Social welfare in New Zealand
Encyclopedia
Social welfare has long been an important part of New Zealand
society and a significant political issue. It is concerned with the provision by the state of benefits and services. Together with fiscal welfare and occupational welfare
, it makes up the social policy
of New Zealand.
Social welfare in New Zealand is mostly funded through general taxation. Since the 1980s welfare has been provided on the basis of need; the exception is universal superannuation.
In addition to the provision of State housing the government also provides an Accommodation Supplement. This is payable as a contribution to rent, board or mortgage payments for qualifying people. The Accommodation Supplement is not paid to those paying income-related rents in a State house.
In some instances a person may also qualify for a rates rebate to help with the cost of local government rates.
was in London
for the 1930 Imperial Conference, the United
Government passed the Unemployment Act, promising relief payments to those who registered as unemployed. Upon his return to New Zealand in January 1931, Forbes announced there would be no payments made without work, meaning those registered would have to participate in government 'make work' schemes such as building roads and working on farms or in forestry projects. When the register was opened in February, 23,000 people put their names down; by June the number of registered unemployed had risen to 51,000 as the Great Depression
worsened. The register did not include women, Māori, or boys under 16. In 1933 (by which time the number of unemployed had reached 80,000), MP Gordon Coates
introduced the Small Farms (Relief of Unemployment) Bill to help turn unemployed workers into small farmers.
the newly elected Labour government immediately issued a Christmas
bonus to the unemployed. However, a regular unemployment benefit
was not introduced until the passing of the Social Security Act
in 1938; that benefit was "payable to a person 16 years of age and over who has been in New Zealand for at least 12 months and is unemployed, is capable of and willing to undertake suitable work, and has taken reasonable steps to secure employment".
They might still qualify if they were a full-time trainee on an approved work related course (usually less than 12 weeks) and looking for work.
The Unemployment Benefit gross rate at 1 April 2011 ranged between $150.01 and $375.04 a week depending on the applicant's age and living situation.
From September 2007 there has been a number of changes to the delivery of unemployment benefits, the changes focus mainly on youth with a goal of having all 15 to 19-year-olds engaged in employment, training, or education. People applying for the unemployment benefit will be required to undertake work or training-related activities in the period between their first contact with Work and Income and their benefit commencing. They will also be required to look for and accept any offer of suitable work during that time.
Similar new measures will also apply to people on Sickness Benefit and Invalid's Benefit
, and the Domestic Purposes Benefit. Beneficiaries could have their benefits cut by up to 50% if they fail to comply. These new measures have been criticised by the DPA (formerly Disabled Persons Assembly) a spokesperson told the New Zealand Herald "Disabled people have been telling Social Welfare for years that we want to work, but we want the appropriate kind of work".
for those 65 years and older was introduced in 1898. The 1938 Social Security Act lowered the age for the means-tested pension to 60, and introduced a universal (not means-tested) superannuation from age 65. The Labour government introduced a compulsory superannuation scheme in 1975 where employees and employers each contributed at least 4 per cent of gross earnings. Robert Muldoon
's third National government
abolished the Labour scheme and created a universal (not means-tested) scheme that paid 80% of the average wage to married people over 60. The age of eligibility was lifted to 61 in 1992, then gradually raised to 65 between 1993 and 2001.
Currently superannuation is paid to all aged 65 and over – provided they have lived in New Zealand for at least 5 years after age 50 – and is taxable. The amount depends on the superannuitant's household situation. For a married couple the net of tax amount is set by legislation to be no less than 65% of the net average wage, although the Fifth Labour Government
increased payments to ensure it is no less than 66% of net average wage. Rates are also payable for people living alone and for single people in shared accommodation.
provided to some extent for families without other means of support, but it was subject to means testing. A family allowance was introduced in 1926, payable at two shillings a week for each child over two years old, but still subject to means testing. The Social Security Act of 1938 extended and modified existing pension arrangements, and added a social security tax to pay for them.
On 1 April 1946, the family benefit was increased to 10 shillings a week and the means test was dropped. The social security tax was raised but this was compensated for by the dropping of the national security (war) tax. This increased family benefit was payable for all children up to the age of sixteen, or up to the end of the year when the child turned eighteen if they were in full-time education or unable to earn a living due to incapacitation.
Since the benefit was normally paid to the mother, many women gained their first ever independent source of household income.
The family benefit was increased to 15 shillings per week per child in 1958-59, and was able to be capitalized up to a maximum of £1000 when buying, altering, or paying off a home from 1959-60.
Universal payment of the Family Benefit was abolished to target families most in need and Family Benefit capitalisation limits for first-home seekers were increased (1985).
