2015 Valuation of the Benefit System for Working-age Adults

This is the fifth valuation of the future cost of New Zealand’s working-age benefit system. It includes:

• An estimate of the total future cost over the lifetime of current beneficiaries
• Analysis of changes over the year, and their impact on the future cost of benefit receipt
• Detailed behavioural information about lifetime patterns of benefit receipt
• Analysis of characteristics associated with higher risk of long-term benefit receipt
• Break-downs of the estimated future cost by client group, by region, and by payment type
• Projected future changes to the client base and the liability

The 2015 report values the lifetime cost of approximately 555,000 working-age clients who received income support in the 2014/15 fiscal year; nearly one fifth of New Zealand’s working-age population. The valuation sees that Welfare Reform continues to have an impact on benefit dynamics – particularly for Sole Parents and Work-Ready Jobseekers – but also that such impacts are stabilising as the changes become embedded.

As in previous years, the valuation includes analysis of characteristics that influence long-term benefit receipt. For the first time, it incorporates cross-MSD and cross-agency data to explore how vulnerability during childhood and youth – measured through contact with the Child, Youth and Family (CYF) care and protection and youth justice services, and criminal history – measured through contact with the criminal justice system, influence benefit pathways.

It’s important to note that this is not a valuation of the CYF or Corrections systems, but an enhancement of the welfare valuation analysis using the new information. New analysis this year also looks at clustering of risk factors, and brings a new perspective to the analysis of intergenerational benefit receipt introduced last year.