More people into work and out of welfare dependency

Targeting our services to those who need them most and moving people off welfare and into work will lead to better lives for people and their families.

Welfare Reforms

In 2012/2013, we advanced the Government’s programme of welfare reform. This is the biggest fundamental reform in New Zealand’s welfare system in 50 years. The changes include taking a long-term investment approach to getting people off welfare and into work.

The reforms modernise New Zealand’s welfare system. They aim to reduce benefit dependency, to encourage work and self-reliance, and to provide a safety net and support for those who need it. The investment approach directs resources where they most effectively reduce benefit dependency. We are working with a greater number of beneficiaries, supporting them to gain employment.

Social Security (Youth Support and Work Focus) Amendment Act 2012

The Social Security (Youth Support and Work Focus) Amendment Act 2012 was implemented during the year. It introduced new part-time and full-time work obligations for some welfare recipients from October 2012. It also introduced:

• new obligations for people who have another child while on a benefit
• financial assistance to help people with the cost of accessing or removing long-acting reversible contraception.

The changes made in October 2012 provided a platform for the third phase of the welfare reforms that were introduced in July 2013.

Social Security (Benefit Categories and Work Focus) Amendment Act 2013

The Social Security (Benefit Categories and Work Focus) Amendment Act 2013 was passed in April 2013. It introduced changes to the benefit system that took effect from 15 July 2013. These changes aim to make the system more simple and more actively work-focused by:

• replacing multiple benefit types with three new benefit categories (Jobseeker Support, Sole Parent Support, and Supported Living Payment) that focus on work for those who are able to work and support for those who cannot work
• clarifying who is expected to be available for work
• introducing a new approach for working with people in the benefit system who are sick or disabled
• ensuring that some clients who are required to look for part-time or full-time work may be required by a potential employer or training provider to take and pass a pre-employment drug test
• introducing powers to stop benefit payments for clients who have an outstanding warrant for arrest in criminal proceedings
• introducing requirements for parents to ensure children in benefit-dependent homes get the best possible start in life.

The 2013 reforms represented the biggest overhaul of New Zealand’s social security system since 1938.

Preparation for the July 2013 changes

To support the July 2013 welfare reform changes, we focused on developing and testing new delivery processes and changes to our IT systems. This is the single largest benefit-related IT project we have undertaken. It took an investment of $50 million, delivered in three phases over 22 months. The project included:

• 22 newly built or modified applications, including an overhaul to the logic of the benefit payment system
• a team of 340 IT staff working on the change programme
• the first use of fully automated predictive analytics.

Nearly all frontline staff across Work and Income sites received intensive training and development for the October 2012 and July 2013 welfare reform changes and related business learning.

We recorded nearly 30,000 individual staff member attendances at workshops and new training products in connection with the reforms. This includes 114 staff members attending mental health programmes and the induction of new case managers.

Training covered a range of policy changes and IT systems, the introduction of a new service model, and the development of core case management skills.

Investment Approach

We have made significant progress on the development of an investment approach for the benefit system. We have built internal actuarial capability, tested new ways of working with client groups, and completed the first actuarial valuation of New Zealand’s benefit system.

The actuarial valuation allows us to pinpoint the drivers of cost in our system. This means we can reduce long-term social and financial costs by targeting resources and effort where they will have the biggest impact.

As at June 2012, the estimate of the lifetime cost of the current beneficiary population was $86.8 billion. Once wider economic factors outside the Ministry’s control are removed, the decrease in benefit payments of $141 million contributes to a $3 billion decrease in future liability from the previous year.

In 2012/2013, we built our internal actuarial capability so we can analyse and monitor the cohort drivers of benefit liability. We are using evidence to drive our work practices and developing tools to target services more effectively. For example, our new work-focused case management approach gives intensive one-to-one support to clients who need more help than others to gain employment and who are likely to respond well to the extra support.

The actuarial valuation gives an estimate of the future costs of the benefit system. This enables us to understand who needs help, to learn what works, and how to adapt our services.

