Cash bait to get beneficiaries into work

The welfare system has encouraged people with ill-health and disabilities to stay on benefits, the Government says.

Greater cash incentives to work are needed to reverse the downward trend, it says.

It also wants more tools to try to prod women on the domestic purposes benefit back into work earlier, under changes to the benefit system unveiled yesterday.

There are two key strands to the announcement; service delivery changes with a greater emphasis on getting people into work and plans to roll the seven core benefits into a single benefit, with a series of add-ons.

Legislative changes to the single benefit, set to be introduced in 2007, are designed to reduce the amount of time Work and Income staff spend administering the complex benefit income system in order to increase time spent on employment needs.

But the shift is also designed to break down entrenched attitudes and stereotypes about benefits and the purpose of them - in future it is hoped there will be no such things as a "sickness beneficiary" or the "DPB".

The Government has described the change as "cutting edge" welfare reform but most political opponents disagreed and little detail was released yesterday.

Social Development Minister Steve Maharey said no existing Work and Income clients would lose financially out of the change, but would not rule out the possibility future beneficiaries might end up with less in their pockets than today's counterparts.

Fuelling the impetus for change is the lowest unemployment rate in years - 3.8 per cent and mounting labour shortages.

Unemployment benefit rates fell by 55,000 in the three years to June, but there are now 118,000 people on the sickness and invalids benefit, about 35,000 more than there were five years ago.

Cabinet papers released yesterday said: "Too much of the system is still inherited from a past in which jobs were scarce and it was assumed categories of people, and particularly people with health conditions or disabilities, couldn't work and didn't want to work."

If no action was taken more than 137,000 people would be on the sickness and invalids benefits by 2007-08 - increasing costs from $145 billion to $1.87 billion.

The Government last year introduced a Sickness and Invalids Benefits Strategy aimed at targeting the problem, which saw some beneficiaries requiring surgery fast-tracked through hospital waiting lists to get them back into work.

Case management of the beneficiaries was stepped up and the hours they could work without losing entitlements were raised for up to six months.

Yesterday Mr Maharey said the Government wanted to increase the ability of sickness and invalid beneficiaries to take their disability payments into the workforce, creating a greater financial incentive to work.

Similar "in-work" payments already operate via family support and the accommodation supplement for beneficiaries with children moving into the workforce.

Greater access to employment programmes, now restricted to some benefit categories, was also planned.

The Government has also signalled it will review the domestic purposes benefit (DPB) with a view to making changes before it is finally axed in 2007.

It will look at introducing stiffer sanctions for those who don't meet work plan obligations and requiring more work-focused participation.

DPB numbers have remained stable at about 110,000 since 1999.

National MP Judith Collins said the announcement was " designed to give the appearance that something is being done."

Green MP Sue Bradford said Labour was tinkering with a system that needed more substantial reform.

It was fair to push the unemployed into jobs. "But it is unfair, inappropriate and unjust when the intention is to push solo parents into employment when they would rather be caring full-time for their children," she said.

New Zealand First leader Winston Peters said the system was a concept without logic.

Benefit numbers

* 319,699 people between 18 and 64 received an income-tested benefit including:

* 109,339 on domestic purposes benefit

* 72,543 on invalids benefit

* 65,969 on unemployment benefit

* 45,648 on sickness benefit