Despite $7.3m spend, beneficiaries in trial did not stay in work longer or earn more

A multimillion-dollar scheme to get beneficiaries with mental health conditions and sole parents back to work appears to have flopped.

Work and Income has already spent more than $7.3 million on the new services, part of wider reforms.

Up to 2000 people at a time are on the trial programmes, which offer extra services such as employment placement and in-work support.

The aim is to help beneficiaries return to and stay in work.

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The extra support costs taxpayers more, but if people stay employed it means more savings long-term.

Those referred are either sole parents or caregivers with children over 14, or those with common mental health conditions, including stress, anxiety or depression.

A full midpoint evaluation of the programmes, which began in September 2013 and will run until next June, has been delayed until later this year.

But an April 7 briefing to Social Development Minister Anne Tolley, released to Labour under the Official Information Act, shows that those on the programme did not stay in work for longer, or earn more.

"At the 12-month evaluation point in September 2014, the impact monitoring showed no detectable impact on off-benefit outcomes or earnings outcomes for the Mental Health Employment Service contracted trial compared to internal Work and Income services," the report said.

A 3 per cent lift in off-benefit outcomes for sole parents was noted, compared with a control group, but this was not statistically significant.

Carmel Sepuloni, Labour's social development spokeswoman, said the evidence showed the trials had failed.

"We were paying for outcomes that would have been achieved if they had just been getting the same support from Work and Income. It is just a lot of money spent on a trial that hasn't given the results that the Government anticipated."

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Innovation was fine, she said, but could come from within the public sector, not from private providers.

But Mrs Tolley said she made no apologies for trialling different ways to get beneficiaries into work.

Beneficiaries advocate Kay Brereton said the underwhelming results showed people pushed off benefits were motivated to find work. "Unfortunately the ministry comes from a different direction - the only reason they haven't got a job is that they are not trying hard enough."