New service delivery model

We trialled a new delivery model at 24 Work and Income sites across the country. The new model has three levels of service: general case management, work search support, and work-focused case management. The intensity of service a client receives depends on how much support they need to find work. The new model supports the Investment Approach and was rolled out in all sites as part of the July 2013 welfare reform changes.

Getting People into Work

Job Streams

Launched on 1 July 2012, Job Streams is a tailored, no-cost recruitment service for employers that covers wage subsidies, training and in-work support. Job Streams supports jobseekers at risk of long-term benefit dependency by helping them move into work.

Job Streams contains two schemes:

• Skills for Industry offers short, industry-focused training to clients for specific job opportunities
• Flexi-Wage is a wage subsidy that supports those at highest risk of staying on benefit into employment. Flexi-Wage Plus has the added option of using funding for other assistance such as training, mentoring or in-work support that will develop the client to do their job.

Sixty-one per cent of Skills for Industry participants either secured paid employment or left benefit for non-work reasons.

Seventy per cent of clients who received a Flexi-Wage subsidy remained off the benefit.

Partnerships with industries and employers

The Skills for Industry component of Job Streams involves us working in partnership with industry, employers, training organisations and other government agencies to meet employers’ needs and to provide job opportunities for our clients. We have industry partnerships in a range of sectors including retail, hospitality, construction, office administration and contact centres.

Highlights during 2012/2013 included the following.

• Downer, an international infrastructure company, used Skills for Industry funding to train and place nearly 100 Work and Income jobseekers into employment.
• An onsite Work and Income work broker based at Hawkins Construction in Christchurch helped place approximately 100 jobseekers into construction-related positions.
• A partnership with the Wellington City Council and Hawkins Construction has employed 10 former clients on a project to refurbish 2,300 council apartments. We expect more clients to gain work on the project as it expands in 2013/2014.

Benefit numbers

In 2012/2013, we have seen encouraging results from our focus on reconnecting clients with the labour market and moving them off a main benefit.

Working-age benefit numbers reduced by 12,784. The number of long-term clients (those on a benefit for more than 12 months) reduced by 3,599. This is a significant achievement, given that the impact of the welfare reform programme on benefit numbers will not begin to be realised until 2013/2014.

The most significant change was in the number of clients receiving a Domestic Purposes-related benefit. At the end of June 2013, Domestic Purposes Benefit (DPB) numbers were 104,446, compared to 112,260 at the same time last year. Of particular note was the reduction in the number of DPB – Sole Parent clients. For the year ended 30 June 2013, the number of DPB – Sole Parent clients reduced by 7,347 (7.5 per cent). This is the largest reduction since digital recording began in 1996.

The number of clients remaining on a benefit longer than 12 months reduced from 78,158 to 74,559, a decrease of 4.6 per cent.

Progress towards Better Public Services Result 1

We are responsible for achieving Better Public Services Result 1: Reduce the number of people who have been on a working-age benefit for more than 12 months.

During 2012/2013, we have been tracking our progress towards the target for this result:

• Reduce the number of people continuously receiving working-age benefits (new Jobseeker Support) for more than 12 months by 30 per cent, from 78,000 in June 2012 to 55,000 by June 2017.

During the year, the number of people receiving a working-age benefit for more than 12 months reduced by 3,599 (4.6 per cent) to 74,559 at 30 June 2013, compared to 78,158 at the same time in the previous year.

2012–2015 Statement of Intent Performance Indicators

More people into work and out of welfare dependency

Intermediate Outcome – Fewer clients are reliant on welfare

Intermediate Outcome – Fewer clients require benefit long term

1. Total jobseekers (including spouses).

2. Total jobseekers (excluding spouses).

3. The Low Likelihood of Long Term Benefit Receipt (LLTBR) rating is used as a proxy to measure work-ready clients.

4. This replaces the indicator in the Ministry’s 2012–2015 Statement of Intent that reads “the proportion of clients who remain on a working-age benefit for longer than 12 months”. The indicator was replaced to reflect the intent of Better Public Services Result 1: Reduce the number of people who have been on a working-age benefit for more than 12 months.