Thursday, June 26, 2014

Inter-generational welfare dependency

The statistical evidence for inter-generational welfare dependency is thin on the ground. But MSD has just released its Benefit System Performance Report (what a couple of weeks for reports).

Here's one finding that caught my eye:

About 90% of new 16-17 year old beneficiaries have been supported by main benefits at some time in their childhood
A lot of focus has rightly gone on young entrants because they have the greatest forward liability. Not just because of their age but the factors that contribute to their early reliance. When I delve into the actual report I may find data about just how long these newcomers had spent on their parent's benefit.

Some other findings:

  • While the number of people on Jobseeker and Sole Parent benefits has also been declining at a faster rate than the 2012 valuation projected, there has been a higher than expected rate of transition from Jobseeker – Work Ready to both the Jobseeker – HCID state and to Supported Living Payment.
  • A higher than expected rate of transfer to Supported Living Payment is also occurring from both Jobseeker – HCID and Sole Parents.

Essentially what this is describing is migration from work-tested unemployment benefits to non-work-tested disability benefits. It's the backlash to setting tougher work expectations.

The Future Focus changes were introduced from September 2010. They require reapplication for unemployment benefit every 52 weeks and place part-time work obligations on sole parents whose youngest child is aged five or more and full-time obligations if youngest child is aged 14 or more.
Both of these initiatives have led to a shorter average time spent on benefit for Jobseeker and Sole Parent clients of approximately one and a half weeks. There is no indication to date of an increase in the time spent off benefit for either group, which suggests greater focus is required to ensure off benefit outcomes are sustained.

More underwhelming results. If, for argument's sake, a sole parent is currently spending an average of 8 years dependent, the reforms have shaved off just a third of a percent.

Generally benefit numbers fell between the reporting dates - June 2012 and June 2013. Hence the estimated liability cost falls. But most of the decrease is in Jobseeker and Sole Parent and these are often the easy- to- place people. Many would have been temporarily unemployed due to the GFC. The 2014 (295,320 in March) numbers are still above what they were in March 2008 (255,754).

1 comment:

Anonymous said...

Essentially what this is describing is migration from work-tested unemployment benefits to non-work-tested disability benefits.

Just goes to show: it's not a reform, it's just renaming.

Even ACT isn't offering welfare reform - they claim their budget keeps all the welfare spending we have now.

Real welfare reform will terminate benefit liability for a large fraction (if not all) of the benefit-dependant population. The test that such reform is starting to be effective is that Australia "closes its doors" - revokes visa-free access for NZ Citizens.

But frankly that's a small price to pay for ending welfare, which is around 80% of government spending.