by about $4.4 billion. This translates to benefit payments being $180 million lower than expected for the year,” she said.

The Report also showed a general trend of people seeking more jobs than benefits over the past year.

“Every week I hear from sole parents expressing gratitude to Work & Income Case Managers who helped them find work. We provide childcare assistance, training, assistance with CVs, handling job interviews and help with the actual work search,” Mrs Bennett said.

Welfare Reforms

The value in investing about $500 million in welfare reforms over the last two Budgets is evident in the results, she added.

According to Mrs Bennett, Welfare Reform and the White Paper for Vulnerable Children were among the two most significant work programmes undertaken by her Ministry.

“These work programmes are interlinked. If we do not get things right for vulnerable children, the chances are extremely high that they will end up trapped on welfare later in life,” she said.

The June 2013 Valuation Report showed that 62% of 30-39 year olds currently receiving benefits first went on welfare as young people. They constituted almost 80% of the total liability for this group because they had become long-term dependents.

“It was really interesting that two thirds of people who went on benefit aged 16 or 17 also came to the attention of Child, Youth and Family as children and 90% lived in benefit dependent homes as children. While most people are supported by welfare for a short period of time, the long-term liability approach allows us to focus support clearly on those who are likely to be long-term dependent,” Mrs Bennett said.

Circuit breaker

Admitting that breaking the cycle of intergenerational welfare dependence is hard, she said that some children had grown up with parents, grandparents, aunts and uncles and cousins all relying on benefits.

“Reliance on welfare is ingrained for many and we have to turn that around, but the good news is that we can and we are doing just that,” she said.

Mrs Bennett said that she spoke to a sole mum who got herself a job after more than 20 years on the DPB.

“Her grown up children were so inspired that they also got employment and they are all earning more and living with pride,” she said.

Youth Services introduced in 2012 allows specialist providers to help young people meet clear obligations, manage their money and gain independence.

Early results in the valuation are showing higher rates of these young people going off and staying off benefit, Mrs Bennett said.

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