Sole benefit planned to save $70m

Beneficiaries who are able but reluctant to work will face greater pressure under changes to the benefit system to be unveiled by the Government today.

The changes are expected to save more than $70 million a year.

Seven big benefits will be rolled into one single core benefit with add-ons.

It aims to free up case managers from spending most of their time - now 70 per cent - administering benefits.

Prime Minister Helen Clark said yesterday she believed the changes would allow Work and Income staff to dedicate that amount of their time to getting beneficiaries into the workforce.

Beneficiaries will be separated into two broad categories of those ready to work and those who need development help, have health barriers or who are raising children.

The Government has repeatedly promised no one will get less money as a result of the changes.

But those deemed work ready will face more immediate case manager scrutiny and the faster imposition of sanctions if they are unwilling to take steps towards work.

It is understood conservative costings prepared for Cabinet estimate a $40 million savings on benefits in the first year of implementation and more than $70 million in following years.

Legislation introducing the single core benefit is set to be introduced next year, but the new benefit structure won't take effect until 2007-2008.

However incremental changes in the approach taken by frontline staff and designed to dovetail with the legislative changes will be tested from May this year in 11 regions.

Social Development and Employment Minister Steve Maharey is not expected to seek extra money in this year's Budget for the changes, instead using cost savings gained through a reduction in unemployment benefit numbers.

Labour came close to introducing the single core benefit when last in Government and Mr Maharey said in 2000 it would be implemented in 2002.

The delays are partly because the Government decided to give priority to the Working for Families package.

Helen Clark said yesterday that visiting Australian Prime Minister John Howard, set to present his own welfare blueprint in Canberra today, had been briefed on the plan "which is of considerable interest given Australia itself has had this on its agenda in the past and will look with interest at how we're actually going with it".

The Australian newspaper put it a little differently yesterday, saying: "Plans to introduce a single welfare payment have been dropped, amid concerns it would be too expensive and difficult to administer."

National welfare spokeswoman Judith Collins said the move was a "superficial name change" which would not move one beneficiary into work. "National is sceptical to say the least."

Benefit plan

* One single core benefit, with add-ons.

* Two broad categories: those ready to work and those who need development help, have health barriers or who are raising children.