Welfare reform: Government announces law changes

The Government will scrap a disciplinary sanction imposed by the former National-led government as part of an "overhaul" of the welfare system.

The sanction cuts income to women and their children if the name of the child's father is not declared. The Government has labelled the sanction "discriminatory".

But a welfare expert advisory group also wanted to abolish sanctions for failing or refusing drug-testing and for breaching arrest warrants - which the Government did not act on.

The announcement followed the public release on Friday of the Welfare Expert Advisory Group's report containing 42 recommendations to improve welfare in New Zealand. 

Social Development Minister Carmel Sepuloni said responding to all 42 recommendations made in the report could "take years", but she said the Government has made "good first steps to improving the system".

Removing the sanction will cost $113.4 million over four years, she said, as part of three pre-Budget announcements that will cost $286.6 million over those years.

Sepuloni claimed National was briefed in 2016 that there was insufficient evidence to support the sanction as it "didn't achieve its initial purpose to get money from the partner that's not named in the birth certificate".

The Government will also be lifting the abatement threshold in line with minimum wage increases - that's the reduction of beneficiaries' payments when they earn more money.

Increasing the abatement thresholds of main benefits over the next four years will cost $97.1 million over those years and will come into effect on April 1 2020.

Social Development Minister Carmel Sepuloni.
Social Development Minister Carmel Sepuloni. Photo credit: Getty

The other Budget announcement was around frontline staff - the Government will allocate funds to employ up to 263 workers over four years to support beneficiaries into "good work".

The Government notably did not implement the report's recommendation to increase benefit levels by up to 47 percent, but Sepuloni hinted that it could happen down the line.

"As we have said, we will be looking at a staged implementation of the report."

'Milestone' for the Greens

The Green Party has welcomed the release of the report and the pre-Budget announcements made alongside it.

The party has a Confidence and Supply Agreement with Labour who promised to work towards overhauling the welfare system, to form the current Government with New Zealand First.

New Zealand First has shown support for the overhaul, with Tracey Martin, a New Zealand First MP and Minister, saying the working group would be a great support to the "much needed overhaul" of the welfare system.

But the Greens' agreement with Labour explicitly says the Government will work towards removing "excessive sanctions" - and the Government's latest announcement only addresses one of them. 

Greens' co-leader Marama Davidson said removing the sanction and increasing the amount people can earn before their benefit is cut "is a crucial step toward delivering on our Confidence and Supply Agreement with the Labour Party".

Former Green Party co-leader Metiria Turei.
Former Green Party co-leader Metiria Turei. Photo credit: Getty

Davidson has followed in the footsteps of former Greens' co-leader Metiria Turei who campaigned on a sanction-free welfare system.

She admitted to lying to government agencies in order to keep receiving money in welfare support to highlight issues within the welfare system, and eventually resigned because of it in August 2017.

Davidson said last year she wanted to continue the campaign, and get benefit rates bumped up by 20 percent - most importantly Sole Parent Support, the modern equivalent of the Domestic Purposes Benefit that Turei cheated on in the 1990s.

The Welfare Expert Advisory Group's report said the current welfare system is based on "conditionality" and is "tightly targeted, with inadequate support to meet even basic needs".

It said the fiscal cost of improving the adequacy and design of income support is estimated to be around $5.2 billion a year.

What else did the report suggest?

The Welfare Expert Advisory Group's report also recommended "urgently" expanding and accelerating efforts to substantially increase public housing on an" industrial scale" and continue efforts to end homelessness.

It recommended increasing the range of home ownership and tenure options for people on low and lower-middle income, and subsidising housing costs for people on low incomes.

"Government needs to increase the variety of home-ownership options, including equity sharing, rent-to-buy state houses, papakāinga housing and other affordable home-ownership products for people on low and low- middle incomes."

Rent-to-buy is one of a range of programmes that fall under the KiwiBuy campaign, touted as a solution to New Zealand's housing crisis, by countering rising rent prices through subsidising home ownership.

The definition of a relationship was also raised in the report. It highlighted how determining whether a 'relationship' exists (whether it's 'in the nature of marriage') is "causing considerable harm".

It said the definition of a relationship is "unfair and does not reflect how relationships actually form", adding that the "financial penalty for partnering is significant and may be unduly influencing partnering decisions".

The group said the welfare system should "not unduly influence the decisions people make about their relationships".

Other recommendations

  • Amend the Social Security Act 2018
  • Make the CEO of the Ministry of Social Development accountable to iwi
  • Make the Ministry of Social Development and Inland Revenue publish yearly reports
  • Remove some obligations and sanctions such as failing or refusing drug-testing and for breaching arrest warrants
  • Assist single parents to return to part-time work when their youngest child is 6 not 3
  • Consider introducing a Living Alone Payment
  • Increase the Family Tax Credit to $170 a week for the eldest child and to $120 a week for subsequent children