The Government could be in line to save NZ$1.3 billion a year if it implements the recommendations of a report on reforming New Zealand's welfare system, the authors of the report said today.
The government-appointed Welfare Working Group has released its final report on the system, saying government should aim to reduce the number of people dependent on welfare currently by 100,000 by 2021 from around 360,000 now.
Social Development Minister Paula Bennett said the 100,000 target was "certainly a big call".
"This will take time and we’ll keep talking to New Zealanders about the kind of welfare system they want, that is fair and effective,” Bennett said.
“This Government certainly believes a radical shift is needed, to put the focus on what people can do, not what they can’t do. We have more than 350,000 New Zealanders on benefits and we can do much better by many of them, by backing them into work," she said.
“This will be policy for a recovering economy, we’re planning ahead so that when the jobs become available, people will be ready for them,” Bennett said.
'Change needed'
“The social and economic costs of the current New Zealand welfare system are unacceptably high and the potential benefits of reform are so significant that fundamental change is needed,” Welfare Working Group chairwoman Paula Rebstock said in a media release.
“The Welfare Working Group is confident that if the reform package is implemented effectively, it will have a positive impact on many individuals, their families and the wider community,” Rebstock said.
The report said New Zealand needed to have a more 'work focused' welfare system. Its recommendations included replacing existing benefit categories with a single payment called ‘Jobseeker Support'.
Here is part of the report on the perceived costs and benefits if government were to accept the group's recommendations:
Our analysis indicates that if the reform outlined in this Report were to proceed it could result in:
- a reduction in the numbers of people on a benefit in New Zealand of around 100,000 people (including partners of welfare recipients) by 2021;
- an expected cost of between $215 and $285 million per year in additional services;
- a reduction in the forward liability from around $47 billion to around $34 billion by 2021;
- annual net savings of around $1.3 billion per annum by 2021; and
- higher employment, lower poverty, reduced inequality, better economic outcomes and improved outcomes for children, young people, Māori, disabled people, those who are sick, and other key at-risk groups.
Look at minimum wage?
Meanwhile the report recommended government "undertake an investigation into whether labour marker barriers to employment need to be addressed as part of a strategy to reduce benefit dependency".
The Government's move this month to raise the minimum wage from NZ$12.75 to NZ$13 has drawn condemnation from various people, mainly on the right, arguing the move will raise the labour costs of employers, making it more expensive to take on new workers.
'Don't need to wait for labour market improvment'
The Welfare Working Group's report said there had been concern from some that welfare reform should not proceed because the overall labour market remained challenging.
"It is important to acknowledge that the unemployment rate in 2011 is higher than it was in the mid-2000s and that many people are finding it hard to find jobs. However, the evidence suggests that requiring active and effective job search significantly improves the chances of people finding work (see Chapter 10)," it said in the report.
"It should be noted that before the recent economic downturn, when many firms were reporting serious difficulty in finding workers at all skill levels, 10% of the working age population were on welfare," it said.
"Even in 2008, when there was high and rising unemployment, there were more than 300,000 new hires from job openings in each quarter. It is critical that the welfare system prepares and positions jobseekers for the opportunities when they emerge."
(Updates with Bennett comments, Annette King video, more from report, video of Social Development Minister Paula Bennett)
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