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>>PM: Good afternoon. Today I‘ve asked social development Minister Paula Bennett
to join me in making an announcement about welfare - the welfare reform programme - so
we'll run through some of the details for you and then take any questions before covering
off the other questions in other areas that you might have. Today I am pleased to announce
that Cabinet has agreed the final details of the next stage of the Government's major
welfare reform programme. As you know, the National-led Government has had a very strong
focus on welfare over the past 3-and-a-bit years. We believe that those who can work,
should work, and we'll help them to do just that. Delivering better public services is
one of the National-led Government's four key priorities for our second term, and welfare
reform is a significant component of this. We've introduced a number of changes to benefits
in 2010, which are already having positive effects. The Future Focus changes include
a requirement that those receiving the unemployment benefit reapply for it after 1 year. That
simple change has seen 12,500 people cancel their benefit, saving $17 million. Of that
number, more than half didn't even complete the application, and more than 3,300 had already
found a job. What this shows is that a more active approach to welfare has the potential
to achieve positive results. With that in mind, last November we announced a comprehensive
reform of the benefit system, building off the recommendations of the Welfare Working
Group. The reform we are undertaking is so comprehensive that Cabinet has agreed we will
action it in two stages. It will be implemented over 2 years, to improve the way help is delivered
to those in genuine need. I think it is clear to almost everyone the current benefit system
is simply not working and not delivering for New Zealand. Three hundred and fifty-one thousand
people, or 13 percent of New Zealand's working-age population, are on a benefit, while 220,000
children live in benefit-dependent homes. This is creating too many vulnerable people
and trapping them into a life of limited choices, poverty, and poor health. Evidence clearly
shows children are better off when their parents are in work and not on welfare. Social development
Minister Paula Bennett will go through some of the finer details of the next stage of
our programme in a moment, but first I want to give you an outline of what's happening.
Next month the first of two bills to bring our welfare reform policies into action will
be introduced to the House. The first bill will broadly do two things. Firstly, it will
make significant changes for young people aged 16 to 18, including teen parents, and
it will also put work obligations on beneficiaries with children as well as those on widows and
women alone benefits. I'm going to talk now about the youth component of the changes,
and after that Paula will talk more about the wider work obligations for beneficiaries.
Young people aged 16 to 17 and teen parents up to 18 years of age will no longer be given
a benefit cheque and left to their own devices. From July we will be funding providers to
work alongside these young people, to make sure that they are in education, training,
or work. We will also help them to make decisions that will put them on a path to employment
and take them off the fast track to a life on welfare. We will help them get re-engaged
in education, and we'll help them to learn to manage their finances better and make good
life decisions. Most young people will be required to be in education, training, or
work-based learning in order to receive either a new youth payment or a new young parent
payment. These will replace the current youth benefits. Some of the basic costs for a young
person, like rent and power, will be paid directly to suppliers, and living costs like
groceries will be loaded on to a payment card that cannot be used to purchase alcohol and
cigarettes. A small in-hand allowance will also be paid direct to that young person.
Another new approach we will take with these young people is that we're going to reward
them when they make good decisions. For example, teen parents will receive an extra $10 per
week when they complete a parenting course. Young people will be able to receive an extra
$10 a week if they complete a budgeting course. Likewise, after 6 months of good attendance
at school or education, they will get an extra $10 a week, although these payments could
be taken away from a young person if they go off the tracks. That means young people
could potentially be getting an extra $20 to $30 a week for making good decisions. The
changes around young people, including teen parents, will be phased in from 30 July this
year. Stage two of our welfare reform will see benefit categories overhauled to ensure
that those who can work, do work. There will also be measures to clamp down on welfare
fraud. I strongly believe that we need a benefit system that focuses on what people can do,
rather than on what they can't do; that challenges people, not treats them as passive recipients
of benefits; and that provides support, training, and opportunities for people to return to
the workforce. That's what our package of reforms is all about, and I make no apology
for wanting New Zealand to be a country of work, enterprise, and self-reliance. I'd also
like to reiterate there won't be any cuts to main benefit rates in our reforms, and
these rates will continue to be adjusted for inflation. Our welfare reform programme is
about making a much more active and investment-focused benefit system. I'd now like to hand over
to the Minister. She'll take you through some details, and then we'll take any questions
you have on welfare and then go back to the other questions after that. Hon Paula Bennett: Thank
you, Prime Minister. I suppose I would like to make the point that we are fundamentally
changing the welfare system. So by the time we get to the end of this reform process,
you will see a very different welfare system. The welfare system was more or less created
in 1935, and we see the Act of the 1960s. The reality is that we need to get it into
modern New Zealand and modernise the system so that it's ready for 2012 and going forward,
and that's what you will see. Social norms have changed, so have people's needs, so has
technology, and we simply have an obligation to make sure that we are keeping up with that
and getting a system that actually works for the people of New Zealand. Underpinning the
whole system will be the investment approach, of which you will see more details in the
second stage of these reforms next year. But we have talked about it before, and I just
want to reiterate it being, really, the fundamental approach to how we move forward on welfare.
