Select Committee on Work and Pensions Written Evidence

Memorandum submitted by the Ministry of Social Development in New Zealand


Overview of the proposed changes

  1.  The Social Security Amendment Bill (the Bill) currently before the House of Representatives introduces a number of legislative amendments to the Social Security Act 1964, which is the enabling statute for the New Zealand benefit and pensions system.

  2.  The Bill is part of a wide programme of work that has been underway since 2003 on support and services, the emphasis of which is on providing the right services and support for people to enable them, where appropriate, to participate in, or prepare for a return to, paid work. Many of the amendments in the Bill align and/or simplify the current system and stand alongside the significant changes in service delivery that are being progressively introduced.

  3.  One of the most significant of these changes is the introduction of obligations for the receipt of benefit, known as "expectations", placed on people in receipt of Sickness or Invalid's Benefits. The introduction of these expectations and the services that accompany them recognises that many people with ill-health and people with disabilities do want to work to some degree. The new system of expectations puts in place a framework that is modern and helps to ensure that all people on benefit have access to the right support to plan their return to work, where this is feasible.

  4.  Improvements are also being made to employment and training assistance. The changes that are being introduced are aimed at simplifying the assistance that is available, making it more flexible and accessible to a wider group of people and more effective in assisting people to find or return to sustainable employment.

  5.  As part of these initiatives the Ministry is working more closely with employers. The development of good working relationships with employers, industry partnerships and work brokerage all play important roles in assisting people to stay in or return to work.

Improvements to service delivery

  6.  The main objectives of the planned service changes include:

    —  providing the right services, at the right time, right from the start

    —  better targeted and more intensive case management

    —  better access to a wider range of employment and training assistance

    —  promotion of the development of services to meet client needs

    —  improved client access to health, rehabilitation, disability support and carer support services

    —  improved support and services for young people aged 15 to 19.

  7.  The diversity of the client groups and the complexity of the issues that people face, mean that it is not possible to rely on a single solution—one size does not fit all. A significant change is the development of three separate services. This means that we can offer people services based on their ability to work, rather than their benefit type, as was previously the case. The services are:

    —  Work Support—for people who are able to work now

    —  Work Development Support—for people who may be able to work in the future with the right support in the right job

    —  Community Support—for people who should not reasonably be expected to plan a return to work in the foreseeable future.

  8.  Delivering case management and employment assistance on the basis of work status/readiness rather than benefit type means that the extent and intensity of individual support is driven by the services and level of support required by the individual not by some preconceived ideas of what the person is capable of doing based on their benefit type.

  9.  In addition to the improvement in services there are a number of other initiatives planned or underway. These include progressive implementation of the Job Search Service for those who are work ready and the development or procurement of appropriate services for people who are planning to return to work in the future.

  10.  The Job Search Service is a 13 week programme that provides structured activities designed to assist those people who are work ready move into work as quickly as possible through intensive job search activity and support. Where additional help is needed the programme ensures that people are able to access suitable employment and training assistance. Those people who are not able to find work within the 13 weeks of the programme and/or who need extra support to find work are assigned a case manager to work with them one-on-one.

  11.  The change in focus for young people that emphasises the importance of 16 and 17 year olds, wherever possible, continuing with their education and training includes a number of planned improvements to service delivery. For example:

    —  intensive one to one case management (including, if appropriate, joint case management between various service providers)

    —  expansion of the services available to young people to include substance abuse treatment

    —  review of the assessment of family breakdown.

  12.  An enhanced service for 18 and 19 year old Unemployment Benefit recipients is also being introduced. This change recognises how important it is to get young people into work as soon as possible after finishing any formal schooling/training that they wish to do.

Legislative changes in the Bill that assist to simplify the system

  13.  The proposals for legislative change fall into two "groupings". The first of these is a number of amendments that align and update some of the current provisions in the Social Security Act 1964. The second group are amendments to support the work-focused system that is being progressively implemented.

Changing requirements

  14.  Requirements on people in the current benefit system lack coherence and a consistent work focus. Instead of a system which presumes that large groups of people are unable to work, a system is proposed where, with the provision of enhanced support and services, most people will be expected to work, or take steps to prepare for work, where work is an appropriate outcome for them.

  15.  Changes to requirements for people receiving Sickness or Invalid's Benefits will support the greater focus on working more actively with people with ill health and disabled people and providing them with the right services and support to participate in the labour market. Many people on Sickness and Invalid's Benefits have indicated that they wish to work or to develop skills that will enable them to work at a later date—the development of services designed to do this is an integral part of the reforms. The proposed changes, extending work-related requirements to Sickness Benefit and most Invalid's Benefit recipients draw on the successful model of engagement and planning used for Domestic Purposes Benefit and Widow's Benefit recipients.

Residence requirements and qualifying child criteria for Domestic Purposes and Widow's Benefits (refer clauses 5 and 6)

  16.  The removal of the qualifying child criteria[118] for Domestic Purposes Benefit and Widow's Benefit means that eligibility in relation to the care of a child will be determined by the applicant meeting the new residency criteria (see paragraphs 17—below), and the child meeting the definition of "dependent child" in the principal Act.

