Growth in invalid's benefit under spotlight

Media Release
GROWTH IN INVALID'S BENEFIT UNDER THE SPOTLIGHT
Tuesday, January 9, 2007

In the 1970s around 1% of working age people were receiving a Sickness benefit, an Invalid's benefit or ACC. The percentage climbed to 5% by June 2002. So finds a new report which analyses reasons for the rapid growth of invalid benefit receipt.

Welfare commentator Lindsay Mitchell says, "The report confirms my own observation, that the large increase in numbers on the invalid's benefit cannot be fully explained by growth or ageing of the population, even though those are the reasons most commonly cited by the Minister of Social Development."

"The report finds that more than half of the growth is explained by an increase in the proportion of people aged 15-59 taking up the invalid's benefit. The inflow in all age groups was higher in 2002 than in 1993. Within the 15-59 age group around 60 percent came from other benefits, mainly the sickness benefit. (How many of these had originally been transfers from the unemployment benefit is not examined)."

"The numbers grew, in part, due to the long duration of stay associated with the invalid's benefit, transfers from other benefits and the gap between grants and cessations widening."

"When examining the types of incapacities experienced by people moving onto an invalid's benefit, the report finds that around two-thirds of the growth in inflow rates at ages 15-59 between 1996 and 2002 was associated with mental disorders. Of the total mental disorders, depression accounted for 29 percent. (Doctor's assessment forms have included tick boxes for 'stress' and 'depression' since 1995.) Substance abuse was the highest-ranked incapacity for almost 8 percent. (An individual can have up to four incapacities listed). Musculo-skeletal incapacities, which may be associated with obesity, account for most of the remainder. Cancer and circulatory and nervous system conditions did not contribute to the overall growth of inflow rates."

"The report also finds the rate of growth in inflows was most rapid for Maori and Pacific people - 41% and 36% respectively, compared to 24% of NZ European and other European grouping, although changes in recording and coding may partly account for this. "

"For Maori and Pacific people the growth has been associated with a wider range of incapacities, with schizophrenia being the largest additional contributor for Maori and for Pacific people, circulatory conditions. These ethnicities are also experiencing a greater share of the growth due to chronic disease."

"There is also speculation that the high unemployment of the early nineties contributed as people with ill health and disabilities remained 'at the back of the queue' for new jobs and gradually migrated from an unemployment benefit to an incapacity benefit. My own research has shown this is consistent with other countries which experienced high unemployment during the early nineties, including the UK and Australia."

"Quoting other work, the report suggests that over time joblessness would be measured less as unemployment and more as 'incapacity-related non- participation'."

Mitchell notes, "This, in part, explains our record low 'unemployment' rate while around 11 percent of the working aged population remain on benefits."

Additional information; There are currently around 78,000 people receiving an invalid's benefit. 21 percent are Maori, 4 percent are Pacific people, 53 percent are male. 67 percent are aged 54 or younger.