So that is looking at that long-term liability. It is quite changing the way in whom we work
with and whom we spend money on. And to give you an example, really, those on the unemployment
benefit are effectively only about 10 percent of the long-term liability - those who are
most likely to cost the most and stay the longest. However, we spend about 90 percent
of our spend on them. We simply have to change that. A big part of what I am talking about
today on the basis and on the back of what the Prime Minister talked about with the youth
payments and the changes to them are some of those changes to those on the DPB and changes
to those with children. We are introducing more support for sole parents than ever before.
The average duration on the DPB is 7 to 10 years, and the DPB costs taxpayers around
$5 million a day. Currently, in those changes that we made 2 years ago, we brought in a
part-time work test for those who had a youngest child at 6 years old. We are taking that back
to 5 years old. So a woman on the DPB or a man on the DPB will now be part-time work
tested when their youngest is 5, and there will now for the first time be a full-time
work test when their youngest is 14 years. That will effect around 11,000 people, who
will now be full-time work tested, so they have children 14 years or over. The whole
changes made to the widows and women alone and the DPB will see changes for about 30,000
on that. That is adding on from the fundamental changes that we made in 2010, now bringing
that back to part-time work testing at 5 years old, and a further full-time work test when
that youngest is 14. Alongside that are changes to widows and women alone. The reality is
that men can't get them. The widows benefit was introduced in 1911, here we are more than
100 years later, and it just makes sense that we bring that in line as well. So we expect
those people to be available for work dependent on the age of their children or if they have
children. Those who do not have children will be work tested full-time, those who have children,
depending on the age, will be in line with the DPB. These will be brought into effect
in October, so the changes that the Prime Minister mentioned, as he said, were July;
the changes to the DPB and the widows and the women alone will be brought in in October.
You will see a second bill coming through in about August this year, with those changes,
really, being implemented in 2013. >>PM: Questions. >>Media: Actually, just picking up on the
changes to the widows, is there any flexibility in the system there for, you know, you can
imagine someone, their spouse dies, a month later their kid hits the age at which they
get work tested to go back to work full-time, and they're still going through the - I mean,
do you have any flexibility around that? Hon Paula Bennett: So, to start with, there will
be a time for people to kind of readjust to new circumstances. We do that certainly around
domestic violence, as well, and people who are getting out of some relationships and
need some time to adjust to their new circumstances. So that will be recognised. It may not be
immediate. Some cases will take a few months, and there'll be some flexibility in that.
As I say, it does also depend on the age of the children. Also, though, that investment
approach is quite going to determine whom they work with, and how, and how much. It
would kind of depend on, at times, the work experience they have and the age and everything
else as to what they do with them. >>Media: Will the investment approach mean more money because
one of the reasons why so much money is spent on those on the unemployment benefit is - I
guess, it's a bit like triage - they're the easiest ones to deal with and the quickest
ones to get back to work? The approach you're taking presumably is to deal with people who
are more difficult to get back to work and will take more time, more investment, presumably.
Hon Paula Bennett: And you're exactly right. So, ultimately, what we do is you would argue
that there would be some that we spend a lot of time and a lot of money on who would have
gone back into work themselves anyway of their own means, and others whom we are spending
nothing on and are getting no support and none of the benefits of actually having external
agencies work with them and the extras that come with that. So, you know, the investment
approach will look at how and who they spend it on and it can look quite different over
a period of time. You'll also see them trialling some stuff. You will have them working on
something and really evaluating whether it works, whether it moves them off, and whether
or not it is the right way to go. It's kind of at a macro, a cohort, and an individual
level, if you like. >>Media: But are you budgeting to spend more money? Hon Paula Bennett: Yes,
we are. So, you know, at the moment we're saying more than $130 million a year is the kind of spend by the time you
get to the end of these reforms, and it's projected to have sort of a billion-dollar
saving over 4 years. >>Media: How much is the allowance for young people - the in-hand
allowance? Hon Paula Bennett It depends on their circumstances. At the moment the independent
youth benefit, the IYB, is around $200 a week. So depending on what their board is - for
some, for example, their food, their board, their power, their everything will actually
be encompassed in that payment. So you would have some on an in-hand allowance and some
on a card, but probably more on the in-hand in other cases. But the sort of maximum around
that in-hand allowance is $50 a week. >>Media: How many “neets” do you expect to be targeted
by the $10-a-week payment? How many of them do you expect to take it up? Hon Paula Bennett: Look,
we think they will, because also remembering the whole thing with the youth package is
that they're going to be really connected to a social service provider. So, for example,
that young person comes in and says: “I want to go on a benefit” or that young person is just
found to be not engaged in education or training or employment, the first thing we're going
to do is attach them to an external provider like the Salvation Army, for example, or one
of your local iwi trusts, or something like that. They will then go through a budget with
that young person and will talk about the expectations coming up. And they will also
get a payment, a milestone achievement payment, if that young person finishes a budgeting
course or a parenting course. So that's quite an incentive for them to walk them through
the process as well. >>Media: How many people do you think will take the extra $10 a week?
