Hardship assistance available as lump sums

Overview

The hardship assistance available as lump sums consists of:

• Special Needs Grants
• Recoverable Assistance Programme payments
• benefit advances.

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Eligibility for lump sum hardship assistance

Special Needs Grants

Special Needs Grants are one-off payments made to those who have an immediate or emergency need and who have no other way of paying to meet that need. Most Special Needs Grants are non-recoverable. Recoverable Special Needs Grants have to be repaid to Work and Income.

Special Needs Grants are available both to people who are receiving main benefits and to people who are not. Residency, income and cash asset tests apply.

As well as lump sums to meet a range of specific expenses, Special Needs Grants include re-establishment grants targeted at particular groups of clients. Clients who may be eligible for re-establishment grants include:

• released prisoners
• refugees
• sole parents who have been victims of domestic violence.

Recoverable Assistance Programme payments

The Recoverable Assistance Programme was introduced on 1 July 1996 to provide recoverable assistance to low-income earners not receiving main benefits. Any low-income earner may apply for assistance with immediate and essential expenses under the Recoverable Assistance Programme.

The Recoverable Assistance Programme was designed to replace most recoverable Special Needs Grants, which had previously been available to people who were not receiving benefits.

This programme provides non-taxable, interest-free recoverable financial assistance to non-beneficiaries, to enable them to meet essential immediate needs for specific items or services. Under this programme, clients may have access to Recoverable Assistance payments up to a maximum value of six weeks' worth of an Invalid's Benefit or the maximum amount allowed for specific cost categories.

In approving a payment under the Recoverable Assistance Programme, Work and Income staff must:

• consider whether such a payment would best meet the immediate need
• investigate other sources of assistance
• investigate the client's ability to repay the payment.

In order to receive these payments, clients must:

• meet income and cash asset tests
• be able to identify a particular immediate need for an essential item or service
• meet residency requirements.

Income and asset limits for qualification for a payment, and the maximum amounts available, vary according to the age and circumstances of the applicant (see table 4.37). In exceptional circumstances, clients may be granted a payment if their cash assets exceed the limit shown in this table.

Table 4.37 Income limits, cash asset limits and maximum payments for the Recoverable Assistance Programme (applicable from 1 April 2008)

Client category	Cash asset limit1	Income limit1,2	Maximum payment1,2
Single person 16-17 years	$921.08	$21,877.44	$1,117.68
Single person 18 years or over	$921.08	$25,144.08	$1,381.14
Married couple with or without children	$1,534.76	$36,519.60	$2,301.96
Sole parent with one child	$1,534.76	$30,510.48	$1,814.40
Sole parent with two or more children	$1,534.76	$32,144.32	$1,814.40

Notes

1. Asset limits, income limits and maximum payments applicable from 1 April 2008.
2. Income limits and maximum payments shown are gross of income tax.

Maximum payments apply under the Recoverable Assistance Programme for a number of purposes. The maximum payments applicable from 1 April 2008 are shown in table 4.38

Table 4.38 Maximum payments from the Recoverable Assistance Programme for specific purposes (applicable from 1 April 2008)

Payment purpose	Status1	Maximum Payment2
Ambulance subscription fees		$200.00
Attendance at funerals and tangihanga		$200.00
Beds, chairs and Tables		$200.00
Bonds and rent		$600.00
Car repairs		$400.00
Car seats and safety helmets		$200.00
Clothing	Single client without children	$150.00
	Married without children	$300.00
	Single or married with children	$400.00
Dentures, glasses, contact lenses and hearing aids		$1,000.00
Drivers licence - renewals	Client aged under 75 years	$44.30
	Client aged 75-79 years	$18.30
	Client aged 80 years or over	$59.30
Drivers licences - new	Learner licence	$79.00
	Restricted Licence	$88.20
	Full Licence	$115.10
Electricity, gas or water		$200.00
Fire, loss or burglary		$1,000.00
Other emergency payments		$200.00
School exam fees		$200.00
School stationery		$200.00
School uniforms (for each dependent child)		$300.00
Telephone installation		$200.00
Tenancy tribunal fees		$20.00
Travel for stranded persons		$200.00
Washing machines and fridges		$400.00

Notes

1. "Married" includes people who are married, living as married, or in a civil union.
2. Maximum payments shown are applicable from 1 April 2008.

