Changes to benefit system three to four years away

11.00am

It will be another three to four years before the overly complex welfare benefit system is revamped, Social Service Minister Steve Maharey said today.

Yesterday afternoon Mr Maharey released Social Development Ministry briefing papers that said many people were missing out on welfare assistance because the benefit system was complex, confusing and difficult to administer.

The first legislative changes to the targeted benefit system had been delayed because of the early election and making further changes would be expensive and it was necessary to time reforms carefully, Mr Maharey told National Radio.

"We will have to cut our cloth according to the money available in each budget.

"But my hope is we can get agreement with cabinet to turn these papers into changes over the next three to four years where we see changes in benefit structure (and) changes in adequacy of income going into households," Mr Maharey said.

The papers estimated case managers were spending 70 per cent of their time administering income support with a disproportionate amount of that time spent on administering discretionary hardship assistance, leaving only 30 per cent available to focus on employment.

The system needed to be simplified, the papers said.

In 2000/01 welfare spending, not including superannuation, was about $7.1 billion or 6.7 per cent of gross domestic product.

About 16.5 per cent of working age people and 26 per cent of children were reliant on a benefit.

The papers said the social welfare system was not providing adequate incomes for many families.

"Providing a decent income to low income families should be seen as an investment in children."

Key areas had not been inflation-adjusted. For instance, Family Support rates had not been adjusted since 1998 resulting in a 5.5 per cent decline in the "real value" of these payments.

More people were relying on discretionary hardship assistance. For instance, the number of special needs grants had increased 16 per cent in the two years to December 2001.

The ministry had found up to 29 per cent, or 285,000 children, were living in poverty.

It said there were disincentives in the system which meant some people might not receive any financial reward from moving into full-time work.

"The system needs to ensure that the move from benefit to work is as smooth as possible, that families can rely on a certain level of income and that increasing participation in paid employment pays more than the benefit," the papers said.

The ministry also said there was a low take-up of social assistance by working families on low incomes.

Many people who were entitled to the community services card, accommodation supplement and disability allowance were not accessing this.

- NZPA