Welfare shake-up targets teenagers

The government is going to fundamentally change the welfare system for young people, with it no longer simply handing money over the way it does now.

Prime Minister John Key used his keynote address at the National Party conference in Wellington this afternoon to announce a much more managed system of payments, with the young person's support provider, or the Ministry of Social Development in some cases, paying bills on their behalf and helping them manage within their budget.

While there was still a lot of detail to work through, Mr Key said some essential costs, such as rent and power, would be paid directly on behalf of those who receive the special 16- and 17-year-olds' benefits, and also to 18-year-old teen parents.

“Money for basic living costs like food and groceries will be loaded on to a payment card that can only be used to buy certain types of goods and cannot be used to buy things like alcohol or cigarettes,” Mr Key said.

“A certain, limited amount [of money] will be available for the young person to spend at their own discretion.”

Those who receive these types of payments would have to adhere to certain obligations, such as attending budgeting or parenting programmes, he said.

“More importantly, each of these young people will have to be in education, training or work-based learning.”

As part of the new approach, the government would fund community and other organisations to provide comprehensive and concentrated support to these teen beneficiaries, he said.

The new approach would cost between $20 million to $25 million a year at the outset, he said.

Mr Key made no apologies for the hands-on approach.

“These are kids as young as 16 we are talking about, many of whom have difficult backgrounds.

“We simply cannot continue to give them money and trust they will do the right things with it.

“That approach has not worked.”

The new system will mean the Privacy Act and the Education Act will have to be changed, Mr Key said.

“Schools will be required to tell us when 16- and 17-year-olds leave during the year and information on these young people can be shared between the ministries of education and social development.

“For the first time we will be able to find out who these disengaged 16- and 17-year-olds are; what circumstances they are in; what problems they have had at school; and what their risk of long-term welfare dependency is.”

Over the past year, there were between 8,500 and 13,500 young people aged 16 or 17 who were not in education, training or work, he said.

“What we know is that when these people turn 18, 90% of them are on a collision course with the benefit system.

“Some are already there.”

Around 1600 of those young people are on a special 16- and 17-year-olds' benefit, Mr Key said, either because they are teen parents or because the relationship with their parents has seriously broken down.

“These young people will almost certainly go on to an adult benefit at age 18.

“Research tells us that young people who go on to an adult benefit that early will stay on it longer and the lifetime cost of that benefit receipt will be very high.”