78.1b reasons for welfare reform

The welfare system costs $78.1 billion over the working lifetime of beneficiaries.

The valuation report, which cost the Government $800,000 to  prepare, is the first of its type in the world and designed as a measuring stick  for the likely cost of the welfare system.

The figure is based on the number of beneficiaries in the  system in 2011 but uses 20 years of data to map their behaviour.

Using figures from this year, the cost is 10 percent higher  at $84.9 billion.

Social Development Minister Paula Bennett says the report  shows the huge cost of beneficiaries and emphasises the importance in changing  the path of youth welfare dependency. . .

The break down of costs is:

    • Benefit:      $17.8 billion
    • Invalids      Benefit: $19.1 billion
    • Accommodation      Supplement: $10.2 billion
    • Sickness      Benefit: $7.2 billion
    • MSD      Expenses: $6.8 billion
    • Woman      alone/widow’s benefit/Orphan’s benefit/unsupported child/DPB       carer/emergency benefit: $5.1 billion
    • Unemployment      benefit: $4 billion
    • Recoverable      hardship assistance/net loan cost: $4 billion
    • Disability      allowance/child disability allowance/childcare subsidy: $3.4  billion
    • Loans:      $0.4 billion
    • Total:      $78.1 billion (as of March 2011) but $84.9 billion using June  2012      figures. The total figure does not include costs associated with  welfare      like family court costs.

Ms Bennett says taxpayers spend $22 million a day on the  welfare system and this needs to be reduced.

The report is intended to help the Ministry of Social  Development focus on the most important areas, especially long-term welfare  dependency. . .

Some people will need welfare permanently because they will never be able to support themselves.

Most people require only temporary support.

The problem area is those whose need is temporary but whose dependence becomes permanent.

The shorter the time people who could support themselves are in receipt of a benefit the better it is for them, society and the economy.

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