Minister hails NZD12bn reduction in future welfare costs

29 Jan 16

The latest valuation of the welfare system in New Zealand has found that government reforms have contributed to a NZD12bn reduction in the future lifetime cost of the system over the last four years.

Social development minister Anne Tolley welcomed the fall in projected welfare costs, which she said equated to claimants spending 900,000 fewer years on benefits over their working lifetimes compared to pre-reform expectations.

Reforms included streamlining payments into three main benefits, putting a greater emphasis on work within the system and increasing the conditions of benefits receipt.

Extensions to the time before someone is eligible for welfare were also introduced, as were provisions to make people reapply for their benefits after set time periods and cancelling the benefits of recipients who go on holiday without approval.

People who turn down a job offer also have their welfare immediately cancelled for 13 weeks, while people with children who do the same have their welfare halved for 13 weeks.

In addition, single parents with a child between the ages of 0 and 5 are now required to do work preparation activities.  

Tolley said the reforms had a significant impact in helping more people into work as well as providing substantial savings to the taxpayer. Over three quarters of the reduction in future years on benefits can be attributed to policy and operational changes, she added.

“All regions have seen reductions to their liability, except Canterbury which has had very low unemployment, and with large numbers of people still going to the region coupled with a slowdown in the rebuild this year, has seen its liability rise marginally,” she stated.

“The valuation is an important tool for ensuring we are providing the right support to those who need it most, and that the support is working to help them lead successful lives.”

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