Training Incentive Allowance

Overview

A Training Incentive Allowance provides non-taxable assistance to people undertaking employment-related training that will:

• enhance and improve their work skills
• improve their prospects of gaining sustainable paid employment.

The allowance is available to people who are receiving a carer's benefit, a Widow's Benefit or an Invalid's Benefit, and contributes toward fees, course costs and associated costs (eg transport, childcare) faced by trainees and students. The allowance may be paid as a lump sum, as an ongoing entitlement or as a combination of the two.

In the 1998 calendar year, a number of changes were made to target allowances, in order to ensure the greatest benefit to recipients. These changes included:

• tightening objectives for an allowance, particularly requiring a greater focus on training for employment
• excluding people who had completed a degree in the last five years
• excluding Training Opportunities Programmes and Work and Income courses
• excluding private establishment courses outside the NZQA accreditation framework.

Since 1999:

• the maximum amount of the allowance has been adjusted on 1 April each year, to reflect the change in the cost of living over the previous 12 months
• the historic requirement that allowances not be paid to people who have completed a degree in the previous five years can be relaxed when applicants intend to undertake employment-related courses that are less than 12 weeks long.

From 1 January 2007, in addition to the above criteria, clients were also required to be involved in a course which:

• attracts Student Achievement Component funding or other government funding, as specified by the Tertiary Education Commission's quality and relevance standards for student loans or allowances, or
• is an explicitly specified course that is considered to meet quality and relevance criteria but which is not Student Achievement Component funded, such as Training Opportunities courses, secondary school courses, or university pre-employment courses.

A Training Incentive Allowance may be used to fund education and training that is included as a goal or activity in an individual's Personal Development and Employment Plan. Personal Development and Employment Plans were introduced on 10 March 2003 for people receiving a Domestic Purposes Benefit or a Widow's Benefit.

Please note that information in the 2007 and 2008 editions of this report on numbers receiving allowances is provided on the basis of calendar years (years ended 31 December). In earlier reports, the information was provided for years ended 30 June. This change reflects the fact that entitlement to an allowance is based on calendar years, and that policies and processes are updated on a calendar year basis. The change aims to ensure that information on allowances most clearly reflects their use and the impact of any changes in the relevant policies or processes.

In addition, information in the 2007 and 2008 editions of this report includes allowances received as a one-off payment (eg to pay for textbooks or course materials), and shows numbers of clients granted one or more allowances. Previous reports excluded allowances received as a one-off payment, and showed numbers of allowances granted rather than numbers of clients granted one or more allowances.

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Trends in the number of clients receiving Training Incentive Allowances

The number of clients receiving one or more allowances in a calendar year has decreased over the last four years (see table 4.24). This reflects the impact of both the policy changes outlined above and changes in numbers receiving carer’s benefits and Widow’s Benefits. Since 2004, the proportion of these clients receiving a carer's benefit has decreased from 86% to 81%, with a corresponding increase in the proportion receiving an Invalid's Benefit.

Table 4.24 Trends in the number of clients granted one or more Training Incentive Allowances during years ended December, by types of main benefit received

Type of main benefit received when first Training Incentive Allowance payment in the year was granted	Training Incentive Allowances granted1
	Year ended December 2003 Number	Year ended December 2004 Number	Year ended December 2005 Number	Year ended December 2006 Number	Year ended December 2007 Number
Carer's benefits2	19,374	18,650	16,046	13,635	10,695
Invalid's Benefit	2,685	2,740	2,870	2,635	2,261
Widow's Benefit	349	369	299	253	191
Other main benefits	45	25	0	0	0
Total	22,453	21,784	19,215	16,523	13,147

Notes

1. Numbers of clients with one or more successful applications for Training Incentive Allowance recorded in SWIFTT during years ended December.
2. Comprises Domestic Purposes Benefits - Sole Parent, Domestic Purposes Benefits - Care of Sick or Infirm, Domestic Purposes Benefits - Women Alone and Emergency Maintenance Allowances.

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Trends in expenditure on Training Incentive Allowances

An upward trend between 1999 and 2003 in annual expenditure on Training Incentive Allowances, followed by decreases over the last three years (see table 4.25), reflects a combination of changes in numbers of allowances granted and changes in the rate at which they are paid.

Table 4.25 Trends in annual expenditure on Training Incentive Allowances

Year ended December	Expenditure on Training Incentive Allowances1,2 ($m)
1995	22
1996	26
1997	29
1998	35
1999	31
2000	36
2001	38
2002	35
2003	40
2004	40
2005	35
2006	31
2007	27

Notes

1. Expenditure on Training Incentive Allowances in years ended December. Please note that reports prior to that for the year ended June 2007 showed expenditure on Training Incentive Allowances in years ended June.
2. Expenditure data shown has not been smoothed. Training Incentive Allowances 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 to clients.

The strong seasonal pattern evident in expenditure on Training Incentive Allowances (see figure 4.12) arises because most allowance expenditure reflects lump sum payments made at the beginning of the school/academic year to cover tuition fees.

figure 4.12 Trends in monthly expenditure on Training Incentive Allowances

Note

1. Expenditure on Training Incentive Allowances has not been smoothed. Training Incentive Allowances are not subject to taxation.

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