Benefit advances

Advance payments of main benefits enable benefit recipients to meet one-off immediate and essential needs that they can't meet from their regular income. The advance is recovered from subsequent payments of the benefit, or through ongoing repayments if the client ceases to receive a benefit.

Since 9 October 1995, benefit advances of up to six weeks' worth of the main benefit received have been available to all recipients of main benefits. At the same date, most recoverable Special Needs Grants provided to people receiving a main benefit were reclassified as benefit advances.

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Trends in the use of lump sum hardship assistance

The annual number of payments of lump sum hardship assistance has increased in the last year, following decreases over the previous three years (see table 4.39). This increase was driven by an increase in the use of non-recoverable Special Needs Grants and by a smaller increase in payments under the Recoverable Assistance Programme. This increase reflects the impacts of a combination of slowing decreases in numbers receiving main benefits, and increased use of benefits such as Invalid's and carer's benefits, which may be received for some time.

Since 2003/2004, around 51% of the hardship assistance payments provided have been non-recoverable Special Needs Grants, while around 43% have been benefit advances (which are recoverable) (see table 4.39).

Table 4.39 Trends in the types of lump sum hardship assistance payments made

Type of lump sum hardship assistance	2003/2004 Number	2004/2005 Number	2005/2006 Number	2006/2007 Number	2007/2008 Number
	Non-recoverable lump sum hardship assistance1
Special Needs Grants (non-recoverable)	395,746	384,880	376,537	346,177	362,505
	Recoverable lump sum hardship assistance1
Special Needs Grants (recoverable)	16,615	16,625	16,854	17,102	19,982
Recoverable Assistance Programme	16,797	21,022	23,347	24,495	28,315
Benefit advances	343,263	339,349	327,147	304,448	299,552
Total recoverable assistance	376,675	376,996	367,348	346,045	347,849
	All lump sum hardship assistance1
Total	772,421	761,876	743,885	692,222	710,354

Note

1. Numbers of lump sum hardship assistance payments recorded in SWIFTT in years ended June.

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Trends in the use of Special Needs Grants and benefit advances

The combined number of Special Needs Grants and benefit advances has increased over the last year following decreases over the previous three years (see table 4.40). This increase reflects both patterns in use of benefits and increased use of hardship assistance among low-income families. Since 2003/2004, there have been decreases in the proportions of Special Needs Grants and benefit advances paid to recipients of unemployment-related benefits (from 20% to 10%), and a slight decrease in the proportion paid to recipients of carer's benefits (from 42% to 38%). There was a corresponding increase in the proportion paid to people receiving sickness-related benefits or Invalid's Benefits (from 25% to 33%). These changes reflect patterns in benefit use.

Table 4.40 Trends in the types of pension or main benefit paid to clients receiving Special Needs Grants or benefit advances

Type of pension or main benefit paid when Special Needs Grant or benefit advance provided	Payments of Special Needs Grants or benefit advances1
	2003/2004 Number	2004/2005 Number	2005/2006 Number	2006/2007 Number	2007/2008 Number
Unemployment-related benefits2	150,148	120,735	103,373	84,681	64,586
Carer's benefits3	317,473	310,574	291,412	260,275	260,799
Sickness-related benefits4	86,756	95,567	101,090	100,369	108,693
Invalid's Benefit	101,025	107,346	110,969	107,643	116,242
Widow's Benefit	7,549	7,060	5,928	5,096	5,193
Transitional Retirement Benefit5	243	0	0	0	0
Emergency Benefit	10,445	10,030	10,164	9,460	8,408
New Zealand Superannuation	22,206	23,380	24,126	24,349	26,633
Veteran's Pension	240	327	317	352	335
No pension or main benefit6	59,539	65,835	73,159	75,502	91,150
Total	755,624	740,854	720,538	667,727	682,039

