The year in review
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As an organisation we give effect to social development in a number of ways (setting direction, providing support to clients, partners and Ministers, strengthening inclusion and participation, and building and supporting capability). We delivered on our core functions – as at 30 June 2019, we were providing direct financial support to approximately 1.25 million people (including students), and during the year the Government invested more than $26 billion on providing support to New Zealanders through benefits, New Zealand Superannuation, housing assistance and student allowances. Although providing support is one way in which we fulfil our purpose as an organisation, all of the wider work we do contributes to the broader social development of New Zealanders in some shape or form.
Delivering on Government priorities
In 2018/19 we supported the Government with its priorities to:
- overhaul the welfare system to ensure it is fair and accessible for all New Zealanders
- strengthen our service culture so people are treated with respect and dignity
- provide warm, dry and affordable housing for all, and end homelessness
- support providers to respond to family violence in their communities
- support the work under way with Crown–Māori relationships with a focus on improving equity and equality for Māori
- reduce child poverty
- realise the potential of rangatahi
- invest for social wellbeing by thinking long term and making great choices on how best to build people’s potential and wellbeing
- support regional and provincial growth.
Supporting the overhaul of the welfare system
The Government wants to ensure that the welfare system is fair and accessible for all. In May 2018 the Minister for Social Development announced that a Welfare Expert Advisory Group (WEAG) would be set up to provide advice on how to achieve this. As the lead agency for social development, we took an active part in the secretariat supporting WEAG’s work.
WEAG presented its recommendations in its final report Whakamana Tāngata: Restoring Dignity to Social Security in New Zealand in February 2019. The report, which was published in May, recommended fundamental change to the welfare system, centred around a major shift from a system that provides a safety net to a system that strengthens the mana and dignity of people using it.
The Government acknowledged that achieving the level of change proposed will require a significant multi-year work programme, and agreed on three priority areas as the focus of initial work:
- taking further steps to ensure that individuals and families have enough income to meet their needs and support their wellbeing
- strengthening our focus on supporting people to achieve meaningful and sustainable employment, while also recognising the value of unpaid work
- improving access to affordable housing.
As the Government has been clear that change is not limited to the recommendations of the WEAG report, we have supported the Minister to take further steps towards realising the Government’s vision for welfare. This has included:
- continuing to focus on improvements to our frontline services
- indexing main benefit payments to the average wage, from April 2020
- repealing section 192 of the Social Security Act 2018 (which succeeded section 70A of the 1964 Act), which requires a sole parent benefit recipient to name the other parent of their child – again from April 2020
- increasing abatement thresholds for main benefits from April 2020
- increasing staff at our front line, to support a focus on employment
- launching Te Pae Tata to embed into MSD a Te Ao Māori view and a different way of working with Māori
- expanding employment services such as Mana in Mahi and Oranga Mahi.
Operating under new social security legislation
In September 2018, exactly 80 years after New Zealand’s first Social Security Act became law, five years of work led by MSD across three Parliaments culminated in the passage of a new simplified Social Security Act [5] , together with two other Acts (the Residential Care and Disability Support Services Act 2018 and the Artificial Limb Service Act 2018), the combination of 24 individual regulations into new consolidated Social Security Regulations, and updates to 28 welfare programmes and 15 Ministerial directions. The new legislation replaces some outdated terms with more inclusive language and is clearer and simpler to follow.
Implementing the Families Package
We continued to implement elements of the Families Package, which was announced in December 2017.
The Winter Energy Payment, the Best Start tax credit and changes to Working for Families tax credits all took effect from 1 July 2018. Our clients did not need to take any action as the changes were made automatically.
In the first year of the Winter Energy Payment [6], 774,000 New Zealanders received payments totalling $441 million to help with their household heating costs over the winter months. We supported the Government to enact a legislative amendment that ensures that from 2019 the Winter Energy Payment will be paid according to Cabinet’s policy intention.
