Statistical Note

Centre for Social Research and Evaluation
Ministry of Social Development

Examination of the statistics on Invalid’s Benefit (IB) (Wilson 2005)¹ shows that 81% of the growth in the proportion of people aged between 15 and 59 taking up IB between 1995 and 2002 is associated with current or recent contact with the benefit system, indicating transfers from elsewhere in the benefits system were important. This statistic is worth elaborating on, as it needs to be placed in context to be fully understood.

1. The growth in numbers of IB recipients over the decade 1993 2002 appears to have been generated by increased inflows (or grants) rather than lengthening duration of stays. (pp 15 19)
2. Once broken down, the growth in inflows can be partly explained by population growth, partly explained by population ageing, partly explained by increased rates of inflow (the % of people in the population in the age group 15—59 coming onto IB) at ages 60 -64 largely due to the rise in the NZS age, and partly explained by increased rates of inflow at ages 15-59 (pp 22 23 of our report).
3. Increased rates of inflow at ages 15 59 accounts for 51% of the growth in inflows to IB (Table 2.3 on p 23).
4. When we break that 51% down further, we find that 60% is accounted for by direct transfers from other benefits (Table 2.5 on p 25) and 40% is accounted for by growth in entries from outside the benefit system.
5. When we break down growth in entries from outside the benefit system by whether or not people had spent some time in the benefit system in the last two years, we find that, between 1995 and 2002, more than half the growth reflects growth in entries by people who had been in the benefit system in the last two years (Figure 2.8 and Table 2.6 on pp 25 26).
6. A complication is that with the data available it is not possible to do this last breakdown for the same period because of the need to look back two years so this comparison is between 1995 and 2002 rather than between 1993 and 2002.
7. When we look at the benefits that account for the growth in direct transfers (pp 27 30) we find that most is accounted for by growth in flows from SB, but growth in flows from DPB/WB, UB and Benefit as a Partner are also important).

According to Wilson et al. (2005:21), "Growth in numbers transferring after spending all of the last two years on benefit explains 47% of the growth in rates of entry among those aged 15–59 between 1995 and 2002 (Table 2.6). A further 34% is associated with growth in entry by those who had spent some but not all of the preceding two years on benefit, so that 81% is associated with growth in entry among those with either current or recent contact with the benefit system."

Thus IB growth for those aged between 15 and 59 will have been partly associated with population growth and population aging as well as growth in transfers, re-entries and new entries.

¹ Wilson, M., K. McLeod and S. Sathiyandra (2005) Growth in Numbers of Sickness and Invalid’s Benefit Recipients 1993–2002, Centre for Social Research and Evaluation, Ministry of Social Development, Wellington.