More people into work and out of welfare dependency

The Ministry is targeting its resources to those who need it most and moving people off welfare and into work. This will lead to better lives for people and their families.

Implementation of welfare reform

During the year, the Government introduced significant reforms to New Zealand’s welfare system. These reforms aim to reduce benefit dependency and encourage work and self-reliance, while continuing to provide a safety net and support for those who need it.

From July 2013, multiple benefit types were replaced with three new benefit categories. This simpler approach to benefit categories enables us to focus on securing work for those who are able to work, and providing appropriate support for those who cannot.

This is supported by a range of other changes to the welfare system introduced during the year, including:

• social obligations for beneficiaries with dependent children
• a new approach to working with clients with a health condition or disability
• powers to stop benefit payments for beneficiaries who have an outstanding warrant for arrest in criminal proceedings
• pre-employment drug test requirements.

We worked with beneficiaries, employers and non- government organisations to communicate these changes and ensure they were made with minimum disruption.

Benefit numbers are down

In 2013/2014, there was a decrease in the overall numbers of people on benefits. Working-age benefit numbers decreased by 5 per cent from 310,000 to 294,000.

During 2013/2014:

• Jobseeker Support numbers fell by 5.8 per cent
• Sole Parent Support numbers fell by 10.7 per cent
• Supported Living Payment numbers increased by 1.5 per cent.

The increase in Supported Living Payment numbers is in line with the ageing population and more people caring for elderly family members.

Good results have been achieved in reducing long-term welfare dependency. The number of people receiving Jobseeker Support for more than 12 months fell by 9.4 per cent during the year. We are on track to achieve the Government’s Better Public Services target to reduce this number by 30 per cent, from 78,000 in April 2012 to 55,000 by June 2017.

This continues a two-year downward trend and represents a decrease of 13 per cent since April 2012.

Investment approach

The investment approach helps to ensure support is invested where it will make the biggest difference. This approach uses available evidence to inform decision-making and supports learning from observed outcomes. This drives ongoing improvement in the performance of employment and work-readiness investment, to better support people to become less dependent on the welfare system.

We are using an annual actuarial valuation to manage the lifetime liability of the benefit system¹¹ more effectively. This gives us greater ability to identify clients in terms of their projected lifetime patterns of benefit receipt.

The latest valuation of the welfare system, at 30 June 2013, puts the lifetime liability of the benefit system at $76.5 billion – a decrease of $10.3 billion from $86.8 billion in 2012¹². Of the decrease, $4.4 billion can be attributed to our interventions.

In 2013/2014, our investment strategy focused on clients with work obligations who had a medium to high risk of ongoing long-term welfare dependency. We developed targeted trials to help determine which services and support work best to achieve appropriate quality of life or work-readiness goals for this group.

New service delivery model

To support the investment approach, we implemented a new work-focused service delivery model. This enhances how we provide services to help people into work. People’s individual employment needs are considered first, and services are tailored to the level of support they need. This includes:

• intensive one-to-one, work-focused case management to support those who need more help to move into work
• specialist services for those with health conditions or disabilities
• less intensive support for those who are able to find their own way into work or who only need a minimal level of assistance.

We have improved online and self-service options so that people requiring lower-level services can more easily complete appropriate tasks. This enables greater frontline assistance for people with complex needs.

Delivering results with employers

In 2013/2014, we started the rollout of an Employer Strategy. This strategy changes how we work with employers by forming industry partnerships that enable industries, employers and government to work together to maximise job opportunities, particularly for those at the highest risk of long-term welfare dependency. We aim to provide a quality service to businesses and help achieve more successful and sustainable placements.

The strategy aims to create a more nationally consistent approach, while still allowing for regional variation.

We are also responding to unique labour market challenges in the Canterbury region. Labour demand is outstripping supply and innovative approaches are needed to support the Canterbury rebuild. We have been raising awareness of the job opportunities in Canterbury by:

• extending the advertising of vacancies to other regions
• promoting the Canterbury Skills and Employment Hub to people on benefits
• facilitating employer engagement with people on benefits in other regions.

Canterbury continues to lead employment growth, accounting for almost half the total national employment growth over the year. This is reflected in regional benefit numbers, with Canterbury seeing a 17 per cent reduction in Jobseeker Support numbers compared to June 2013.

How we demonstrate our success

Note: Result changes below 1 per cent between 2012/2013 and 2013/2014 are considered not statistically significant.

Footnotes

11: ‘Lifetime liability of the benefit system’ is defined by the actuarial valuation as the cost of all future benefit payments and associated expenses for working-age clients who received a benefit at any time in the 12 months up to the valuation date. The future cost of the benefit system is not a ‘liability’ for accounting purposes and is not reported on the Government’s balance sheet. The purpose of the actuarial valuation is to estimate future cost to allow the Ministry to manage operational decisions and target interventions in order to shift the focus of the benefit system toward improving outcomes over the long term.

12: Source: Actuarial Valuation of the Benefit System for Working-age Adults as at 30 June 2012 and 30 June 2013. These valuation reports and the figures therein have not been subject to audit.

13: The results for this indicator include both part-time and full-time work-obligated clients.