27 Feb 2012

Government sets out timetable for welfare reforms

10:06 pm on 27 February 2012

The Government has set out its legislative timetable for implementing comprehensive welfare reforms.

The first stage includes changes to the Domestic Purposes Benefit, youth benefits and the Widow's and Women Alone Benefit.


Social Development Minister Paula Bennett says the first bill will be introduced in the House in March. Changes to youth benefits, including teenage parents, will take effect from the end of July this year.

Ms Bennett says obligations for people on the Domestic Purposes Benefit, affecting about 11,000 people, and the Widow's and Women Alone Benefit, affecting about 30,000 people, comes into effect in October.

Some beneficiaries with children five years and older will have to be available for part-time work, and those with children aged 14 and over to be available for fulltime work.

A second bill containing an overhaul of benefit categories and a clampdown on fraud will be introduced in July, with changes taking effect in 2013.

Paula Bennett says the Government will initially have to budget more for welfare as the changes include more support, such as childcare and training, for some beneficiaries.

"At the moment, we're saying more than $130 million a year as the kind of spend by the time you get to the end of these reforms and it's projected to have a $1 billion saving over four years."

Ms Bennett says some beneficiaries could receive childcare for more than 40 hours a week.

Youth an important focus - PM

Prime Minister John Key says the current welfare system is unsustainable, creating a cycle of dependence and teenagers are a strong focus of the reforms.

"Young people aged 16 to 17 and teen parents up to 18 years of age will no longer be given a benefit cheque and left to their own devices.

"From July, we will be funding providers to work alongside these young people to make sure that they are in education, training or work."

Important changes

Stage 1 changes for DPB, Widow's Benefit and Women Alone include:

Ensuring that sole parents with children aged 5 and older are available for and supported into part-time work;

Ensuring that sole parents with children 14 and older are available for and supported into fulltime work;

Extending work expectations to women receiving the Widow's and Women Alone benefits and to partners of beneficiaries with children;

Enabling Work and Income to direct people to prepare for work early;

Requiring sole parents who have another child while on a benefit to be available for work after one year, in line with parental leave.

Stage 1 changes affecting young people and teen parents include:

A managed system of payments with essential costs such as rent and power paid directly, with an allowance and a payment card for living costs;

Incentives for Youth Service Providers to help young people into work, education or training. Young people encouraged to undertake budgeting and parenting courses;

Guaranteed Childcare Assistance Payment, so childcare costs do not stop young parents from studying;

Sharing information between government ministries to target school leavers most at risk of coming onto a benefit from age 18.