Monday, January 30, 2006

State of the Welfare Nation (2)

Under this man's watch welfare spending continued to grow. The big drop in reported unemployment has not been reflected in total welfare spending. And as a percentage of the total welfare bill, Super spending declined.

To use the technically correct terminology, Social Assistance Benefits Paid in Cash has risen every year since 1994;

1994 10,279
1995 10,657
1996 11,075
1997 11,616
1998 12,192
1999 12,429
2000 12,483
2001 12,681
2002 12,838
2003 13,110
2004 13,352
2005 13,448


Nigel Kearney said...

Do you know where all the money has gone? I have noticed before that welfare spending keeps going up while Labour is claiming success in reducing unemployment.

Are there more people on benefits, are the benefits more generous, or is it all being spent on increased bureaucracy?

Brian Smaller said...

"Are there more people on benefits, are the benefits more generous, or is it all being spent on increased bureaucracy?"

Yes, Yes and Yes.

Lindsay Mitchell said...

Nigel, there are fewer working-age people on benefits due to the drop in unemployment. Down by about 70,000 over 5 years. DPB is down slightly but invalid and sickness benefits up sharply. There is cost of living indexation, more going on special benefit because basic benefit rates are not enough to live on apparently. Paid parental leave is new and super grows steadily. The number of MSD staff continues to rise so we can assume the costs of bureaucracy have increased BUT those costs are not included here. Departmental and non-departmental expenses cost around another $1.2 billion

Anonymous said...

And as a percentage of the total welfare bill, Super spending declined.

Actually, this statement isn’t true, according to the figures that Lindsay supplied, which I found on Statistics New Zealand’s website, in the downloadable tables associated with this information release:

Crown Accounts Analysis (Year ended 30 June 2005)

Table 5 – Social Assistance Benefits Paid in Cash and in Kind – disaggregates the total expenditure by benefit type.

Cash payments to Superannuitants increased from 42% of total expenditure in 1999 to 46% in 2005.

Also of interest:

Total benefit expenditure increased by 21% between 1994-1999 and 8% between 1999-2005

Superannuitant payments increased by 4% between 1994-1999 and 18% between 1999-2005.

Expenditure on all other benefits (Unemployment, Domestic Purposes, Sickness, Disability Allowance, Invalids, Accommodation Supplement) increased by
39% between 1994-1999 and 1% between 1999-2005.

In other words, based on these figures, most of the increase in expenditure on social assistance benefits between 1999 and 2005 is due to increased expenditure on New Zealand Superannuation. The mostly likely reason I can think of is that the larger numbers of people born after the Depression ended are now reaching 65.

Lindsay Mitchell said...


My statement that Super had decreased as a percentage of total welfare was based on a comparison between 1994 and 2005, the range of figures available. In my later comment, however, I gave steadily growing super expenditure as one reason for the overall increase.

Most of the increase in welfare expenditure between 1999 and 2005 is due to super AND invalid/sickness benefits, which rose by 83 percent. DPB grew by only .03 percent but again, expenditure has always increased since that benefit was introduced.

Yes, reported unemployment is down. Yes, we've had a strong economy. Our welfare expenditure should have declined - considerably. It didn't. What is going to happen in a downturn?

Lindsay Mitchell said...

Beg your pardon, lest I provoke a further quibble. The cost of the DPB actually dropped by half a percent between 2004 and 2005. Let's hope a trend is starting - and that the trend speeds up somewhat.