A new family support benefit (introduced as the family care benefit in 1984) raised the incomes of some poor families. In 1986 the guaranteed minimum family benefit was introduced. This fixed an income floor above the statutory minimum wage for persons with dependant children in full-time employment. Known as the Guaranteed Minimum Family Income, it guaranteed working families roughly 80% of the average post-tax wage, although its impact on participation rates was limited by rising unemployment and high effective marginal tax rates.
Family benefits were abolished on 1 April 1991. In effect, they were partly replaced by more targeted allowances for low-income families.
-led coalition government introduced the Working for Families package as part of the 2004 Budget. It was progressively implemented between October 2004 and April 2007.
The package, which commenced operating on 1 April 2005, has three primary aims: to make work pay; to ensure income adequacy; and to support people into work. It replaced the system known as Family Support as well as the child components of the main social welfare benefits. The Guaranteed Minimum Family Income was renamed the Minimum Family Tax Credit and the level of support was changed to encourage working families to leave the benefit system.
The Working for Families package includes several components:
Because parts of the package use tax credits it is also delivered by the Inland Revenue Department
.
The package is thought to cover approximately 75% of all families with dependent children.
There are three forms of Domestic Purposes Benefit:
The rate of payment of a DPB is greater than the rate paid for the Unemployment Benefit and the Sickness Benefit. The rate of payment for the DPB: Care for the Sick or Infirm is the same as for the Invalid's Benefit.
For people with a child collecting the DPB: Sole Parent benefit they are encouraged to name the other partner and to seek child support
payments. There is a financial penalty for Sole Parents (section 70A of the Social Security Act 1964) who do not seek child support without sufficient reason. Any child support payments are generally used to offset the State cost of the DPB payment, with any excess going to the sole parent.
The Invalid's Benefit is paid to those permanently incapacitated or totally blind (excluding those already receiving an age benefit). An applicant must have been at least 16 years of age and residentially qualified. The applicant was residentially qualified when their incapacity arose in New Zealand or they were resident in New Zealand on 4 September 1936 and had lived in New Zealand for at least 10 years immediately before applying for the benefit. In 2007 the residence requirement was set at two years.
The Sickness Benefit is payable to those who are temporarily incapacitated from working through sickness or accident, excluding the first seven days of incapacity. In order to qualify, an applicant must have suffered a loss of salary, wages, or other earnings, and have resided in New Zealand for at least 12 months. The rate of benefit at the time it was introduced could not exceed the loss of earnings through incapacity. The rate now is currently the same as the Unemployment Benefit. As with other benefits introduced in 1938, the applicant had to be over 16 years of age.
Ruth Dyson, Minister for Social Development and Employment, reported, "...the main reason for people leaving the unemployment benefit is to enter paid work. In the last 8 years, 8.8 percent of all unemployment benefit cancellations were the result of a transfer to the sickness benefit, and less than one-third of 1 percent of all unemployment benefit cancellations were the result of a transfer to the invalids benefit. Those figures should finally put to rest the accusation that the Opposition spokesperson on social welfare consistently makes that these outstanding figures for the reduction in those on the unemployment benefit are as a result of a transfer to another benefit. That is not true; they are the result of people moving into paid work."
On October 26, 2006 the government announced a number of changes to the welfare system. Then Minister for Social Development and Employment David Benson-Pope
later stated that, when implemented, the reforms will move between 3,000 and 6,000 people off the Sickness Benefit.
A full list of benefits is available on the Work and Income website.
Previous, the new entrants wage had been the youth minimum wage and applied to all young people between 16 and 18 regardless of levels of work experience or position
The minimum wage rates are reviewed every year. As of 1 April 2011 the adult minimum wage rates (before tax) that apply for employees aged 16 or over are $13.00 per hour. The rates that apply to new entrants, and employees on the training minimum wage (before tax), are $10.40 per hour.
, introduced by the First Liberal Government
in 1898. The scheme was introduced to avoid what MP William Pember Reeves
described as the "worst social evils and miseries" referring to the British
workhouse
s where the elderly lived in spartan institutional circumstances. The pension scheme was non-contributory and was available only to the "deserving poor"; men and women who had become destitute through no fault of their own. The prime responsibility for protecting individuals from the hazards of sickness and unemployment lay with individuals themselves, their families and various charity organisations.
A decade later a widows' pension was introduced for women with children who had lost their husbands. The Liberals also passed the Workers Dwellings Act in 1905 allowing the government to buy land, build houses, and rent them to workers and their families. The small-scale scheme that resulted from this legislation can be seen as a precursor to the much larger state housing introduced by the first Labour
government in the 1930s.
was won by the first Labour government. A regular unemployment benefit
was introduced with the passing of the Social Security Act
in 1938. Under the Act the Government introduced a raft of social welfare benefits, mostly means tested, that were more generous and covered more people than before. The welfare state they created was a male wage-earners welfare state. Alongside policies to create full employment were policies to set fair wages sufficient for a man to provide for a family.
did not overtly change the main welfare system, however, real expenditure per benefit receipent fell. Some benefits were removed such as the unemployment benefit for under 18 year olds and funding for state housing was cut back. These changes were somewhat ad hoc in nature.
embarked on a free market
programme aimed at reducing state spending and 'dependence on the state'. Welfare benefits were drastically cut, and 'user-pays' charges were introduced for many formerly free public services. These policies were widely known as "Ruthanasia" after Finance Minister Ruth Richardson
, although the welfare portfolio was managed by Social Welfare Minister Jenny Shipley
.
