Budget 2012: Students and disabled hit the hardest

Students and the disabled will be the biggest losers among a multitude of small cuts across the gargantuan welfare bureaucracy that will help fund new services for jobless youth.

Student allowances are being trimmed by $47.7 million (7.4 per cent) in the coming year, mainly because of a pre-announced decision to limit allowances to 200 weeks, shutting out many postgraduate students.

Disability allowances will be cut by $37 million (9.2 per cent) by removing funding for some medicines and alternative treatments, cutting funded services for beneficiaries and reducing numbers getting the allowance.

The Budget also almost halves job subsidies, from $40 million to $22 million, cuts family services by a net $7 million, and saves $20 million from a long list of small "efficiency savings", mostly in administration.

Read all of nzherald.co.nz's Budget coverage here.

Social Development Minister Paula Bennett said $206 million was being "reprioritised" out of her budget over the next four years - an average of $51.5 million a year - to pay for most of the $287.5 million that will be spent over that period on welfare reforms.

The bulk of the extra money in the coming year will go to companies and community agencies to help "at-risk" school leavers to find jobs or further training (a net $17 million extra), and to help teenage beneficiaries with their education, budgeting and parenting ($7.3 million) and childcare and contraception ($6.5 million).

Schools will get another $6.6 million for more social workers and youth workers, and Child, Youth and Family Services will get an extra $11.5 million for more social workers, mental health services and sharing information on vulnerable children with other agencies.

The shift reflects a new "investment" approach to save money by investing now in those at most risk of long-term welfare.

Officials have calculated that the average teenager who goes on a youth benefit before age 18 will cost taxpayers $113,000 in total welfare costs over the rest of their lives, and teen parents will cost an average of $250,000.

The Budget allocations still show continued increases in spending on the domestic purposes and sickness benefits over the next four years, apparently because the full changes that will move many sole parents and all sick people on to work-tested "jobseeker support" will not take effect until July next year.