Benefit Forecasts for the Economic and Fiscal Update 2022
The Treasury’s Budget Economic and Fiscal Update (BEFU) released on 19 May 2022 includes benefit number forecasts as part of the fiscal forecasts
MSD’s benefit forecasts were finalised using benefit data up to February 2022. This publication illustrates key benefit number forecasts presented in the BEFU 2022.
The last forecast was published at the Half Year Economic and Fiscal Update (HYEFU) 2021 which was published in December. These forecasts are important because the New Zealand Government spends a large portion of the Budget on Benefit or Related Expenses ($30 billion over the 2021/22 financial year) and these forecasts are used to inform Budget decisions.
In February 2022 there were 355,000 people on a working-age benefit (defined here as Jobseeker Support, Sole Parent Support and Supported Living Payment), which was close to forecast with around 3,300 (0.9%) more people than expected at HYEFU 2021.
The number of people on benefit is expected to decrease before rising from around mid-2023 due to a change in the economic outlook
The number of people on benefit is expected to decrease to around 331,200 by May 2023. From around mid-2023, the Treasury is forecasting a period of low economic and employment growth. As a result, we expect a rising number of people on benefit. The expected number of working-age beneficiaries is displayed in Figure 1.
There were around 2,100 more people on Jobseeker Support (JS) than expected at HYEFU 2021 as at February 2022. The number of people on JS follows a similar trend to working-age benefit numbers and is expected to increase from around mid-2023 (see Figure 2).
There is always a level of uncertainty surrounding economic and benefit forecasts
At BEFU 2022, there is particular uncertainty around the timing of the turning point in mid-2023 given the current economic drivers.
Figure 1: Working-age benefit numbers
Figure 1 shows past working-age benefit numbers as well as forecast numbers.
The grey line shows the actual number of people who received a working age benefit from June 2014 to February 2022. The green line shows the forecast at HYEFU 2021.
At the HYEFU 2021 forecast, we expected the number of people receiving a working-age benefit to fall from 351,700 in February 2022 to 326,700 in June 2026. The blue line is the latest BEFU 2022 forecast. At BEFU 2022, we expect the number of people receiving a working-age benefit to continue falling from 355,000 in February 2022 to around mid-2023. From mid-2023, numbers are expected to increase to 354,500 in June 2026.
Figure 2: Jobseeker Support
Figure 2 shows past working-age benefit numbers as well as forecast numbers.
The grey line shows the actual number of people who received Jobseeker Support from June 2014 to February 2022.
The green line shows the forecast at HYEFU 2021. At the HYEFU 2021 forecast, we expected the number of people receiving Jobseeker Support to fall from 183,400 in February 2022 to 182,800 in June 2026. The blue line is the latest BEFU 2022 forecast, this shows the number of people expected to be supported by Jobseeker Support over the next five years. At BEFU 2022, we expect the number of people receiving Jobseeker Support to continue falling from 185,500 in February 2022 to around mid-2023. From mid-2023, numbers are expected to increase to 182,800 in June 2026.