The impact of these changes was particularly pronounced as the unemployment rate was high due to the 1987 stockmarket crash
and the cost-cutting programmes of the previous fourth Labour government
, which had reduced the staff of many state services such as New Zealand Rail
. The cutbacks have been partially reversed by the fifth Labour government
, but inflation means that in real terms benefits are still lower than before the cuts.
By this time the Government had moved away from a policy of full employment and universal welfare to a more targeted system. The programme of reforms had a bias in favour of families, in particular working families and were intended to make it more attractive for beneficiaries to move into the workforce.
The government says the changes will introduce an intensive employment support to every New Zealander who is receiving a benefit and is able to work.
Working New Zealand involved:
From September 2007 there have been a number of changes to the delivery of welfare benefits, the changes focus mainly on youth with a goal of having all 15-year-olds to 19-year-olds engaged in employment, training or education. People applying for the Unemployment Benefit will be required to undertake work or training-related activities in the period between their first contact with Work and Income and their benefit commencing. They will also be required to look for and accept any offer of suitable work during that time.
Similar new measures will also apply to people on Sickness and Invalid Benefits, and the Domestic Purposes Benefit. Beneficiaries could have their benefits cut by up to 50% if they fail to comply.
Criticisms
These new measures have been criticised by the DPA (formerly Disabled Persons Assembly) a spokesperson told the New Zealand Herald "Disabled people have been telling Social Welfare for years that we want to work, but we want the appropriate kind of work".
Susan St John and Louise Humpage have also commented that the changes "wipes away any notion that our social security system is about ensuring everyone can participate as citizens. Instead, it makes getting people into a job, any job, the fundamental duty of citizenship."
Further changes were expected, including further welfare benefit simplification
in 2008. However, this did not eventuate before the November 2008 general election. After the election, the newly elected National Government proposed and implemented alternative reforms under the title "Future Focus" and established a Welfare Working Group to report on further reforms.
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
society and a significant political issue. It is concerned with the provision by the state of benefits and services. Together with fiscal welfare and occupational welfare
Occupational Welfare
Occupational welfare is welfare distributed by industry as part of employment. First characterized by British social researcher and teacher Richard Titmuss in 1956, occupational welfare includes perks, salary-related benefits, measures intended to improve the efficiency of the workforce and some...
, it makes up the social policy
Social policy
Social policy primarily refers to guidelines, principles, legislation and activities that affect the living conditions conducive to human welfare. Thus, social policy is that part of public policy that has to do with social issues...
of New Zealand.
Social welfare in New Zealand is mostly funded through general taxation. Since the 1980s welfare has been provided on the basis of need; the exception is universal superannuation.
State housing
The government provides State housing to those in need. The number of houses owned by the State has varied over the years and between different governments. Currently the level of rent paid in state housing is related to the level of income of the people living in the house (income-related rents) so that those on low incomes pay below market rents. Where a household's income is relatively high the rents are set at the market rate.In addition to the provision of State housing the government also provides an Accommodation Supplement. This is payable as a contribution to rent, board or mortgage payments for qualifying people. The Accommodation Supplement is not paid to those paying income-related rents in a State house.
In some instances a person may also qualify for a rates rebate to help with the cost of local government rates.
Unemployment Act 1930
In 1930, while Prime Minister George ForbesGeorge William Forbes
George William Forbes served as the 22nd Prime Minister of New Zealand from 1930 to 1935. Few expected him to become Prime Minister when he did, and some believed him unsuitable, but he nevertheless remained in that office for five years...
was in London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
for the 1930 Imperial Conference, the United
United Party (New Zealand)
The United Party of New Zealand, a party formed out of the remnants of the Liberal Party, formed a government between 1928 and 1935, and in 1936 merged with the Reform Party to establish the National Party...
