Benefit dependency high but reducing

A Stuff article Future welfare bill ‘cut by $7.5b focusses on reductions in spending but it includes some sobering statistics on inter-generational welfare dependency.

Among some of the most startling statistics, are figures which show the effect of inter-generational welfare dependence.

New methods of data collection have allowed the ministry to track trends of young beneficiary recipients whose parents have also collected welfare.

The limited history of the data means only welfare recipients up to the age of 25 could be tracked.

Notable statistics:

  • 75% of the liability is attributable to clients that first entered benefits under the age of 20.
  • 74% of all beneficiaries up to the age of 25 had a parent on the benefit while they were a child
  • 35% had a parent on benefit throughout their teenage years
  • 88% of Youth Benefit clients came from families where one or more parent was also on a benefit
  • More than half of those had an “intensive beneficiary” as a parent – one who was on a benefit for more than 80 per cent of the time their child was aged 13-18
  • a client whose parent was intensively in the system during ages 13-18 was then 48% more likely to remain on JS-WR (job seeker – work ready) after a year compared to those clients matched to a non-beneficiary parent. Their exits were also less sustainable; on leaving the system, they were 11% more likely to be back on benefits within two years.

However these figures are dropping, with Jobseekers down by 8% overall since new initiatives were implemented in 2012 (and the economy improved).

Reforms have helped slash the forecast cost of New Zealand’s total welfare bill by $7.5 billion within the past year, a report says.

The estimated liability of the welfare system is now $69b, down from $76.5b in 2013, according to the latest valuation of the future costs faced by the Ministry of Social Development.

Based on New Zealand’s current situation – which includes rates of employment, inflation and trends of decreasing welfare dependence – that is forecast to drop a further $5.3b by 2019, according to independent consultants Taylor Fry.

From the Key Findings:

Welfare Reforms and Future Focus Impacts included in the Valuation

  • Impact from Welfare Reform changes that occurred from July 2013 onwards, including:
    – Simplification of the benefit structure in July 2013
  • Continuing Impact from Welfare Reform changes that occurred from July/August 2012 onwards, including:
    – implementation of the Youth Service in August 2012
    – introduction of Job Streams in July 2012
    – Bill 1 changes to work expectations for sole parents, partners of main beneficiaries, widows, and women alone effective October 2012
    – A new service delivery model, with the level of case management tailored to clients’ likelihood of long-term benefit receipt
  • Continuing impact from Future Focus changes from September 2010 onwards:
    – a new requirement for Unemployment Benefit (UB) recipients to reapply for the benefit and complete a comprehensive work assessment interview every 52 weeks;
    – introduction of part-time work obligations for parents with youngest child 6 or older
    – new budgeting obligations for clients who repeatedly apply for hardship assistance
  • Additional Future Focus changes from May 2011 to:
    – require Sickness Benefit (SB) recipients to attend a reassessment interview with a case manager after 52 weeks
    – require new SB recipients to undergo additional medical assessment after 8 weeks

Stuff reports that about 30% of the reduction is due to Government/Ministry initiatives:

Of the $7.5 billion reduction, $2.2 billion was directly attributed to reforms within the ministry – both legislative and policy changes, as well as operational changes.

The rest was down to factors outside the ministry’s control, which included the falling rate of unemployment that accounted for a further $2.2b drop. It was forecast that more people would come off benefits and there would be less people applying for them.

Not sold on benefit cuts

I’m uneasy about the policy of threatening to cut benefits in half in parents don’t comply with ‘obligations’. I agree with RRM’s sentiment “war on crap parents who suck at what they do and need a kick up the arse.” But I have my doubts they have the right sort of kick here.

The policy announced by Social Development Minister Paula Bennett yesterday…

… will apply from July to 31,500 children, aged 3 and 4, whose parents are either on sole parent or couple benefits.

Parents will have their benefits halved if they fail to take “all reasonable steps” to:

  • Attend early childhood education 15 hours a week from age 3.
  • Attend school from age 5 or 6.
  • Enrol with a general practitioner.
  • Complete Well Child checks.

And they expect 1300 families to have their benefits cut:

A Cabinet paper estimates that about 2200 beneficiary families might fail the test each year, of which 1300 might fail to comply immediately and have their benefits halved.

I’m all for encouraging and coercing slack parents into meeting basic obligations.

And I think it’s important to try and address problems with kids while they are young, if they can be identified and fixed early it could solve a lot of problems that occur far too often later in life.

But halving a benefit seems to me to be far too draconian. I think we have to find a better way, like incentives for compliance – provided that doesn’t disadvantage the majority of beneficiary parents who do their best for their children.

No benefit if on arrest warrant

Government plans to stop benefits of anyone who has an outstanding arrest warrant has not surprisingly been controversial. Some have hailed it as “why wasn’t this happening already”, some have condemned it as diversionary and another beneficiary bash.

Different sides argue this on Kiwiblog – Half of those with arrest warrants on a benefit – and from here at The Standard. The Standard has just startedtopic on this which will build comments today – Trouble? Re-announce a distraction…

I see Paula Benefit is up to her old tricks again. As the government desperately wants to be doing something other than not attending huis over water rights, it’s up to Paula to pull a benefit bash. But she’s obviously run out of ideas so now we’re re-announcing the old bene-bashes.