Hon Paula Bennett: Well, we've costed it, and if sort of the numbers that we think will,
then we think, let's see, the cost being about an extra $3.8 million a year. There's 3,000,
both teen parents and those on the IYB, and if a reasonable percentage of them take it
up over time, then that's the kind of cost we're talking about. >>Media: It says in
here that sole parents with young children and those on the supported living payment
will be eligible for a financial incentive if they decide to take up work earlier than
expectations require them to. What are those expectations? Hon Paula Bennett: Yes, I'm
delighted with this one. So Cabinet has agreed that actually for those outside of the work
to depend on the economy and how many jobs are created, because under the 9 years of
the previous Labour Government they knocked about 140,000 off benefits essentially on
the back of economic growth and more jobs. If there are no jobs, whatever changes you
make to the welfare system will make no real difference will it? >>PM: For a start off,
all the economic forecasters are predicting strength and growth in the labour markets,
so there's going to be more jobs in the economy off the best information we have. It doesn't
matter really whether you look at Treasury's forecast, the Reserve Bank, or the private
sector economists - that's the first thing. The second thing is, look, I think you saw
over that period of time, you're right, there was volatility and a reduction overall in
the number of people on the unemployment benefit, but there was also an increase in those other
benefit categories. So as the Minister said, that's really one of the big areas of focus
of attention. But you're right - in the end, people have to find work. We're simply making
them - they have to be work-available. At the end of the day, if the jobs aren't there,
well then they continue to enjoy all of their benefits. But the emphasis has got to be,
I think, on us to be an economy which creates work and creates jobs. I think there are jobs
out there. We constantly see that through our Work and Income offices that they're registering
1,000 or 2,000 jobs a week. So there are jobs there. We need to make sure those people who
are currently on benefits some of them are reskilled and retrained so that they can take
advantage of that. Sometimes it's just confidence. You know, they're out of the workforce out
of a period of time, it's hard for them to get back and get a job. They just need some
encouragement to do that. >>Media: Have you set the rates for the success or incentive
fees for the private providers? Hon Paula Bennett: No, we're just about to start the
RFP process for that. But I think this is really important. This is where we're going
to be working with up to 14,000 young people with those service providers, because it's
not just those that are on benefits; it's also those that are not engaged in employment
or training. For some we will be paying a very minimal amount. Quite frankly, they are
not hugely at risk and perhaps just need a little bit of a push in the right direction
or they're just sort of slightly lost. Others have pretty complex needs whether that be
around a family history of welfare dependence, a history with Child, Youth and Family, drug
and alcohol, and they are going to be more expensive and need a lot more time and a lot
more investment. So it's going to look quite different. For some, you could be spending
$500; for others you could be spending several thousand on them. >>Media: Treasury brought
up concerns about the robustness of that system - the contracting - and, actually, the general
sort of set-up. Can you reassure people that that is going to be a robust system for giving
out those contracts and for following it up later on? Hon Paula Bennett: So where Treasury
had it wrong was they presumed that the providers themselves were going to be deciding who was
at risk and who was not and what level of. They won't be doing that, so a fundamental
change as part of these changes is that. We are going to be changing laws so that school
will have to report in real time when kids are not there, when they've dropped out, and
when they are no longer engaged. We're then going to combine that with the information
that we hold on them through the Ministry of Social Development, which at times is pretty
outcomes that we want for these kids. >>Media: So how do you stop someone having a contract
from the department. So it is not like they are just getting regular payments no matter
then we are very confident that we can have different outcomes for them. >>Media: Did
force survey put the “neet” rate for 15 to 24-year-olds at 13 percent. Do you have
when they turn 18. If you are looking at who is on benefit the longest, who has the highest
look, I think we always want it to be significantly lower, but, no, I don't have a particular
to be in line with that. >>Media: You're saying you want to get 46,000 people off - what's
are the projections that we've been working to. >>Media: Sorry, Minister - just, the
not in work, they're not in training, and they're not at school, but we know they're
because we are not sharing information in real time, because we are not wrapping the
any privacy or Bill of Rights concerns been raised about information sharing like that
they have got children or not, and everything else. But they're issues that we're working
the invalids benefit will be moving into - we are just giving it a different category, but
tests on them? Hon Paula Bennett: Well, we announced that last year as well in our welfare
going to be more support to help people go ahead? Hon Paula Bennett: Yes, it will. Particularly
someone in the community, whether it be iwi based or whether it be a community organisation.
- >>Media: Sorry; 60,000 people on the sickness benefit - does that mean that they are all
this current system we've got is sustainable. It's a system that was based on mutual obligation,
is supporting 351,000 New Zealanders of working age, then I think you've got a system that's
they will, as the labour markets tighten up and when they have training. A lot of these
ready and able to carry out that employment. >>Media: You talk about jobs being out there;
about - >>PM: They are certainly going to be better than what someone is earning on
in conditions defined in the First World as being in poverty, they're almost exclusively
specifically looked at those, but I am confident over time, as we saw with Future Focus, where
in the system allowed us to deliver, I think, a better system. In the end, this is a system
next few years. >>PM: We've done that in Christchurch. We put $43 million, I think,
I think if you go and have a look at what is wrong with countries in Europe, you can
mean, obviously, the issue is around when someone is work tested if they have another
deliver better outcomes for people.