Government passed the Unemployment Act, promising relief payments to those who registered as unemployed. Upon his return to New Zealand in January 1931, Forbes announced there would be no payments made without work, meaning those registered would have to participate in government 'make work' schemes such as building roads and working on farms or in forestry projects. When the register was opened in February, 23,000 people put their names down; by June the number of registered unemployed had risen to 51,000 as the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
worsened. The register did not include women, Māori, or boys under 16. In 1933 (by which time the number of unemployed had reached 80,000), MP Gordon Coates
Gordon Coates
Joseph Gordon Coates, MC and bar served as the 21st Prime Minister of New Zealand from 1925 to 1928.- Early life :Born on the Hukatere Peninsula in Kaipara Harbour where his family ran a farm, Coates took on significant responsibility at a relatively early age because his father suffered from...
introduced the Small Farms (Relief of Unemployment) Bill to help turn unemployed workers into small farmers.
Social Security Act 1938
After winning the 1935 electionNew Zealand general election, 1935
The 1935 New Zealand general election was a nationwide vote to determine the shape of the New Zealand Parliament's 25th term. It resulted in the Labour Party's first electoral victory, with Michael Joseph Savage becoming the first Labour Prime Minister...
the newly elected Labour government immediately issued a Christmas
Christmas
Christmas or Christmas Day is an annual holiday generally celebrated on December 25 by billions of people around the world. It is a Christian feast that commemorates the birth of Jesus Christ, liturgically closing the Advent season and initiating the season of Christmastide, which lasts twelve days...
bonus to the unemployed. However, a regular unemployment benefit
Unemployment benefit
Unemployment benefits are payments made by the state or other authorized bodies to unemployed people. Benefits may be based on a compulsory para-governmental insurance system...
was not introduced until the passing of the Social Security Act
Social Security Act 1938
The Social Security Act 1938 is a New Zealand Act of Parliament concerning unemployment insurance. After winning the 1935 election the newly elected First Labour government immediately issued a Christmas bonus to the unemployed...
in 1938; that benefit was "payable to a person 16 years of age and over who has been in New Zealand for at least 12 months and is unemployed, is capable of and willing to undertake suitable work, and has taken reasonable steps to secure employment".
Today
The criteria for receiving an unemployment benefit remain similar to the original 1938 legislation. At 1 December 2011, a person could get Unemployment Benefit if they were:- not in full time work
- available for, and looking for full time work
- over 18 years of age (or 16-17 if they are married or in a civil union or in a de facto relationship and have one or more children they support)
- be a New Zealand citizen or permanent resident
- have lived in New Zealand for at least 2 years at any one time since becoming a New Zealand citizen or resident (unless you are a refugee)
- normally living in New Zealand and intending to stay there.
They might still qualify if they were a full-time trainee on an approved work related course (usually less than 12 weeks) and looking for work.
The Unemployment Benefit gross rate at 1 April 2011 ranged between $150.01 and $375.04 a week depending on the applicant's age and living situation.
From September 2007 there has been a number of changes to the delivery of unemployment benefits, the changes focus mainly on youth with a goal of having all 15 to 19-year-olds engaged in employment, training, or education. People applying for the unemployment benefit will be required to undertake work or training-related activities in the period between their first contact with Work and Income and their benefit commencing. They will also be required to look for and accept any offer of suitable work during that time.
Similar new measures will also apply to people on Sickness Benefit and Invalid's Benefit
Disability pension
A disability pension is a form of pension given to those people who are permanently or temporarily unable to work due to a disability. It is distinct from welfare.- North America :...
, and the Domestic Purposes Benefit. Beneficiaries could have their benefits cut by up to 50% if they fail to comply. These new measures have been criticised by the DPA (formerly Disabled Persons Assembly) a spokesperson told the New Zealand Herald "Disabled people have been telling Social Welfare for years that we want to work, but we want the appropriate kind of work".
New Zealand Superannuation
A means-tested old age pensionPension
In general, a pension is an arrangement to provide people with an income when they are no longer earning a regular income from employment. Pensions should not be confused with severance pay; the former is paid in regular installments, while the latter is paid in one lump sum.The terms retirement...
for those 65 years and older was introduced in 1898. The 1938 Social Security Act lowered the age for the means-tested pension to 60, and introduced a universal (not means-tested) superannuation from age 65. The Labour government introduced a compulsory superannuation scheme in 1975 where employees and employers each contributed at least 4 per cent of gross earnings. Robert Muldoon
Robert Muldoon
Sir Robert David "Rob" Muldoon, GCMG, CH served as the 31st Prime Minister of New Zealand from 1975 to 1984, as leader of the governing National Party. Muldoon had been a prominent member of the National party and MP for the Tamaki electorate for some years prior to becoming leader of the party...
's third National government
Third National Government of New Zealand
The Third National Government of New Zealand was the government of New Zealand from 1975 to 1984. It was an economically and socially conservative government, which aimed to preserve the Keynesian economic system established by the First Labour government while also being socially conservative...
abolished the Labour scheme and created a universal (not means-tested) scheme that paid 80% of the average wage to married people over 60. The age of eligibility was lifted to 61 in 1992, then gradually raised to 65 between 1993 and 2001.
