Part 5: Future opportunities

We are keen to discuss with you your priorities for your portfolio and the opportunities for further work to address or enhance responses to social issues. This section sets out areas and issues you may seek to address.

Poverty and hardship

In New Zealand, poverty and hardship are about exclusion, because of a lack of resources, from the minimum acceptable way of life in New Zealand

Poverty is not always a fixed state, nor is there a clear boundary between those who are in poverty and those who are not. People experience poverty on a spectrum that ranges from more to less severe, and a persistent or recurring experience of poverty can be more damaging to longer-term outcomes than a more transitory one.

The Ministry helps people who need support in addition to their own resources on either a temporary or a more permanent basis. Poverty and hardship have many causal factors, so efforts to address it must continue to be across multiple fronts including:

• paid employment with real progression opportunities, driven by economic growth and productivity gains
• in-work supports that encourage upward mobility and alleviate poverty among working families
• education, particularly early childhood education but also primary, secondary, and post-school education
• good parenting and healthy home environments
• health, in particular health in early childhood, and parental health
• income support that meets the core objectives of reducing hardship and promoting mobility
• housing that is affordable, healthy, warm and not overcrowded
• joined-up, wrap-around services for the worst problems and the most vulnerable families.

Overall, population rates of income poverty have largely returned to the levels before the Global Financial Crisis. However, for some groups, housing costs are now very high and household incomes have remained broadly static in real terms for beneficiaries, while New Zealand Superannuation, average wages and median household income are all rising.

When thinking about poverty in New Zealand, families with children are a particular concern. Families with children have high poverty rates after housing costs both in historical terms and relative to other age groups, and hardship rates above those for countries with whom we traditionally compare ourselves.

In light of the short and long-term costs of child poverty to individuals and communities and relatively flat trend lines in levels of child poverty and hardship, it is important to continue to make progress in this area. Alleviating hardship for children in the ‘here-and-now’ is an investment to improve life chances and child wellbeing in other domains, and reduces the potential harm and costs (including economic costs) to society. Within this multi-pronged approach, options could be explored to review the adequacy of the existing transfer payments, notably in the case of families with children.

Supporting young people through transitions

Building the resilience of young people as they enter adolescence will improve outcomes

New research is drawing attention to the challenges that young people in the 10-13 age group face as they transition between schools and into adolescence.

Options for providing additional support to these young people and their parents are currently being investigated. Increased resilience will impact on mental health outcomes and youth offending rates throughout the teenage years. Initiatives to support this group fall into three broad areas of focus:

• enhancing parent and caregiver skills
• providing more accessible social and emotional support
• creating opportunities for young people to gain life skills through sport and cultural activities.

Increasing social service support in secondary schools will improve achievement

Education is a critical factor for young people at risk of poor social outcomes. Locating wrap-around services in secondary schools is an effective way to ensure that students are supported to achieve positive educational and social outcomes.

Opportunities exist to review and extend support provided to students by co-locating social services in a broader range of secondary schools. By partnering with the Ministry of Education we can assess how services are designed and targeted to best support young people, families and communities with the greatest needs.

Reducing the impacts of gang membership

Addressing the intergenerational transfer of gang membership will reduce benefit dependency and other poor social and health outcomes

An interagency approach is being developed to address the social, economic and societal impacts of gangs. The focus is on reducing the likelihood of young people joining gangs, improving access and services to treat mental health issues and drug and alcohol addiction, support for victims of family violence, and improving outcomes for the children of gang members who are in prison.

Progress is also needed to improve connections with existing education, skills and employment opportunities for gang members and their families.

Addressing skill gaps

The response to skill gaps in the labour market can be improved by strengthening connections to the education sector

A more buoyant economy provides opportunities to support more people into employment or training. Options include targeting better support and assistance to sole parents, older workers and those who regularly move on and off a benefit through short-term or seasonal employment. This support will help people whose jobs have disappeared with the advent of technology and outsourcing of work, such as in contact centres.

The Ministry is seeking to improve responses to skill gaps in the labour market and continue to support broader Government objectives in the labour market and tertiary education. This work could include:

• working across government on a programme to identify and address persistent skills shortages and contribute to economic growth
• improving the way immigration, labour market and welfare policies work together, to ensure these are cohesive and support New Zealanders having first access to employment opportunities
• examining how the tertiary and welfare systems operate together to improve outcomes for particular groups of people, investigating how target groups move between the two systems, and whether the right incentives are in place to support them to succeed

• influencing and implementing broader government aims in the student support area.