Notes

1. Numbers of Special Needs Grants and benefit advances recorded in SWIFTT in years ended June.
2. Comprises Unemployment Benefits and Unemployment Benefits - Hardship paid to unemployed people and to trainees, and Independent Youth Benefits.
3. Comprises Domestic Purposes Benefits - Sole Parent, Domestic Purposes Benefits - Care of Sick or Infirm, Domestic Purposes Benefits - Women Alone and Emergency Maintenance Allowances.
4. Comprises Sickness Benefits and Sickness Benefits - Hardship.
5. The phasing-out of this benefit was completed on 1 April 2004.
6. Includes clients receiving an Orphan's Benefit or an Unsupported Child's Benefit.

The total annual value of Special Needs Grants and benefit advances provided each year has increased in the last year following decreases over the previous three years (see table 4.41). The increase in value of payments over the last year reflects a combination of growth in numbers of payments made and increases in the average payment made which were particularly evident among recipients who were receiving a pension or main benefit.

Since 2003/2004, between 42% and 45% of the annual value of Special Needs Grants and benefit advances has been provided to clients receiving carer's benefits (see table 4.41). Over the same period, the proportion provided to clients receiving sickness-related benefits or Invalid's Benefits has increased (from 24% to 32%), with a corresponding decrease in the proportion provided to clients receiving unemployment-related benefits. These changes reflect patterns in benefit use.

Table 4.41 Trends in the value of Special Needs Grants and benefit advances paid, by the type of pension or main benefit clients were receiving

Type of pension or main benefit paid when Special Needs Grant or benefit advance was provided	Value of Special Needs Grants and benefit advances1,2
	2003/2004 Amount($000)	2004/2005 Amount($000)	2005/2006 Amount($000)	2006/2007 Amount($000)	2007/2008 Amount($000)
Unemployment-related benefits3	27,529	22,434	19,610	16,487	13,073
Carer's benefits4	67,474	66,749	65,106	61,556	64,476
Sickness-related benefits5	16,345	18,264	19,768	20,518	22,701
Invalid's Benefit	20,484	21,837	23,112	23,219	25,898
Widow's Benefit	1,668	1,565	1,387	1,255	1,272
Transitional Retirement Benefit6	61	0	0	0	0
Emergency Benefit	2,337	2,311	2,318	2,306	2,121
New Zealand Superannuation	6,177	6,423	7,056	7,489	8,536
Veteran's Pension	74	103	100	114	127
No pension or main benefit7	9,292	10,222	11,280	12,018	14,680
Total	151,441	149,908	149,738	144,962	152,885

Notes

1. Dollar value of Special Needs Grants and benefit advances recorded in SWIFTT in years ended June.
2. Due to rounding, values provided may not add to totals shown.
3. Comprises Unemployment Benefits and Unemployment Benefits - Hardship paid to unemployed people and to trainees, and Independent Youth Benefits.
4. Comprises Domestic Purposes Benefits - Sole Parent, Domestic Purposes Benefits - Care of Sick or Infirm, Domestic Purposes Benefits - Women Alone and Emergency Maintenance Allowances.
5. Comprises Sickness Benefits and Sickness Benefits - Hardship.
6. The phasing-out of this benefit was completed on 1 April 2004.
7. Includes clients receiving an Orphan's Benefit or an Unsupported Child's Benefit.

Between 40% and 42% of the Special Needs Grants and benefit advances since 2003/2004 have been provided to pay for food, while around 36% have been provided to assist in "other emergency situations" (see table 4.42). Over this period, however, assistance for "other emergency situations" has accounted for between 52% and 54% of the total value of Special Needs Grants and benefit advances each year, while food has accounted for around 18% of this amount. This reflects differences in the level of assistance provided for the respective purposes.