Currently superannuation is paid to all aged 65 and over – provided they have lived in New Zealand for at least 5 years after age 50 – and is taxable. The amount depends on the superannuitant's household situation. For a married couple the net of tax amount is set by legislation to be no less than 65% of the net average wage, although the Fifth Labour Government
Fifth Labour Government of New Zealand
The Fifth Labour Government of New Zealand was the government of New Zealand between 10 December 1999 and 19 November 2008.-Overview:The fourth National government, in power since 1990, was widely unpopular by 1999, with much of the public antagonised by a series of free-market economic reforms,...
increased payments to ensure it is no less than 66% of net average wage. Rates are also payable for people living alone and for single people in shared accommodation.
Family benefits and tax credits
The 1911 Widow's pensionWidow's pension
A widow's pension is a payment from the government of a country to a person whose spouse has died.Generally, such payments are made to a widow whose late spouse has satisfied the country's requirements, including contribution, cohabitation, and length of marriage.-United States:In the United...
provided to some extent for families without other means of support, but it was subject to means testing. A family allowance was introduced in 1926, payable at two shillings a week for each child over two years old, but still subject to means testing. The Social Security Act of 1938 extended and modified existing pension arrangements, and added a social security tax to pay for them.
On 1 April 1946, the family benefit was increased to 10 shillings a week and the means test was dropped. The social security tax was raised but this was compensated for by the dropping of the national security (war) tax. This increased family benefit was payable for all children up to the age of sixteen, or up to the end of the year when the child turned eighteen if they were in full-time education or unable to earn a living due to incapacitation.
Since the benefit was normally paid to the mother, many women gained their first ever independent source of household income.
The family benefit was increased to 15 shillings per week per child in 1958-59, and was able to be capitalized up to a maximum of £1000 when buying, altering, or paying off a home from 1959-60.
Universal payment of the Family Benefit was abolished to target families most in need and Family Benefit capitalisation limits for first-home seekers were increased (1985).
A new family support benefit (introduced as the family care benefit in 1984) raised the incomes of some poor families. In 1986 the guaranteed minimum family benefit was introduced. This fixed an income floor above the statutory minimum wage for persons with dependant children in full-time employment. Known as the Guaranteed Minimum Family Income, it guaranteed working families roughly 80% of the average post-tax wage, although its impact on participation rates was limited by rising unemployment and high effective marginal tax rates.
Family benefits were abolished on 1 April 1991. In effect, they were partly replaced by more targeted allowances for low-income families.
Working for Families
In 2004 the LabourNew Zealand Labour Party
The New Zealand Labour Party is a New Zealand political party. It describes itself as centre-left and socially progressive and has been one of the two primary parties of New Zealand politics since 1935....
-led coalition government introduced the Working for Families package as part of the 2004 Budget. It was progressively implemented between October 2004 and April 2007.
The package, which commenced operating on 1 April 2005, has three primary aims: to make work pay; to ensure income adequacy; and to support people into work. It replaced the system known as Family Support as well as the child components of the main social welfare benefits. The Guaranteed Minimum Family Income was renamed the Minimum Family Tax Credit and the level of support was changed to encourage working families to leave the benefit system.
The Working for Families package includes several components:
- Working for Families Tax credits
- increases in Childcare Assistance
- increases in Accommodation Supplement payments
- changes to some benefit rules
Because parts of the package use tax credits it is also delivered by the Inland Revenue Department
Inland Revenue Department (New Zealand)
Inland Revenue , previously known as the Inland Revenue Department, is the New Zealand government department responsible for the collection of over 80% of the Crown's revenue in New Zealand. It also collects and disburses social support programme payments and provides the government with policy...
.
The package is thought to cover approximately 75% of all families with dependent children.
Domestic Purposes Benefit
The Domestic Purposes Benefit (DPB) was introduced in 1974 following the Report of the Royal Commission of Inquiry into Social Security. It provides State financial support primarily for single mothers, irrespective of whether the father was contributing to maintenance payments (a feature of earlier legislation) and irrespective of fault. There is a small number of fathers on DPB. While there is a Widow's Benefit for women with children whose partner has died, this is not available to men.There are three forms of Domestic Purposes Benefit:
- DPB: Sole Parent
- DPB: Care for the Sick or Infirm
- DPB: Woman Alone
The rate of payment of a DPB is greater than the rate paid for the Unemployment Benefit and the Sickness Benefit. The rate of payment for the DPB: Care for the Sick or Infirm is the same as for the Invalid's Benefit.
For people with a child collecting the DPB: Sole Parent benefit they are encouraged to name the other partner and to seek child support
Child support
In family law and public policy, child support is an ongoing, periodic payment made by a parent for the financial benefit of a child following the end of a marriage or other relationship...
payments. There is a financial penalty for Sole Parents (section 70A of the Social Security Act 1964) who do not seek child support without sufficient reason. Any child support payments are generally used to offset the State cost of the DPB payment, with any excess going to the sole parent.