Responding to and addressing family violence
New Zealand rates of family violence are amongst the highest in the developed world. To address this major issue the Government has established a multiagency joint venture, in which MSD and nine other agencies work together to reduce family violence and sexual violence. The Joint Venture uses an integrated response that ensures the help provided to victims and families is tailored to their needs and that perpetrators are held to account and supported to change their behaviour.
In 2018/19 we invested $53 million in supporting victims and perpetrators of family violence and sexual violence and on prevention and education, and worked with more than 50 providers and community groups.
Improving clients’ MSD experience and their access to entitlements
We want people to feel as comfortable as possible when they engage with us. Sometimes asking us for support is stressful and challenging for people. We have been listening to our clients and drawing on our data, insights and tools to understand their needs better so that we can make it easier for people to deal with us, and deliver services more effectively.
This year we continued our programme of making our site offices warmer, more welcoming places – we have now refreshed the physical layout in 52 offices, and plan to expand this to all offices in the next year. Clients have more opportunities to give us feedback about their experience with MSD.
Continuing our focus on sustainable and meaningful employment outcomes
Employment is a key way for many of our clients to live independently and reach their potential. We invested more than $380 million on employment, work-readiness and training services, and supported over 70,000 people into work. In addition, through industry partnerships over 5,000 employers offered over 16,000 work and training opportunities to clients.
Supporting young people into work
The Government is committed to getting young people into sustainable and meaningful work. We played a significant role in developing a flagship programme, Mana in Mahi – Strength in Work, which helps to facilitate partnerships between MSD, other government agencies, employers and employment programmes and provides wage subsidies and pre-employment training funding. Mana in Mahi placed 247 young people into sustainable employment this year through contracts with 161 employers.
Working with others to improve client outcomes
We can achieve better outcomes and ensure that New Zealanders live in inclusive and supportive communities when we are connected. We have contracts with about 2,200 other organisations who provide services around prevention and response to vulnerability and harm, youth development, disability support, work readiness, skills training, and getting people into work, and we invested over $400 million into communities, iwi, non-government organisations (NGOs) and business and industry partners.
We are implementing new ways of working with the sector to achieve the best outcomes. For example, it is now standard practice for both MSD and Oranga Tamariki to work with providers on the co-design, trialling and procurement of new services, for example Family Violence Whānau Resilience services, sexual violence services, Youth Services, the Intensive Intervention Service and Whānau Care.
Adapting to changes in public housing responsibilities
In October 2018 a new agency, the Ministry of Housing and Urban Development (MHUD), was established. MHUD took over many of the public and transitional housing functions that we had previously been performing, but we still play a key role in providing access to housing support, by assessing eligibility for public housing, managing the public housing register, and providing assistance for emergency and transitional accommodation.
We worked closely with MHUD on an action plan for the development of a National Homelessness Strategy – a cross-government multiagency initiative to prevent or minimise homelessness in New Zealand, addressing housing supply, homelessness prevention, and support to get people into suitable homes.
Responding to adverse events
Our reach into and connections within communities mean that we are well positioned and able to provide support and to respond to adverse events when they occur. We played a lead role in the all-of-government response to the Christchurch mosque attacks of March 2019, with extra staff on the ground including 12 Muslim case managers who travelled from Auckland. We implemented a new Ministerial Welfare Programme that enabled clients to receive over $400,000 in hardship and Civil Defence payments, and in the months that followed the attacks we have provided services to help people with financial management, improving their English, and learning to drive. In the months since the attack we have led the central government response and have maintained a dedicated team of case managers to support the victims of the attacks and their families. This case management assistance is provided in a number of ways, including direct financial assistance, referral to specialist immigration advice, and assistance to access mental health support and counselling services.
