Welfare facts and figures

The latest actuarial valuation of the welfare system contains some big figures and sobering facts:

* the current lifetime liability1 is $86.8 billion.

* sole parents spend an average 15.8 years on benefit with a lifetime cost2 of $234,000.

* Youth spend an average 18.9 years on benefit, costing $239,000.

* The average young beneficiary has a 43 per cent chance of being on benefit in 15 years’ time.

* 25 per cent of youth are expected to be on a benefit 40 years after the valuation date.

 The total liability for benefit types includes:

*$21 billion for Sole Parent Support

* $20.5 billion for Jobseeker Support

* $18 billion for Supported Living Payment

*$705 million for youth and $18 billion for non-beneficiary support.

The figures support the government’s determination to get those who can work into work.

Social Development Minister Paula Bennet said:

“. . . The valuation includes the future lifetime costs of those on a benefit at any time in the twelve months up to June 2012.

This detailed valuation says, 30-34 year olds first going on benefit aged 16-19 will cost four times as much as those who first go on benefit aged 30-34.”

Sixty per cent of those now aged 30-39, came onto benefit aged 16-19 and contribute 77 per cent to the liability for the current 30-39 year old age group.”

“That’s deeply concerning but totally justifies our focus on youth.”

It’s difficult to argue with that.

Helping young people get work-ready and then getting them into jobs offers them a much brighter future than benefit dependency would and means they are contributing tax rather than consuming it.

In Budget 2011 an extra $287 million was targeted to young people on benefits, including childcare assistance for teen parents.

Budget 2012 included another $188m for reforms providing more support.

The investment approach has changed the entire focus of the welfare system so that support is invested where it will make the biggest difference.”

“Welfare reforms actively target support to those who can work, but are at risk of becoming long-term welfare dependent without help,” says Mrs Bennett.

An investment approach takes a long-term view of each individual given their needs, challenges and prospects of a quick return to work.

“This approach and the detailed valuations allow the Government to spend taxpayers’ money where it will have the biggest impact,” says Mrs Bennett.

Until National was in government nobody took responsibility for reducing benefit dependency. Most money went to those it was easiest to help and the difficult cases were left to linger on benefits at a huge cost to them and us.

The positive impacts from helping young people stay off benefits and get into work are both financial and social.

Young people in work not only earn more than those on benefits, they are less likely to commit crimes and abuse alcohol and drugs.

1Lifetime liability: All future lifetime costs of benefit payments and associated expenses for those receiving benefits in the 12 months up to and including the effective date of the valuation.

2Lifetime cost: All expected future benefit payments to age 65 discounted to the valuation date.

3The Discount Rate: The time value of money. In other words – in today’s money – how much money we would need to put aside now to pay that liability, assuming that amount would earn interest. e.g. $10 in today’s money is worth more now, than $10 five years later.

One Response to Welfare facts and figures

  1. Armchair Critic says:

    Sixty per cent of those now aged 30-39, came onto benefit aged 16-19…

    It’s difficult to argue with that.

    That’s interesting, it’s the tranche of people that National stuffed up with their nasty approach to welfare in the 1990s.

    Unfortunately, Paula Bennett’s simplistic and vengeful approach to welfare is just another round of unnecessary cruelty.

    Here’s what really gets me about this post – the figures are presented with the underlying implication that Bennett somehow manages to magic away the costs. That’s completely untrue.
    People require resources to stay alive. Those resources have a cost to gather and distribute. Those costs don’t just vanish when a decree is issued, they are merely allocated differently and the transparency is further reduced.

    It requires a real trick of the mind to believe this kind of “see no evil, hear no evil” approach achieves anything worthwhile.

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