Social Security Act 1938
Two types of health benefits were introduced with the 1938 legislation, the Invalid's Benefit and the Sickness Benefit.The Invalid's Benefit is paid to those permanently incapacitated or totally blind (excluding those already receiving an age benefit). An applicant must have been at least 16 years of age and residentially qualified. The applicant was residentially qualified when their incapacity arose in New Zealand or they were resident in New Zealand on 4 September 1936 and had lived in New Zealand for at least 10 years immediately before applying for the benefit. In 2007 the residence requirement was set at two years.
The Sickness Benefit is payable to those who are temporarily incapacitated from working through sickness or accident, excluding the first seven days of incapacity. In order to qualify, an applicant must have suffered a loss of salary, wages, or other earnings, and have resided in New Zealand for at least 12 months. The rate of benefit at the time it was introduced could not exceed the loss of earnings through incapacity. The rate now is currently the same as the Unemployment Benefit. As with other benefits introduced in 1938, the applicant had to be over 16 years of age.
Controversies
In recent years the government has been accused of exaggerating drops in unemployment by transferring people to Sickness Benefits, welfare commentator Lindsay Mitchell wrote in an October 2006 press release "There is a constant flow between benefits. Taking this into account the net gain from the unemployment benefit to the sickness benefit over the five years to April 2005 was 20,870. Over the same period the net gain from the Sickness Benefit to Invalid's Benefit was 26,302, bearing in mind the same beneficiary may have been transferred more than once."Ruth Dyson, Minister for Social Development and Employment, reported, "...the main reason for people leaving the unemployment benefit is to enter paid work. In the last 8 years, 8.8 percent of all unemployment benefit cancellations were the result of a transfer to the sickness benefit, and less than one-third of 1 percent of all unemployment benefit cancellations were the result of a transfer to the invalids benefit. Those figures should finally put to rest the accusation that the Opposition spokesperson on social welfare consistently makes that these outstanding figures for the reduction in those on the unemployment benefit are as a result of a transfer to another benefit. That is not true; they are the result of people moving into paid work."
On October 26, 2006 the government announced a number of changes to the welfare system. Then Minister for Social Development and Employment David Benson-Pope
David Benson-Pope
David Henry Benson-Pope is a New Zealand Labour Party politician who sat in the Parliament of New Zealand from 1999 to 2008. He formerly served as a cabinet minister....
later stated that, when implemented, the reforms will move between 3,000 and 6,000 people off the Sickness Benefit.
Supplementary benefits
In addition to main benefits such as Unemployment Benefit, Superannuation,Sickness Benefit and Invalid's Benefit, a person may be entitled to other assistance depending on their circumstances. Examples of other assistance available at 1 December 2011 are:- Accommodation Supplement - A weekly payment which helps people with their rent, board or the cost of owning a home.
- Childcare Subsidy - A payment that helps families with the cost of pre-school childcare.
- Disability Allowance - A weekly payment for people who have regular, ongoing costs because of a disability, such as visits to the doctor or hospital, medicines, extra clothing or travel.
- Living Alone Payment - An ongoing extra payment on top of your NZ Superannuation or Veteran’s Pension, when you maintain a household on your own.
- Unsupported Child's Benefit - A weekly payment which helps carers supporting a child or young person whose parents can't care for them because of a family breakdown.
A full list of benefits is available on the Work and Income website.
Minimum wage
The minimum wage is in three forms - the standard wage for all workers over the age of 16, a training minimum wage for people undergoing training in the workplace, and a new entrants minimum wage for young people who have no or little work experience and who are in entry level positions.Previous, the new entrants wage had been the youth minimum wage and applied to all young people between 16 and 18 regardless of levels of work experience or position
The minimum wage rates are reviewed every year. As of 1 April 2011 the adult minimum wage rates (before tax) that apply for employees aged 16 or over are $13.00 per hour. The rates that apply to new entrants, and employees on the training minimum wage (before tax), are $10.40 per hour.
Liberal Government reforms
Among the early forms of social welfare in New Zealand was the old age pensionPension
In general, a pension is an arrangement to provide people with an income when they are no longer earning a regular income from employment. Pensions should not be confused with severance pay; the former is paid in regular installments, while the latter is paid in one lump sum.The terms retirement...