Table 4.42 Trends in the purpose of Special Needs Grants and benefit advances

Purpose of Special Needs Grant or benefit advance	Number of Special Needs Grants and benefit advances1
	2003/2004 Number	2004/2005 Number	2005/2006 Number	2006/2007 Number	2007/2008 Number
Advances	9,883	9,398	8,250	7,546	8,040
Disabled Civilian Amputee2	104	59	77	90	161
Food	302,260	299,739	297,485	272,514	285,460
Funeral Grants	23	27	15	12	17
Health-related assistance	14,955	15,752	14,781	13,727	14,629
Home help payments2	13	16	15	12	42
Live organ donors (income assistance)	0	13	48	41	80
Medical and associated costs	94,390	89,518	87,361	83,629	82,822
Other emergency situations	274,081	270,154	262,328	245,339	248,273
Payments for goods or services	904	583	403	272	324
People affected by benefit stand downs	2,808	2,651	1,627	1,038	548
Re-establishment accommodation element	612	637	653	658	647
Re-establishment grants	11,077	11,073	11,558	12,036	11,480
Rural sector (including Civil Defence Emergencies)	267	289	9	6	240
Sickness Benefit/Invalid's Benefit assessment travel	220	192	234	179	100
School education costs	36,835	34,287	30,943	27,290	26,158
Special Education Service3	16	0	0	0	0
Teen payment	0	0	5	0	3
Terminal benefit arrears2	2565	2,139	770	5	0
Transfer to New Zealand Superannuation	626	592	554	417	166
Urgent house repairs and maintenance	3,978	3,704	3,374	2,883	2,787
Youth transition	7	31	48	33	62
Total	755,624	740,854	720,538	667,727	682,039

Notes

1. Numbers of Special Needs Grants and benefit advances recorded in SWIFTT in years ended June.
2. These items were created as Special Needs Grants but were later transferred to other payment codes. Table 4.44 and figure 4.16 below don't include expenditure on these items as Special Needs Grants expenditure.
3. Transferred to other payment codes from July 2002.

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Trends in use of the Recoverable Assistance Programme

Increases since 2003/2004 in the total value of Recoverable Assistance Programme payments made (see table 4.43) reflect increases in both the number of payments made and the average value of payments made.

Table 4.43 Trends in the total and average value of assistance provided under the Recoverable Assistance Programme

Level of assistance under Recoverable Assistance Programme	Level of assistance provided under the Recoverable Assistance Programme
	2003/2004	2004/2005	2005/2006	2006/2007	2007/2008
Amount ($000)1	$ 5,375	$ 6,837	$ 7,907	$ 8,909	$11,024
Number of payments2	16,797	21,022	23,347	24,495	28,315
Average value per payment ($)	$320	$325	$339	$364	$389

Notes

1. Total expenditure on Recoverable Assistance Programme payments in years ended June.
2. Numbers of Recoverable Assistance Programme payments recorded in SWIFTT in years ended June.

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Trends in expenditure on lump sum hardship assistance

Trends in expenditure on Special Needs Grants

Please note that the expenditure data in table 4.44 includes expenditure on recoverable Special Needs Grants that were:

• provided to recipients of main benefits prior to 9 October 1995
• subsequently reclassified as benefit advances.

Expenditure on Special Needs Grants has increased over the last two years, following a slight decrease in the previous year (see table 4.44). The accelerating increase in 2007/2008 reflects a rise in numbers of Special Needs Grants paid, as well as increased rates of payment which also led to the increase in 2006/2007.

