Treasury reiterates support for welfare reform

 The Treasury's Briefing to the Minister of Finance post 2014 election contained the following:

While New Zealand's overall employment rates are high, some groups are still under-represented in employment. These include those with no or low qualifications, Māori, the disabled and solo parents. New Zealand is particularly unusual in terms of the high proportion of our children in sole parent households and our low employment rates for solo mothers. In many OECD countries solo mothers have similar or higher employment rates than partnered mothers. However, solo mothers have significantly lower employment rates than partnered mothers in New Zealand (see Figure 16). 

These employment patterns matter because paid work is an important route out of poverty and low incomes. Unsurprisingly, around two in three (63%) of the children in low income households are in households where the main source of income is a welfare payment (Perry, 2014). These families often face multiple barriers to moving into work, including low parental education, health and housing issues. However, overcoming these barriers can bring wider personal and social benefits to the parents, their children and the community. These include the long-term economic, social and fiscal costs from the related impacts of joblessness, like crime or anti-social behaviour, and poor housing, health, and educational achievement.

As the pace of economic change continues to intensify, there will be even more pressure on the state sector to support people to cope with change. This will be particularly the case as the combining forces of globalisation and technology continue to increase the pace of change in our economy. There is a debate about the degree to which employment protection, minimum wages and support for some industries and sectors are levers that should be used to try and insulate people from these changes. However, given that employment opportunities will continue to evolve in an increasingly dynamic economy, our focus is more on supporting people to be adaptable, flexible and resilient.

Therefore, the Treasury supports the increasing focus of the welfare system towards investing in those people who, without support, are most likely to be on benefits long-term. Policies that assist people to move out of long-term dependence on welfare and participate in the labour market are likely to improve outcomes for the most disadvantaged, including the most disadvantaged children, as well as enhance economic growth (The Treasury, 2013c and The Treasury, 2013e).