, introduced by the First Liberal Government
First Liberal Government of New Zealand
The First Liberal Government of New Zealand was the first responsible government in New Zealand politics organised along party lines. The Government formed following the founding of the Liberal Party and took office on the 24 January 1891, and governed New Zealand for over 21 years until 10 July...
in 1898. The scheme was introduced to avoid what MP William Pember Reeves
William Pember Reeves
The Hon. William Pember Reeves was a New Zealand statesman, historian and poet, who promoted social reform.-Biography:...
described as the "worst social evils and miseries" referring to the British
United Kingdom of Great Britain and Ireland
The United Kingdom of Great Britain and Ireland was the formal name of the United Kingdom during the period when what is now the Republic of Ireland formed a part of it....
workhouse
Workhouse
In England and Wales a workhouse, colloquially known as a spike, was a place where those unable to support themselves were offered accommodation and employment...
s where the elderly lived in spartan institutional circumstances. The pension scheme was non-contributory and was available only to the "deserving poor"; men and women who had become destitute through no fault of their own. The prime responsibility for protecting individuals from the hazards of sickness and unemployment lay with individuals themselves, their families and various charity organisations.
A decade later a widows' pension was introduced for women with children who had lost their husbands. The Liberals also passed the Workers Dwellings Act in 1905 allowing the government to buy land, build houses, and rent them to workers and their families. The small-scale scheme that resulted from this legislation can be seen as a precursor to the much larger state housing introduced by the first Labour
New Zealand Labour Party
The New Zealand Labour Party is a New Zealand political party. It describes itself as centre-left and socially progressive and has been one of the two primary parties of New Zealand politics since 1935....
government in the 1930s.
First Labour Government
The 1935 electionNew Zealand general election, 1935
The 1935 New Zealand general election was a nationwide vote to determine the shape of the New Zealand Parliament's 25th term. It resulted in the Labour Party's first electoral victory, with Michael Joseph Savage becoming the first Labour Prime Minister...
was won by the first Labour government. A regular unemployment benefit
Unemployment benefit
Unemployment benefits are payments made by the state or other authorized bodies to unemployed people. Benefits may be based on a compulsory para-governmental insurance system...
was introduced with the passing of the Social Security Act
Social Security Act 1938
The Social Security Act 1938 is a New Zealand Act of Parliament concerning unemployment insurance. After winning the 1935 election the newly elected First Labour government immediately issued a Christmas bonus to the unemployed...
in 1938. Under the Act the Government introduced a raft of social welfare benefits, mostly means tested, that were more generous and covered more people than before. The welfare state they created was a male wage-earners welfare state. Alongside policies to create full employment were policies to set fair wages sufficient for a man to provide for a family.
Change in approach in the 1980s
By 1984 the political culture changed, with social welfare targeted according to need, not distributed universally according to citizenship. The fourth Labour governmentFourth Labour Government of New Zealand
The Fourth Labour Government of New Zealand was the government of New Zealand from 26 July 1984 to 2 November 1990. It enacted major social and economic reforms, including reformation of the tax system. The economic reforms were known as Rogernomics after Finance Minister Roger Douglas...
did not overtly change the main welfare system, however, real expenditure per benefit receipent fell. Some benefits were removed such as the unemployment benefit for under 18 year olds and funding for state housing was cut back. These changes were somewhat ad hoc in nature.
Cutbacks of the 1990s
In the early 1990s the fourth National governmentFourth National Government of New Zealand
The Fourth National Government of New Zealand was the government of New Zealand from 2 November 1990 to 27 November 1999. Following in the footsteps of the previous Labour government, the fourth National government embarked on an extensive programme of spending cuts...
embarked on a free market
Free market
A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...
programme aimed at reducing state spending and 'dependence on the state'. Welfare benefits were drastically cut, and 'user-pays' charges were introduced for many formerly free public services. These policies were widely known as "Ruthanasia" after Finance Minister Ruth Richardson
Ruth Richardson
Ruth Richardson served as New Zealand's Minister of Finance from 1990 to 1993, and is known for her strong pursuit of free-market economic reforms .-Early life:...
, although the welfare portfolio was managed by Social Welfare Minister Jenny Shipley
Jenny Shipley
Dame Jenny Shipley, DNZM , served as the 36th Prime Minister of New Zealand from December 1997 to December 1999, the first woman to hold this office and the first, and to date only, woman to serve as parliamentary leader of the National Party of New Zealand.-Early life:Shipley was born as Jennifer...
.
The impact of these changes was particularly pronounced as the unemployment rate was high due to the 1987 stockmarket crash
Black Monday (1987)
In finance, Black Monday refers to Monday October 19, 1987, when stock markets around the world crashed, shedding a huge value in a very short time. The crash began in Hong Kong and spread west to Europe, hitting the United States after other markets had already declined by a significant margin...
and the cost-cutting programmes of the previous fourth Labour government
Fourth Labour Government of New Zealand
The Fourth Labour Government of New Zealand was the government of New Zealand from 26 July 1984 to 2 November 1990. It enacted major social and economic reforms, including reformation of the tax system. The economic reforms were known as Rogernomics after Finance Minister Roger Douglas...
