What is the target?
The Government's target for Result 1 is to reduce working-age client numbers by 25% (from 295,000 to 220,000) and achieve an accumulated actuarial release of welfare liability of $13 billion by June 2018.
Note: An 'actuarial release' is an estimate of the change in long-term liability of the benefit system resulting from changes in the number of beneficiaries and their likelihood of long-term benefit receipt. The measure attempts to isolate the impact of collective Government activity on beneficiary numbers.
Why is this important for New Zealand?
The goal of reducing long-term welfare dependence is to support people to have paid work to improve their lives. Higher participation in the labour market also supports economic growth which has wider benefits for New Zealanders.
A number of people only receive a benefit for a short period of time and move into work or training with little or no support from the Ministry of Social Development. However, there are others who require more support to participate in the workforce and as a result are often missing out on opportunities to better their lives, and those of their their cost of paying benefits to working-age people is over $7 billion a year. The financial cost alone is concerning, but it is only a portion of the entire economic and social cost to New Zealand caused by lost labour productivity and the negative social impacts of people being out of work and on welfare.
What we have achieved so far
Since the Better Public Services targets were set in 2012 (and refreshed for Result 1 in December 2014) we have made good progress in reducing welfare dependence. It is important to consider the reduction in welfare dependence not purely as a total number but also as a percentage of the total population, as it shows any reductions in the wider context of New Zealand, and is less subject to skewing due to population changes.
Currently the proportion of the working-age population dependent on welfare is the lowest since 2007 and the number of beneficiaries is the lowest since 2009.
In late 2014, the Better Public Services Result 1 target was expanded to include a target relating to reduction of the long-term cost of benefit dependence: to achieve an accumulated actuarial release of $13 billion by June 2018.
The accumulated actuarial release for the period from 30 June 2014 to 31 December 2016 is $4.0 billion. Welfare reform policy and operational changes have made significant progress towards Better Public Services Result 1, with the number of beneficiaries falling to the lowest level in eight years. Furthermore, the welfare system’s estimated future cost has reduced by $12 billion since the Better Public Services targets were introduced in 2012.
The beneficiary count and actuarial release forecasts are sensitive to economic conditions, population and demographic changes, and the Ministry of Social Development’s performance in supporting clients into sustainable employment.
What are we doing to achieve this result?
In order to achieve the Better Public Service Result 1 targets, we need the number of main benefit clients to reduce by 67,000 and the mix of clients to be such that the actuarial release increases by a further $9 billion.
In collaboration with other agencies and key partners we will use a social investment approach to understand who, how and when we should target certain clients.
Along with sole parents, we have identified four key overlapping client groups in the working-age population to invest in:
- young people
- people with a health condition or disability
- people with complex barriers to work, work, interventions are working well for many of our clients, such as sole parents and jobseekers, but other client segments are not achieving the same outcomes. Consequently, we will continue to focus on other high liability clients by:
- focusing on early entrants to the benefit system to support young people and other at-risk groups;
- supporting people into work quickly to limit the risk of long-term benefit dependence; and
- providing intensive support for people who have significant barriers to work and are at risk of long-term benefit dependence.
- invest in known effective employment interventions for high-liability clients (e.g. increase the use of contracted services with an emphasis on purchasing for results)
- trial new interventions where there are no known effective interventions (e.g. Oranga Mahi which is a collaboration between the health and social sectors to provide more support to people at risk of long-term welfare dependence), and
- improve business-as-usual activities (e.g. enhanced work-focussed case management).
Case Studies: Result 1
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