2016 Valuation of the Benefit System for Working-age Adults
17 May 2017.
This is the sixth valuation of the future cost of New Zealand’s working-age benefit system.
The cumulative impact over five years of change to the way we work with people is approximately a $13.7 billion reduction in the welfare system’s future lifetime cost.
Those changes have meant that compared to the pre-reform 2012 valuation clients are expected to spend about 1,300,000 fewer years on main benefits over their working lifetimes. Over three quarters of this reduction in future years on benefits can be attributed to policy and operational changes.
The improvement has been largely driven by improvements for Sole Parents and Jobseekers, but also by a reduction in re-entries to benefits. Essentially, people are exiting the welfare system in ways that are more stable and sustainable.
Previous years’ valuations have considered the interactions between risk factors and cross-agency service usage. The valuation continues to incorporate data on clients’ child protection history, criminal history, educational status and intergenerational benefit receipt. This year’s valuation incorporates new data from the government provided social housing support through the Income Related Rent Subsidy.
The 2016 benefit system valuation uses a combined benefit system – social housing projection model, which represents the largest technical extension to the valuation model since 2012. While the benefit system valuation does not include social housing costs, the combination of the benefit and social housing systems cohorts allows us to better understand the combined population.
For example, benefit system clients in social housing have a higher risk of long-term benefit dependency. Combinations of key risk factors are also more likely to be present. For example, 18-24 year old benefit system clients who have spent time in social housing are two times more likely to have a criminal conviction and two times more likely to have had a parent on benefit for at least 80 per cent of their teenage years.
The valuation considers such clients and identifies a number of factors which are most likely to signal risk of benefit dependency.