Kiwiblog reports on the stats:

“Of the approximately 15,000 people with a current arrest warrant, around 8,200 are on benefits,” says Mrs Bennett.

A lawyer who’s a regular on Kiwiblog comments and answers some queries:

  1. F E Smith  Says:
    September 5th, 2012 at 6:14 pm That low, huh?  I thought it would be a greater proportion than that.By the way, I think it is a fantastic policy.  Should have been implemented years ago.

    Are there checks to ensure the people concerned know that there is an arrest warrant for them?

    In my experience, 98% of people subject of a WTA are fully aware of it.  Of those who weren’t, many at some point were aware of it but then forgot about it.  Often Corrections will be the most likely organisation to apply for a warrant in lieu of service, which means that almost all of those people should be aware that there will be charges coming for not complying with a sentence.

    The person receiving the benefit is the same person with the arrest warrant and not just someone with a similar name

    Well, that does happen, but not very often.  The level of incidence is so low, in my opinion, as to be able to be discounted.

    because now, those crims who have their benefits cut will return to crime to feed themselves.

    Gee, if you believe this then I have a good sized bridge in Auckland to sell you.  In my experience there is very little crime out of necessity, especially the necessity to feed oneself or one’s dependants.  Very, very little.  On the other hands, there are quite a number of people receiving a benefit who continue a life of crime quite happily.


  1. F E Smith Says:
    September 5th, 2012 at 8:30 pm

    FES – how much if any effect will removing benefits be likely to have on offending of individuals?

    Oh, take their benefit off them and they will scream!  I expect it to be quite effective, to be honest.

And another view…

  1. tristanb Says:
    September 5th, 2012 at 6:03 pm

    Inky: Are there checks to ensure the people concerned know that there is an arrest warrant for them?

    No. There’s no checks to ensure it’s not a similar name [strong sarcasm]. WTF?! Plus they’ll find out when they don’t get their benefit! Arrest warrants aren’t things that we develop for no reason (like rashes) – you actually have to commit a crime to get one.

    You’ve just got to find something wrong with this don’t you?

    Lee C: because now, those crims who have their benefits cut will return to crime to feed themselves.

    Yes, starvation is the most common motive behind crime in NZ. That’s why people rape – because they can’t afford a MacAttack. (Also strong sarcasm.)

    You’ve never actually met a criminal have you? They’re arrogant, they get every entitlement they’re “entitled” to and more. They’re nasty and they only care about themselves – that’s why they commit crime – because they don’t consider how traumatic it is to have your windows forced, and have someone rifle through your house before stealing family heirlooms.

And another lawyer on the other side of the argument:


A lot of these warrants will be for unpaid fines where notices have been sent to a former address.

Even a temporary suspension of payments will cause hardship.  Many of these people are on the breadline and a temporary cut will mean they will not be able to make the next week’s rent or grocery bill.

For political gain and minimal savings Bennett intends to make it that much harder for them.  Shame on her.

And another:

Kotahi Tāne Huna

Failure and incompetence are the hallmark of the National Party, so they hide behind these distractions.

The question is: will the Labour Party come out strongly and promise to reverse this and other attacks on New Zealand’s most vulnerable citizens?

Perhaps a promise to fully compensate any person who can show that this policy caused genuine hardship?

Or will we hear about an old guy whose neighbour didn’t pay a fine?

Criminals are “New Zealand’s most vulnerable citizens”?

Don’t forget the “benefit scroungers”

A post from a different country and a different year, but I think it still makes some pertinent points.

I, for one, do not like benefit scroungers – but I really believe that the problem cannot be solved by quick and easy methods. It’s all right to say “make them work” but many of the people who live on benefits have NEVER worked. Sometimes for two or three generations.

Can you tell me who is going to employ them? If I were running a business I wouldn’t employ anyone who has never worked – people with no skills and nothing to offer. It would be a bad investment. So then people say “the government should make them work”. How? By forcing the workshy on to employers? That won’t work either.

As an employer I would bitterly resent being forced to employ someone who has never understood or participated in the work ethic. So should the government create jobs for benefit claimants? Maybe – but that would involve spending huge amounts of taxpayer’s money – at a time of cutbacks and austerity measures.

No… I’m afraid benefit scroungers are with us for some time yet. They are a lost generation.

We need to focus on youngsters who are still at school – to make sure they have the skills to be employable and to become full and valued members of society.

To an extent I agree with that.

Those who least want to work will often be those who employers least want to employ.

And we should be doing as much as we can to ensure people leave scholl with employable skills and productive aspirations.

But we shouldn’t ignore and turn our backs on those caught in benefit traps. Some may well be unlikley to ever get or jobs, we have to accept a level of unemployability, and society has a responsibility to provide support forn them.

There are people stuck on benefits, through less than helpful upbringings, bad choices or bad luck, that genuinely want to better lives for themselves.

We should be willing to help them take steps to greater self sufficiency and ambition.