23 Mar 2010

Government unveils welfare reforms

7:43 pm on 23 March 2010

The Government has unveiled a number of changes to the welfare system, which the Social Development Minister says aim to break the cycle of welfare dependency.

Prime Minister John Key and the Minister, Paula Bennett, announced the reforms at Parliament on Tuesday afternoon.

The changes include requiring those who have been on the unemployment benefit for longer than a year to reapply for it and undergo a comprehensive work assessment.

Of the 64,000 people currently on the unemployment benefit, 12,000 have received it for more than a year.

Those who fail their first work test will have their unemployment benefit halved, and continued non-compliance will result in a total suspension of the benefit.

"These new rules will provide a strong signal that the unemployment benefit is a temporary support only, for people who are actively seeking work," Mr Key says.

Other changes

In another key change, two groups of beneficiaries will have to be available for part-time work of at least 15 hours a week.

They are parents on the domestic purposes benefit whose youngest child is six, and people on the sickness benefit who have been assessed as being able to work.

Sickness beneficiaries will be reassessed after a year on the benefit and the Government is also tightening up criteria for hardship grants.

Ms Bennett says the sickness benefit is a temporary form of assistance.

"In fact 9,000 sickness beneficiaries have been assessed as being able to work part-time. We will expect them to do what they can to support themselves. We want to focus on what people can do, not on what they can't."

The Government also wants to introduce a greater range of sanctions that would be used more often.

For example, if someone failed to attend a job interview, their benefit could be cut by half.

A second breach of the rules would result in their benefit being suspended, and their benefit would be cancelled on a third breach.

The maximum penalty for those with dependent children would be a 50% benefit reduction.

Mr Key says the reforms are not about saving money, rather improving outcomes for beneficiaries.

Legislation is expected to be in place before the end of the year.

Salvation Army's concerns

The Salvation Army is concerned about the Government's welfare reforms to one-off payments that beneficiaries can access in financial hardship.

Under the reforms, applicants for the hardship grants are required to complete budgeting activities and prove they've attempted to improve their financial situation.

In extreme cases interviews will be conducted to establish the need for a grant.

However, the Salvation Army's Captain Gerry Walker says people are already under a lot of pressure.

"We've had a 40% increase in people accessing our services in the last 12 months, and they're struggling to survive on rates of benefits currently being paid."

Gerry Walker says people who have exhausted their entitlement through Work and Income are turning to food banks.

'Unlikely' to make a difference

A group campaigning against child poverty says it is not likely the measures would reduce the numbers of people on welfare.

Child Poverty Action Group spokesperson Donna Wynd says a similar policy was introduced by the National Government in the 1990s, then scrapped by Labour.

She says most single parents were already looking for work once their youngest child went to school, so there was no evidence the policy was making a difference.

Bashing beneficiaries - Greens

The Green Party says the changes are unnecessary and amount to beneficiary bashing.

Co-leader Metiria Turei says benefit applicants are already required to undergo a work test and receive support to look for work.

Ms Turei says rather than increasing the bureaucracy, National could use the money to get beneficiaries into jobs.

The Labour Party says the Government should focus on creating jobs, rather than cracking down on beneficiaries.

Labour leader Phil Goff doubts the jobs are available to make the reforms work.

"With 168,000 people out of work, most of them desperate to find work, they've got the wrong focus. They should be focused on creating those jobs, not on forcing people into work when there are tens of thousands of people breaking their neck to find those jobs," he says.