Earlier changes in annual expenditure on Special Needs Grants (see table 4.44) reflect:

• increases between 1998/1999 and 1999/2000 in the number of grants provided, including assistance to students awaiting Student Allowances and to people who had made provision for possible disruption in the transition to the year 2000
• the declining real value of Family Income Assistance and of Accommodation Supplements prior to the implementation of the Working for Families package in October 2004
• demand for Special Needs Grants for food, which has remained at the levels reached during transition to the year 2000
• increased levels of other assistance to low-income families available since the implementation of Working for Families in October 2004.

Table 4.44 Trends in annual expenditure on Special Needs Grants

Year ended June	Expenditure on Special Needs Grants1,2,3 ($m)
1995/1996	58
1996/1997	40
1997/1998	39
1998/1999	40
1999/2000	44
2000/2001	46
2001/2002	47
2002/2003	48
2003/2004	50
2004/2005	50
2005/2006	44
2006/2007	46
2007/2008	56

Notes

1. Expenditure on recoverable and non-recoverable Special Needs Grants in years ended June. These figures may differ from expenditure on these grants shown in other sources that are restricted to non-recoverable Special Needs Grants.
2. Expenditure shown is smoothed using a two-month moving average. Special Needs Grants are not subject to taxation.
3. Expenditure data in this table differs from, and should not be cited as, MSD's official measure of expenditure on financial assistance provided to clients.

Monthly expenditure on Special Needs Grants shows significant variation (see figure 4.16), reflecting variation in the number of grants made.

figure 4.16 Trends in monthly expenditure on Special Needs Grants

Notes

1. Includes expenditure on recoverable and non-recoverable Special Needs Grants.
2. Expenditure on Special Needs Grants is smoothed using a two-month moving average. Special Needs Grants are not subject to taxation.
3. Expenditure data in this graph differs from, and should not be cited as, MSD's official measure of expenditure on financial assistance provided to clients.

Benefit advances and Recoverable Assistance Programme payments

Fluctuations in combined annual expenditure on benefit advances and Recoverable Assistance Programme payments over the last few years (see table 4.45), reflect in part a combination of decreased numbers of benefit advances, increased Recoverable Assistance Programmes, the level of assistance provided to those receiving these payments, and other types of assistance available. Decreases in benefit advances in turn reflect reductions in the number of clients receiving main benefits.

The levels of expenditure on benefit advances and Recoverable Assistance Programme payments during and after 1995/1996 (see table 4.45) reflect at least in part:

• the expanded availability of benefit advances from 9 October 1995
• increases in the numbers of clients receiving New Zealand Superannuation, sickness-related benefits or Invalid's Benefits
• decreases in the number of low-income working families seeking and receiving assistance from Work and Income, particularly following the implementation of the Working for Families package in October 2004.

Table 4.45 Trends in annual expenditure on benefit advances and Recoverable Assistance Programme payments

Year ended June	Expenditure on benefit advances and Recoverable Assistance Programme payments ($m)1,2,3
1995/1996	82
1996/1997	88
1997/1998	81
1998/1999	75
1999/2000	79
2000/2001	87
2001/2002	91
2002/2003	103
2003/2004	106
2004/2005	107
2005/2006	109
2006/2007	108
2007/2008	113

Notes

1. Expenditure on benefit advances and Recoverable Assistance Programme payments in years ended June.
2. Expenditure has been smoothed using a two-month moving average. Benefit advances are not subject to taxation.
3. Expenditure data in this table differs from, and should not be cited as, MSD's official measure of expenditure on financial assistance provided to clients.

Significant variation in monthly expenditure on benefit advances and Recoverable Assistance Programme payments (see figure 4.17) reflects seasonal variation in the number of benefit advances made.

figure 4.17 Trends in monthly expenditure on benefit advances and Recoverable Assistance Programme payments

Notes

1. Expenditure on benefit advances and Recoverable Assistance Programme payments in years ended June.
2. Expenditure has been smoothed using a two-month moving average. Benefit advances and Recoverable Assistance Programme payments are not subject to taxation.
3. Expenditure data in this graph differs from, and should not be cited as, MSD's official measure of expenditure on financial assistance provided to clients.