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Future Focus changes to the welfare system

This Regulatory Impact Statement has been prepared by the Ministry of Social Development.

It provides an analysis of options to make specific policy changes to the rules, obligations and incentives provided to welfare recipients to help more people move into work.

The key assumption underpinning this analysis is that work will become available for people as the economy recovers and that the implementation of the work-test can be matched to the employment capacity in local labour markets.

There is no research currently available which accurately quantifies the size of the behavioural response from these changes in policies. This prevents estimates, with the degree of accuracy required, from being made of the number of people who will move from benefit to work over a year, as a result of the proposed changes. The inability to determine firm numbers of people shifting from benefit to work as a result of these changes is due to the difficulty of separating out the effect of the policy changes from the effect of changes in other influences such as economic and labour market settings (e.g. employment growth, minimum wage increases). Some broad estimates of magnitude can be made based on previous experiences of similar policy changes. The Ministry of Social Development will also monitor and evaluate the package of changes to determine, to the extent possible, the impact of these changes.

The options have been developed under an assumption that the overall package of changes must be affordable within current budget constraints.

The policy options being considered are not likely to have direct effects on imposing costs on businesses, impairing private property rights or market competition that the government has said would require a particularly strong case before regulations are considered. There may be small indirect impacts on some businesses where the changes impose a cost on an individual e.g. removing childcare subsidies from some high income families or requiring an additional medical certificate for Sickness beneficiaries.

Businessman in a boardroom.


Regulatory Impact Statement

Future Focus changes to the welfare system

Mar 2010

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