Beneficiary advocates are angry that an Australian company has emerged as the big winner in an experiment that will pay contractors up to $12,000 to help a sole parent or a person with mental health issues into paid work.
Perth-company Advanced Personnel Management (APM) has won pilot contracts for people with mental health conditions in Auckland, Waikato, Christchurch and Southland, and for sole parents in the Bay of Plenty, Wellington, Nelson and Canterbury - more than any local agency in the Work and Income tender.
The company will make between $2250 and $12,000 for every person with a mental health condition in Auckland that it can place in a job if the person stays employed for a year. The fees vary depending on the number of hours the person works and whether their needs are classified as medium, high or very high.
The $52 million three-year trial is part of welfare reforms that took effect last July, shifting 59,000 people off the former sickness benefit on to a broad new benefit called Jobseeker Support with an obligation to prepare for or look for work, and reinforcing requirements for sole parents to look for work part-time when their youngest children turn 5 and fulltime from 14.
Working-age sole parents on benefits have dropped by about 5000 since June, from 82,897 to 77,843, and have fallen by 13 per cent from a peak of 89,856 at the end of 2011 as the new requirements have been phased in.
Total working-age beneficiaries of all kinds have fallen by 8 per cent in the same two years, from 350,932 to 321,869.
APM's website describes the company as "the largest private sector provider of Australian Government funded vocational rehabilitation services and disability employment services". It says New Zealand operations started in 2012 with vocational rehabilitation contracts with the Accident Compensation Corporation (ACC).
NZ service delivery manager Karen Came said she could not speak because of confidentiality clauses in the Work and Income contracts.
Beneficiary Advocacy Federation co-ordinator Kay Brereton said the contracts should have gone to more local agencies such as the West Auckland Living Skills Homes (Walsh Trust), which won one of the mental health contracts, and the Kawerau Job Centre, which won a sole-parent contract.
"How can we see that moving people into work is going to be achieved without creating a community solution?" she asked.
Strive Community Trust chief executive Sharon Wilson-Davis said she did not bid for the contracts and allowed an existing sole-parent contract to end late last year because she felt it would be impossible to achieve the work placements required to earn fees under the new pilots.
"A lot of these people certainly want to work but sometimes you are better off to get them into further training," she said.
"Otherwise if you push them into these low-paying jobs, then when those jobs go they are back in the same place."
Welfare-to-work scheme brings hope
After the outward signs of success collapsed around her, Misty Leong was comforted by her teenage son.
When her husband left, she had to give up her successful real estate business to look after her daughter who was just 2, her son, and her own elderly mother.
It was 2009, in the early panic of the global financial crisis, and no one was buying houses anyway. Ms Leong went bankrupt. Her $1.8 million property was lost.
"I lost my health, money, property, everything," she says. "But my son, he says: 'Mum, you are still strong."'
Born in China 46 years ago and brought up in Macau, Ms Leong came to New Zealand in 1989. She worked as a waitress, then in a factory, but quickly opened her own takeaway bar in Forrest Hill on Auckland's North Shore.
Later she and her husband and a partner started a gardening and home service business, and from there Ms Leong moved into real estate with Century 21 in 2002.
When it all collapsed, she was bereft. "I had no food, no income, no anything. My husband left me with all the business debts and didn't help me with the children at all," she says.
She got the domestic purposes benefit. She never stopped looking for a job but had no luck.
Her break came when Work and Income referred her in February last year to In-Work NZ, the country's biggest private contractor of welfare-to-work programmes. Within two months she landed a checkout job at Devonport's New World supermarket. It was only 16 hours a week at first, but in July her hours increased to 22 and the in-work tax credit of an extra $60 a week, paid to single adults working at least 20 hours a week or couples working 30 hours between them, allowed her to move off the benefit.
List of successful tenders:
Sole-parent employment contracts
Auckland (200 clients): Skills Update; Quality Education Services; In-Work NZ.
Bay of Plenty (100): Alpha Consultants; APM Workcare; Choice Consultancy; Kawerau Job Centre.
East Coast (150): First Choice Employment; Career Change Ltd.
Taranaki (100): Taranaki Further Education and Training Services; Training for You; Choice Consultancy.
Wellington (150): Acts Institute; APM Workcare; In-Work NZ.
Nelson (100): Business Management School Ltd; Golden Bay Work Centre; Community Colleges NZ; APM Workcare.
Canterbury (200): APM Workcare; Catapult Employment Services; Steph Mainprize Consulting; MaxNetwork.
Mental health employment contracts
Auckland (600): Workwise; West Auckland Living Skills Homes Trust; Elevator Group; Connect Supporting Recovery; Framework Trust; APM Workcare.
Waikato (100): Workwise; APM Workcare.
Christchurch (200): APM Workcare; Workwise.
Southland (100): APM Workcare.