Addressing the needs of rural communities

Some rural communities are declining as a result of internal migration to larger urban centres to access education and employment opportunities

In some areas, migration from rural areas is leading to social isolation and less connection with the wider family unit. It is also increasing the pressure on those remaining to meet rates and other amenity costs. This is compounded by a lack of transport options to access services that are delivered from larger population centres.

Opportunities exist to analyse the specific needs of people who live in disadvantaged rural communities and consider how to improve access to services, education, training and employment opportunities.

Barriers to full engagement in society

Assisting disabled people to experience equal rights of citizenship

Disabled people as a group experience poorer outcomes than their non-disabled peers. The Disability Action Plan ensures disabled people can overcome barriers and experience equal rights of citizenship. Areas of work that are underway and could be further developed include:

• strengthening work programmes to increase the number of disabled people in paid work, and implementing the Health and Disability Long-term Work Programme
• reducing the number of disabled children and adults who are victims of violence, abuse or neglect
• reviewing the current care and support processes for disabled children who are (or are likely to be) subject to out-of-home placements. This might include making changes to legislation, operational policy, operational delivery and/or monitoring and enforcement
• transforming government-funded disability support services by enhancing and expanding the Enabling Good Lives approach, aimed at giving disabled people more choice and control over their lives. Demonstration sites are underway in Christchurch and Waikato.

Sustained collaborative effort is needed to help people to address the barriers they face to fully participate in society

Drug and alcohol abuse are particular risk factors for child maltreatment and family violence. Although the rates of hazardous drinking in 2012/13 (15.4%) had reduced from 2006/07 (18.0%), they are still high. One in four young people aged 15 to 24 is drinking at levels that are hazardous to their health.

New Zealand has one of the highest obesity rates in the developed world. Mental health disorders have increased by 16% since 2007, with those living in the most deprived areas more likely to experience psychological distress and have a diagnosed mental health disorder. Both of these issues impact on people’s health, and their ability to gain employment and contribute to their communities.

Further work could be undertaken to understand the drivers of these issues and to develop effective strategies to address them.

New Zealand Superannuation and retirement income

New Zealand Superannuation represents nearly 50% of the Ministry’s total expenditure

The number of people receiving New Zealand Superannuation is expected to grow from 661,600 in June 2014 to 756,100 in June 2018.

The great majority of older New Zealanders have sufficient income and assets to provide a reasonable standard of living. However, rates of home ownership are falling and hardship is increasing among older working-age people. This indicates that in the future more older New Zealanders may face constrained living standards, as well as greater health and housing needs.

Various policy options could be considered to address the sustainability and cost of New Zealand Superannuation and to adapt it to reflect contemporary social norms and structures. This includes exploring options relating to the age of eligibility, the unit of entitlement and the basis of indexation. Policy settings that impact on retirement income more generally could also be considered including:

• exploring asset accumulation and options for decumulation, such as home equity release and the use of KiwiSaver or other funds to purchase an annuity, along with the taxation rules applying to these products
• reforming supplementary assistance to provide a single means-tested add-on for New Zealand Superannuation recipients who have high costs relative to their income/assets
• reviewing the ACC/Superannuation interface and existing policies
• reviewing the use of trusts and benefit eligibility - the growing use of trusts is making it more difficult to administer some benefits, particularly the Residential Care Subsidy, and addressing the issues of equity and fairness if trust income is not assessed appropriately.

Options exist for improving international social security agreements

New Zealand has a range of international social security agreements and we are increasingly being approached to enter into additional agreements and to make our policies more consistent with other countries. A key feature of these discussions is our Direct Deduction policy. The principles behind this policy are sound, but it is still unpopular with other countries and with those affected by it.

There are policy and technical issues related to this policy that could be addressed. For example, one of the most unpopular aspects of the policy is that, where one partner of a couple has an overseas state pension that is more than their New Zealand Superannuation, the excess amount is deducted from the New Zealand Superannuation entitlement of the other partner.

The growing movement of people between countries and immigration and emigration trends provide an opportunity to consider whether there are alternatives to social security agreements that could provide better outcomes for people who have lived and worked in two or more countries during their working life. The movement of people between Australia and New Zealand has particular implications for the social security agreement with Australia. This agreement is complex, making it difficult for people to understand and expensive to administer. There may be a case for a fundamental review of this agreement.