, which had reduced the staff of many state services such as New Zealand Rail
New Zealand Railways Corporation
KiwiRail Network, formerly ONTRACK , is the infrastructure arm of KiwiRail. The ONTRACK trading name was introduced in 2004 after the government repurchased all of New Zealand's rail infrastructure from Toll NZ. It does not operate revenue rolling stock...
. The cutbacks have been partially reversed by the fifth Labour government
Fifth Labour Government of New Zealand
The Fifth Labour Government of New Zealand was the government of New Zealand between 10 December 1999 and 19 November 2008.-Overview:The fourth National government, in power since 1990, was widely unpopular by 1999, with much of the public antagonised by a series of free-market economic reforms,...
, but inflation means that in real terms benefits are still lower than before the cuts.
By this time the Government had moved away from a policy of full employment and universal welfare to a more targeted system. The programme of reforms had a bias in favour of families, in particular working families and were intended to make it more attractive for beneficiaries to move into the workforce.
Work focused support in the 21st century
Announced in October 2006 the Working New Zealand reform includes changes to the service delivery of Work and Income and changes to the Social Security Act 1964. Amending legislation was passed by the New Zealand Parliament in June 2007 including introducing a 'Purpose and Principles' section.The government says the changes will introduce an intensive employment support to every New Zealander who is receiving a benefit and is able to work.
Working New Zealand involved:
- extending employment assistance to Independent Youth, Domestic PurposesDomestic Purposes BenefitThe Domestic Purposes Benefit was first introduced in New Zealand in 1974. The Destitute Persons Act 1910 and the Domestic Proceedings Act 1968 created a statutory means by which a woman could seek a maintenance order against the father of her children...
, Sickness and Invalid's Benefit clients - setting stronger work expectations for clients in some circumstances
- providing targeted employment initiatives to reduce the high Maori Unemployment Benefit rate
- offering a Job Search Service for all work-ready clients
- continuing to align rules and criteria of different benefits.
From September 2007 there have been a number of changes to the delivery of welfare benefits, the changes focus mainly on youth with a goal of having all 15-year-olds to 19-year-olds engaged in employment, training or education. People applying for the Unemployment Benefit will be required to undertake work or training-related activities in the period between their first contact with Work and Income and their benefit commencing. They will also be required to look for and accept any offer of suitable work during that time.
Similar new measures will also apply to people on Sickness and Invalid Benefits, and the Domestic Purposes Benefit. Beneficiaries could have their benefits cut by up to 50% if they fail to comply.
Criticisms
These new measures have been criticised by the DPA (formerly Disabled Persons Assembly) a spokesperson told the New Zealand Herald "Disabled people have been telling Social Welfare for years that we want to work, but we want the appropriate kind of work".
Susan St John and Louise Humpage have also commented that the changes "wipes away any notion that our social security system is about ensuring everyone can participate as citizens. Instead, it makes getting people into a job, any job, the fundamental duty of citizenship."
Further changes were expected, including further welfare benefit simplification
Welfare benefit simplification
also known as Universal Benefit, Single Benefit, Core Benefit, Single Core BenefitWith the general complexity of welfare systems, there are occasional requests for simplification of welfare systems....
in 2008. However, this did not eventuate before the November 2008 general election. After the election, the newly elected National Government proposed and implemented alternative reforms under the title "Future Focus" and established a Welfare Working Group to report on further reforms.
See also
Comparisons- Social Security (United States)Social Security (United States)In the United States, Social Security refers to the federal Old-Age, Survivors, and Disability Insurance program.The original Social Security Act and the current version of the Act, as amended encompass several social welfare and social insurance programs...
- Social Security (Australia)Social Security (Australia)Social Security, in Australia, refers to a system of social welfare payments provided by Commonwealth Government of Australia. These payments are administered by a Government body named Centrelink...
- Italian welfare stateItalian welfare stateThe Italian welfare state is based upon the corporatist-conservative model, as described by Gøsta Esping-Andersen, one of the world's foremost sociologists working on the analysis of welfare states.- Health care :...
- Scandinavian welfare model
- also Swedish welfareSwedish welfareSocial welfare in Sweden is made up of several organizations and systems dealing with welfare. It is mostly funded by taxes, and executed by the public sector on all levels of government as well as private organisations...
and Social Security (Sweden)Social Security (Sweden)Social security in Sweden consists of various social insurances handled by Försäkringskassan and welfare given out on a need basis by local municipalities.- Child allowance and parental benefit :...
- Social programs in CanadaSocial programs in CanadaSocial programs in Canada include all government programs designed to give assistance to citizens outside of what the market provides. The Canadian social safety net covers a broad spectrum of programs, and because Canada is a federation, many are run by the provinces. Canada has a wide range of...
- Social programs in Canada