The extra $188.6 million being ploughed in to pay for the Government's welfare reforms includes a $51.8 million package to contract out the case management of 1000 sole parents and 1000 people with health or disability issues to private providers as a trial to see if they are more effective at getting high needs' beneficiaries back into work.
A spokeswoman for Social Development Minister Paula Bennett said the results for that group of beneficiaries would be compared with those of a similar group being dealt with by Work and Income and further decisions would be made on whether to expand the use of contracted case management, which the Work and Income board had recommended for more specialist attention and one-on-one care.
The $51.8 million will also cover support for those 2000, such as paying for courses, wage subsidies and support when they returned to work, such as transport.
The latest welfare reforms kick in in July this year and will place heftier work-testing and job hunting requirements on almost all beneficiaries except for the seriously ill or seriously disabled who are unable to work.
The reforms which come into effect in July this year will pool beneficiaries into three broad categories, depending on their ability to work.
They include the Jobseeker Support for all those who are considered ready and able to work, Sole Parent Support for those whose children are too young for school and the Supported Living Payment for the long-term ill or seriously disabled who are unable to work.
It will also introduce a range of penalties for beneficiaries who do not meet job hunting requirements, such as failing a drugs test and those with arrest warrants.
The new spending in the Budget also provides for 354 more Work and Income staff, including 214 front-line staff in Work and Income offices. Social Development Minister Paula Bennett said it would mean Work and Income was actively working with 41 per cent of beneficiaries.
The extra funding would also be used to develop a model to assess beneficiaries on their ability to work and $16.4 million for the Work Bonus for sole parents who return to work before their youngest child reaches school age.
Finance Minister Bill English has defended the need for the extra funding for the second tranche of the welfare reforms, which follows a funding injection of $288 million last year.
"By 2015/16 we will be spending $500 million less on benefits than we anticipated 12 months ago. Part of that is because of increased employment opportunities, but also, we believe, it is the early effects of changes in welfare."
Work and Income has estimated the numbers on benefits will fall by between 28,000 and 44,000 by 2017, with estimated savings of up to $1.6 billion.