Budget 09: Savings redirected to help the jobless in recession

Social services have escaped relatively unscathed in a Budget which has made numerous small spending cuts to redirect money to redundant workers and others hit by the recession.

A fund called Enterprising Communities, which supports community initiatives to create jobs, is being phased out, saving $5.6 million in the coming year and $9.3 million a year once the last of the current projects ends in 2011.

The training incentive allowance, which pays course fees for beneficiaries, is being restricted to cover only courses below level four on the National Qualifications Framework. This will save $2 million in the coming year and $11.5 million a year from 2012.

"Efficiency savings", announced recently by Ministry of Social Development head Peter Hughes with up to 200 head office redundancies, are listed as making surprisingly small net savings - zero in the coming year, rising to $7.6 million a year from 2011.

But these cuts pale by comparison with previously-announced spending increases for redundant workers, social services struggling to cope with the recession and subsidies for businesses that avoid layoffs by cutting back to a nine-day fortnight.

There have been no changes in benefit rates. Spending on benefits is forecast to be a massive $2.5 billion higher over the five years to June 2013 than in the Treasury's last forecast in December.

Council of Christian Social Services president Shaun Robinson said it could have been much worse.

"You will notice that benefits and entitlements haven't gone down. In this environment you might think that might happen," he said.

"I see this as a reasonably balanced response given that it's only six months since the Government came into power and they got the hospital pass of all hospital passes with the recession."

The Budget concedes there has been more demand than anticipated for the ReStart package unveiled in December for people who lose their jobs. The package was originally allocated $50 million over two years to pay higher family support and accommodation supplement to redundant workers for up to 16 weeks.

Only $3 million is expected to have been spent by the end of the current financial year next month, but this is forecast to rise to $32.7 million in the coming year, with the remaining $14.5 million allocated to 2010-11. The scheme is due to last only two years.

Social Development Minister Paula Bennett announced last week that the Government would earmark up to $40 million in each of the next two years for a "community response fund" to compensate social service agencies for increased demand and reduced funding from charitable trusts.

The Budget shows that the former Labour Government allocated $25 million extra for social services in the current year under its "Pathways to Partnership" programme, rising to $66.8 million extra in the coming year, $119.3 million in 2010-11 and $175.2 million in 2011-12.

National has cut these increases by $12.2 million in the coming year, $57.4 million in 2010-11 and $24.5 million in 2011-12, reaching Labour's original figure of $175.2 million only in 2012-13.

SOCIAL DEVELOPMENT

UP
* ReStart redundancy help+ $32.7m
* Grants to social services+ $29.7m
* 9-day fortnight subsidies+ $11.6m
* Youth justice + $8.7m
* Super held at 66 per cent of wages+ $1.5m

DOWN
* Enterprising Communities axed- $5.6m
* Training allowance restricted- $2.0m