Launching our new strategic direction
In August 2018 we launched our new organisational strategic direction, Te Pae Tawhiti, and we commenced work on an operating model and business case to support its implementation. Te Pae Tawhiti embraces our organisational purpose Manaaki tangata, Manaaki whānau – we help New Zealanders to be safe, strong and independent, and sets out three key changes (shifts) that we want to make to the way we work. Te Pae Tawhiti signals a distant horizon for us to aspire to – one where we work differently to achieve better outcomes for all New Zealanders, and particularly for Māori. This year we began our journey towards becoming a more responsive organisation. It will, however, take a while before we can properly measure the outcomes of this. We launched our Māori strategy and action plan, Te Pae Tata, which articulates how we will give effect to Te Pae Tawhiti to do better for Māori. We also began development of a strategy and action plan (Pacific Prosperity) to guide us in our work to improve outcomes for Pacific peoples.
Facing up to challenges
We saw a significant increase in demand for financial assistance across the board. The number of people on main benefits increased by nearly 15,000, and we provided nearly 1.7 million hardship grants worth $480 million – an increase of about 500,000 and $150 million on the previous year. Because our case managers spent more time responding to this increased need, they were unable to spend as much time with clients exploring employment- and work readiness-related outcomes. However we still saw 70,000 people leave the benefit system because they got work. In Budget 2019 we received funding for 263 extra case managers over the next two years to restore the employment focus.
Demand for public housing continues to increase – nearly 15,000 people and households were on the Public and Transitional Housing Registers at 30 June 2019, four times as many as five years ago. Amongst the reasons for this increase are the lack of affordability of housing options and constraints on housing supply. New Zealanders in need received over $90 million of emergency assistance for accommodation – compared to $33 million the previous year. An inquiry by the Privacy Commissioner found we were taking a blanket approach to approaching third parties for information before requesting it from clients. We immediately updated our practices to ensure that we take a case-by-case approach to how we ask for information from outside parties, and to ensure we do so in a way that is consistent with our legal obligations.
Reviewing our baseline funding
In 2018/19 we worked with the Treasury to review our baseline funding. The review found that generally our baseline expenditure was providing good value for money for the Government, but that there was room to improve, and that Te Pae Tawhiti is well aligned with Government priorities. The review recommended a stabilisation package to balance funding of cost pressures in our operating model (addressing risks to service delivery) and new programmes for employment assistance, disabled people and people with health conditions, and communities, children and youth. The Budget of May 2019 delivered the majority of this stabilisation package and also funded areas that had not been part of the baseline review, such as welfare system settings, family violence and sexual violence services, and a range of other discrete initiatives.
Managing our finances
Our total expenditure for the year ended 30 June 2019 was $26.439 billion, against a Supplementary Estimates budget of $26.876 billion. This expenditure covered departmental operating and administration costs, capital, and payments to working-age people, whānau, families, seniors and students. We also made payments to third-party providers, other organisations and groups within communities to deliver community services. We spent $1.024 billion on departmental operating and administration expenses, and $64 million in capital in 2018/19. Personnel costs ($496.1 million) made up just over 48 percent of the total departmental operating expenditure.
Departmental operating expenses
Leadership changes
This year we farewelled our Chief Executive of seven years, Brendan Boyle, and welcomed his successor, Debbie Power, and two new deputy chief executives.
Looking into the future
In 2019/20 we will continue to put people at the centre of everything we do. We will continue to develop our operating model and change the way we work to ensure we achieve this. Additional case managers will enable us to refocus on helping our clients into jobs, or where appropriate to increase training and skills development. We will continue to develop positive relationships with our clients built on mutual trust, and to work proactively with people to get them into sustainable jobs that are right for them. We are talking about how we can focus on helping people get what they need first time, every time, and creating the time and space we need to do this effectively. We have already begun to change. We are improving the way we deliver our services to clients. We are improving collaboration with providers, partners and other government agencies. We are forward-facing and looking at how best to support New Zealanders into the future. A lot of change is happening in our organisation, but we remain focused on how we work with our clients to help them to be safe, strong and independent. That core purpose will not change – but we will do it better.
Footnotes
[5]The new Act repealed the Social Security Act 1964, which after hundreds of amendments over 54 years had become disjointed and hard to understand.
[6] The first Winter Energy Payment season ran for 13 weeks from 1 July 2018. From 2019 onwards, payments are available for 22 weeks each year from 1 May.
