Editorial: Figures on benefits don't actually tell whole story

Social Development Minister Paula Bennett argues the children's interests are best served by seeing their parents go to work. Photo / Michael Cunningham

Social Development Minister Paula Bennett is naturally happy to attribute a big reduction in the state's welfare liability to the Government's efforts to get beneficiaries into paid work, though, as she concedes, just under half the drop in the potential lifetime cost of current beneficiaries is explained by more people coming off benefits or fewer coming on to them. And only $1 billion is savings on sole parents, the main target of tougher work-seeking requirements introduced in 2010 and 2012.

This was the third actuarial report on the benefit system commissioned by the Social Development Ministry and the Treasury in response to the Government's welfare working group report in 2011. The liability this year is lower than the actuaries expected and they suggest a number of technical reasons besides those Ms Bennett celebrates.

A dispassionate reading of the report would suggest the numbers of beneficiaries who could be called work shy or likely to remain in welfare longer than they need to be is smaller than the National Party often supposes. But whatever has produced the greater part of the system's reduced liability, it is welcome. The ministry's latest annual valuation has assessed its liability at $76.5 billion, down by $10.3 billion from the previous year.

Nor can it be denied that more stringent conditions placed on beneficiaries of working age have had an effect, which is good news if no harm if being done to children. Sole parent beneficiaries now have had to look for part time work once their children were aged 6 or more. Their benefit can be cut if children aged 3 or over are not in a preschool centre or school, enrolled with a GP and up to date with health checks. Beneficiaries who have another baby once their next youngest child is school age have to find work a year after giving birth.

Despite the outcry that greeted these measures, figures obtained by the Child Poverty Action Group last year showed that just over 5000 sole parents lost some or all of their benefit for a period in 2011 and 6418 the following year. Ms Bennett said no parent had the benefit cut for more than eight weeks.

To help people look for work, the welfare agencies have provided childcare assistance and training, even guidance for writing CVs and presenting well at job interviews.

The reduction in the state's potential liability is no more than $1 billion but that is a respectable return so far on the half a billion it has cost to carry out welfare reform. The work requirements have been criticised for their effect on the children but Ms Bennett argues the children's interests are best served by seeing their parents go to work. Of all teenagers who apply for a benefit, she points out, 90 per cent were children in homes dependent on a benefit.

People who went on a benefit under the age of 18 comprise a third of the state's liability and those who started under 20 comprise a further 40 per cent. An increase in the number of young people going off benefits last year has reduced the taxpayers' potential liability for that group by 21 per cent.

Lifetime liability is probably a better measure of social welfare costs than snapshot figures that do not reflect the high turnover of recipients. Most, fortunately, need help for a short time and can support themselves again fairly soon. But able-bodied, long-term beneficiaries are a constant worry to National. John Key told the party's conference last year that welfare reform "may well prove to be one of the great legacies of this Government".

That is not especially inspiring. As this study shows, there are gains to be made, but there are larger problems on the Cabinet's plate.