Budget 2013: Govt allocates $188.6m for welfare reforms

Social Development Minister Paula Bennett. Photo / Mark Mitchell

The Government has allocated a further $188.6 million for its welfare reforms, including funding to contract out some of its highest-needs beneficiaries to external providers to deal with.

The Budget provides for 354 more Work and Income staff as new work-testing obligations come into force under the second tranche of National's welfare reforms. Of those, 214 will be front-line staff in Work and Income offices and Social Development Minister Paula Bennett said it would mean Work and Income would be actively working with 41 per cent of beneficiaries.

The extra funding also included more to contract external providers to work intensively with about 1,000 sole parents and 1,000 people with a health problem or disability to get them ready for work.

There was also funding for an independent expert group to develop a system of testing for work-readiness of people with health problems or disabilities.

The package also includes funding for the "Work Bonus" for sole parents who return to work before they are required to under the new work rules. That bonus means they continue to receive their benefits for a few weeks after returning to work.

Work and Income has estimated the numbers on benefits will fall by between 28,000 and 44,000 by 2017, with estimated savings of up to $1.6 billion.

Finance Minister Bill English said that the Government was willing to put a significant amount of money into resourcing the reforms, saying it would not only save the state money but get people out of poverty and into work.

"By 2015/16 we will be spending $500 million less on benefits than we anticipated 12 months ago. Part of that is because of increased employment opportunities, but also we believe it is the early effects of changes in welfare."

Ms Bennett said that the reforms would extend work testing from 50,000 currently on the unemployment benefit to 129,000 who would be in the Jobseeker Support category.

The reforms which come into effect in July this year will pool beneficiaries into three broad categories, depending on their ability to work. They include the Jobseeker Support for all those who are considered ready and able to work, Sole Parent Support for those whose children are too young for school, and the Supported Living Payment for the long-term ill or seriously disabled who are unable to work.

It will also introduce a range of penalties for beneficiaries who do not meet job hunting requirements, such as failing a drugs test, and those with arrest warrants.

* $188.6 million over four years for welfare reforms. $174 million of that is new funding.

* This is on top of the $287.5 million in 2012 Budget.

* Employ 354 more Work and Income staff, including 214 'frontline.'

* $16.4 million for the 'Work Bonus' for sole parents who return to work before they are required to.

* Funding to contract out case management of some sole parents/ sick/ disabled beneficiaries to external providers.