  17.  The eligibility criteria for Domestic Purposes Benefit and Widow's Benefit will also be amended so that people who are caring for a dependent child not their own can qualify for those benefits at the discretion of the Chief Executive and subject to the additional requirement that the child's parents are unable, or in exceptional circumstances unwilling, to support the child.

  18.  Removal of the qualifying child criteria will align and help simplify the benefit structure. People who are caring for a child not their own provide a valuable caring role in society, yet currently they must meet hardship criteria before they are eligible for social assistance through the Emergency Benefit. Widening access to Domestic Purposes or Widow's Benefits will extend financial assistance to these carers.

Eligibility criteria—residence (refer clause 10)

  19.  The current eligibility requirements in relation to residency are complex and differ widely across the various benefits, particularly in relation to period of residence. Many of the differences are arbitrary or reflect out of date assumptions or conditions. The proposed change will simplify the administration of the benefit system and align the residence requirements across all the benefits.

  20.  The current requirements that in order to meet the residence eligibility criteria a person must be a New Zealand citizen or permanent resident; and be ordinarily resident in New Zealand have not changed. The key changes are in the length of time a person has to be resident. These are summarised in the following table.

Benefit type
Current residence rules
New residence rule

Unemployment and Sickness Independent Youth
Must have lived in New Zealand continuously for 2 years at any time
Must have lived in New Zealand continuously for 2 years at any one time since becoming a citizen or permanent resident
Must have lived in New Zealand for at least 10 years
Domestic Purposes (Sole Parents and Women Alone) and Widow's
Period of residence determined through any dependent children or the partnership
Domestic Purposes—(for the Care at Home of the Sick or Infirm)
No requirement

  22.  Refugees who have been granted permanent residence would be exempt from the two year residence requirement. They would still have to be ordinarily resident in New Zealand. People who fail to meet the residence requirements for a main benefit but who are New Zealand citizens or permanent residents and ordinarily resident may, on hardship grounds, qualify for Emergency Benefit.

Income stand-down changes (refer clauses 11, 16, 21 and 34)

  23.  The current benefit income stand-down provisions are complex, formula-based and depend on the family circumstances of the individual. Depending on these circumstances a person can face up to a 10 week stand-down. In practice very few people have more than a two week stand-down imposed. The proposed change to reduce the maximum income stand-down to two weeks for all those benefits subject to a stand-down will considerably simplify the administration of the system and allow applicants for assistance to know "up front" the maximum stand down that they could face.

  24.  The Bill also proposes to extend the current exemption from the stand-down for people applying for Domestic Purposes Benefit who have entered a refuge following a breakdown in their relationship to people applying for Unemployment Benefit, Invalid's Benefit, Sickness Benefit and Independent Youth Benefit in the same circumstances. Extending the exemption to the stand-down to any applicant for assistance entering a refuge removes the present distinction and helps align the current system.

Back-dating of benefit when failure to grant due to departmental error (refer clause 12)

  25.  The current powers that the Ministry has to pay a benefit where a person has not made an application are very limited. The insertion of a specific correction power into the Act not only overcomes the current difficulties but is far more transparent and accessible to people.

  26.  The correction power will allow the Minister to consent to payments of a benefit commencing earlier than the date of application where some error or omission of the Ministry contributed to the applicant not making an application at that time.

  27.  The Minister may delegate the power to consent to the Chief Executive. Decisions taken by the Chief Executive will be able to be reviewed by a Benefits Review Committee and able to be appealed to the Social Security Appeal Authority.

Periods benefits are paid in respect of (refer clause 13)

  28.  The periods that benefits are paid in respect of currently vary depending on the benefit type that a person is receiving. Unemployment, Sickness and Independent Youth Benefits are paid in respect of a 5 day week. Domestic Purposes, Widow's and Invalid's Benefits are paid in respect of a 7 day week. Having two different payment week calculations adds complexity to the current system and is difficult to justify in terms of genuine benefits to people. Aligning the payment period for all benefits (including Emergency Benefit and supplementary assistance) to a seven day or weekly period assists to align the benefits.

Payment to continue for 8 weeks for all sole parents in receipt of benefit (refer clause 35)

  29.  At present only sole parents in receipt of Domestic Purpose or Widow's Benefits can continue to have their benefits paid for eight weeks when they cease to have the care of a dependent child because of a sudden change in circumstances beyond their control. Payment is continued for eight weeks to allow the recipients time to adjust to the change in their financial circumstances. It is desirable to detach the length of time that a benefit can continue to be paid when a person has a change in circumstances from his or her benefit type. This move will mean that all sole parents will be treated the same in this respect and support the broader goal of alignment across the benefit system.

Application process for benefits (refer clause 24)

  30.  The existing benefit application process has been subject to a number of judicial decisions that have altered the original policy intent and resulted in administrative difficulties. This amendment, whilst arguably not a simplification of the system, does reflect current case law and provides a transparent process that is lacking at the moment.

118   These criteria do not recognise children born out of New Zealand as qualifying children for these benefits unless one of a number of exceptions based on the residence of the applicant or his or her spouse or partner applies. Back

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Prepared 26 July 2007