Taxpayer-funded work search grants top $20m

Peter Hughes. Photo / Mark Mitchell

The Government is shovelling out almost twice as many grants to help unemployed people back to work as it did before the recession.

Just over 110,000 grants were paid in the year to September for such things as new clothes and shoes, work tools, removing tattoos and getting unwarranted or unregistered cars back on the road.

Ministry of Social Development data supplied under the Official Information Act show grants more than doubled from around $9 million in 2005-06 to almost $22 million last year.

Ministry head Peter Hughes said the increase "reflects the increase in unemployment-related benefit numbers over the same period as a result of the economic climate".

But grants made to help people back to work jumped even more than unemployment - from 56,132 in 2005-06 to 110,299 last year, while unemployment benefits increased only from 38,796 to 67,084 in the four years to last month.

The grants are available on a means-tested basis for people moving off sickness and sole parent benefits, students and non-beneficiaries, as well as people coming off the unemployment benefit.

The increase also reflects a policy change by the Labour Government which lifted the maximum grants to any individual from $500 to $1500 a year from May 2007.

The average grant went from $169 in 2007 to $194 the next year and has levelled off since then.

Beneficiary advocate Kay Brereton said the most common grants were for presentable clothes and shoes to wear to job interviews.

"If you've spent any time on the benefit, you don't necessarily have tidy clothes and shoes that suit job interviews," she said. "Sometimes it's tools and equipment and safety gear. At quite a lot of places you have to bring your own hard hat and boots and safety equipment."

Job-search grants of up to $300 in a year can also be made for childcare, transport, an interpreter and for tattoo removal if referred by a doctor. But Ms Brereton said she did not see many grants for these purposes.

"I don't think tattoo removal gets used all that much."

Grants for job-search increased from 6576 in 2005-06 to 27,664 last year.

Larger grants up to the full $1500 annual limit are available for the costs of taking up a definite job offer, including tools and equipment, moving house, initial childcare costs and initial transport costs such as registration and a warrant of fitness if a vehicle is essential for the job.

However, the grant cannot be used to pay for actual vehicle repairs or to buy a car. Work and Income can lend beneficiaries up to $400 for vehicle repairs under a separate policy, but requires repayment. It does not give grants or loans to buy a car.

Grants made to take up job offers account for almost all the increase in costs between 2005-06 and last year, trebling from $4.5 million to $14 million.

The 37,063 grants made to take up job offers in 2005-06 appear to have assisted only half of the 75,591 working-age beneficiaries who moved off benefits into paid work in that year.

Full data for 2010 are not yet available, but the 49,868 grants made to take up job offers in the year to June 2009 appear to have assisted 90 per cent of the 55,155 working-age people who moved off benefits into paid work that year.

Ms Brereton said most people who found fulltime jobs through Work and Income were told about the grants, but many who found work independently were still unaware of them.

She said there was also a growing problem of people who could find only casual or part-time work. The grants are only available for jobs of at least 30 hours a week unless there is no fulltime work available or people have reasons why they cannot work fulltime, such as childcare or disability.

"I have a client at the moment who is in temporary work.

"If he could get more tools and equipment he could get more work, but they don't want to give him a transition to work grant because it's only temporary work," Ms Brereton said.

"A lot of industry is using labour-hire firms. They are not employed permanently, only on a when-work-is-available basis. So they are not treated terribly consistently."