Welfare reform focuses on beneficiaries with children, youth

UPDATE 5pm: The next stage of the government's welfare reform regulations will begin next month.

Prime Minister John Key and Social Development Minister Paula Bennett announced reforms that both described as so complex and substantial, they will be introduced in two stages.

The first stage of that legislation, which will require some beneficiaries with children to be available for work, as well as those on widow's and women alone benefits. The first stage will also target youth who are on a collision course with long-term welfare dependency, Ms Bennett said.

According to documents released by the government this afternoon, stage one changes affecting the DPB, widow’s and women benefits alone include ensuring sole parents with children five and older are available for and supported into part-time work, while sole parents with children 14 and older should be available for and supported into full-time work.

Those work expectations will also be extended to women receiving the widow’s and women alone benefits and to partners of beneficiaries with children.

Sole parents who have another child while on a benefit will have to be available for work after one year, in line with parental leave.

Stage one changes of the reform that will affect young people and teen parents include a managed system of payments with essential costs like rent and power paid directly, with an allowance and a payment card for living costs, Ms Bennett said.

Youth service providers will be incentivised to help young people into work, education or training. Young people encouraged to undertake budgeting and parenting courses, she said, while ministries will now also share information to target school leavers most at risk of coming onto a benefit from age 18.

The first Bill will be introduced in March, with the youth changes beginning to take effect from the end of July. The other initiatives around work obligations will come into effect in October.

A second Bill containing an overhaul of benefit categories and a clamp down on fraud will be introduced in July. This will form the second part of the National-led Government’s welfare reform programme and will take effect from July 2013.

The reforms will cost $130 million a year to implement, with an expected saving of $1 billion over four years.

Prime Minister John Key and Social Development and Employment Minister Paula Bennett are due to use Mr Key's post cabinet press conference at 4pm to announce further details of the reforms, which were first raised at the National Party's national conference in August last year.

That announcement sign-posted the way forward, with detail and a timeline still to be worked out at that stage.

Much of that new information is expected at this afternoon's press conference.

The biggest shift in thinking that came out of the August announcement was a fundamental change in how the welfare system will work for young people under a National government, with it no longer simply handing money over the way it does now.

In making the initial announcement, Mr Key said the system of payments to those who receive the special 16- and 17-year-olds' benefits, and also to 18-year-old teen parents, would be more closely managed. The young person's support provider, or the Ministry of Social Development in some cases, would pay bills on their behalf and help them manage within their budget.

It was planned that money for basic living costs like food and groceries would be loaded on to a payment card that could only be used to buy certain types of goods and not be used to buy things like alcohol or cigarettes.

There are around 1600 young people on a special 16- and 17-year-olds' benefit, either because they are teen parents or because the relationship with their parents had seriously broken down.