PM Key announces welfare policy focused on early school leavers; 'Competent' adult to handle benefit money

‘Disengaged’ 16 and 17 year-old school leavers are to be targeted by the National Party if it wins a second term in office.

Prime Minister John Key today announced a youth welfare policy as the first part of a suite of changes to New Zealand’s welfare system.

See the National Party's Q&A sheet on the policy here.

The Labour Party attacked the policy, saying there needed to be more of a focus on job creation, rather than managing young people while they were on benefits.

More power

In his address to the National Party’s annual conference in Wellington, Key said the government needed to know more about young people who left school early.

The policy would see the government outsource oversight of a 16 or 17 year old school leaver's benefit to organisations such as Presbytarian Support, which would receive funding for 'competent adults' to help the young person manage their bill payments and budget.

National would change the Privacy Act and Education Act to require schools to alert the government when 16 and 17 year olds left school early. The Acts would be amended to allow information about these people to be shared between the Ministers of Education and Social Development.

"For the first time, we will be able to find out who all 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," Key said.

National would change how benefits given to 16 and 17 year old school leavers would be handled. A 'competent' adult would be given the young person's welfare payments to pay bills such as rent and power on their behalf and help manage their budgets.

“While there is still a lot of detail for officials and ministers to work through, we envisage that some essential costs, like rent and power, will be paid directly on the young person’s behalf,” Key said.

“Money for basic living costs like food and groceries will be loaded onto 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, and that a certain, limited amount will be available for the young person to spend at their own discretion," he said.

The support provider for each young person would be required to be "very active" in helping them budget and teaching them how to manage money.

The government would not expect that to just be the end of the case, Key said.

"There is a deal involved here. Young people who are receiving these payments will have clear obligations, for example; to attend budgeting or parenting programmes. Most importantly, each of these young people will have to be in education, training or work-based learning," he said.

That included teen parents.

"We have carefully considered the interests of the children here. And we absolutely believe that a child’s interests are best served if their parent continues with her own education, and if the child is in good-quality childcare. So we will be insisting that teen parents continue with education or training, and we will cover the costs of the childcare involved," Key said.

"Some of that education will be in Teen Parent Units, and we envisage there will be more of these established. But that is only one option among many. Innovative programmes are already being developed in communities around New Zealand," he said.

"So there will be flexibility to respond to each teen parent’s individual circumstances, and that also includes the timing of when that education or training will commence. For the most part, that will be up to support providers to determine."

By the time their child is one year old, most teen parents would be expected be in some form of education or training.

"So the three parts of this new benefit policy – which will apply to all young people the government supports financially – are intensive support and mentoring; money management; and new obligations, including to continue with education or training," Key said.

"If all this sounds a bit hands-on, I make no apologies.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," he said.

"That approach has not worked."

Labour attacks

Meanwhile the policy announcement failed to address the elephant in the room - job creation, Labour Party spokeswoman for Employment and Youth Affairs Jacinda Ardern said in a media release.

“Our young people don't need welfare reform, they need jobs,” Ardern said.

“Rather than use his key note speech today to outline his economic plan for New Zealand, John Key gave us his third attempt to address youth unemployment, and for the third time ignored the primary problem- there just aren't enough jobs out there,” she said.

“New Zealanders aged 15-24 make up 45% of the total number of our unemployed population. Youth don’t have time for a third failed approach from government. When National came in, there were roughly 200 under 24 year olds who had been on an unemployment benefit for more than a year, that number is now eight times higher."

New Zealand's proportion of unemployed youth was one of the highest in the OECD and worsening.

"Our youth unemployment rate stands alongside that of adult unemployment - an alarming concern," Ardern said.

“National’s suggested punitive changes to benefit structures will affect roughly 1,500 16 to 17 year olds, but is being treated like a silver bullet. How will food stamps move young people into education or work?" she said.

“This is the wrong focus- it's the 58,000 young people who are not in employment, education or training that need the Government’s attention. Is this really National’s economic plan, and all the hope and aspiration John Key has for our young people? The 170,000 jobs promised by National need to materialise, and fast.”

See Key's full speech below:

Ladies and Gentlemen, fellow National Party members, it’s fantastic to be here.

I am proud to be the leader of our great Party – the National Party.

And I am proud to be leading a Government that is building a brighter future for all New Zealanders.

I want to thank you all for being here today and for the work you do for the Party.

You are the heart of this Party and you make National strong.

This year we celebrate the National Party’s 75th birthday.

We remain as true to the values of National as the Party’s founders did back in 1936.

We stand for a safe, prosperous and successful New Zealand, where all Kiwis have the opportunity to get ahead and to realise their goals.

We believe in personal responsibility, individual freedom and choice.

And we believe in encouraging potential and rewarding achievement.

Ladies and Gentlemen, our Party is in great shape to fight this year’s election.

I want to thank our President, Peter Goodfellow.

With Peter at the helm, the National Party has solid local foundations and a head office that is geared up and ready to campaign.

I want to thank our Regional Chairs, our Deputy Chairs, Board Members, Electorate Chairs, volunteers and members.

You are all crucial to the fortunes of this Party.

I want to pay special thanks to the man who has delivered three excellent Budgets in the toughest of circumstances – my Deputy, Bill English.

I want to thank my talented team of Ministers, who are working hard to secure a brighter future for New Zealand.

I want to thank all our Members of Parliament who do such a great job representing Kiwis from Northland to Invercargill, and from the East Coast of theNorth Island to the West Coast of the South Island.

We are a strong, stable Government and we have delivered on our promises.

We have turned around an economy that was deep in recession to one that is growing.

We have seen 43,000 new jobs created over the past year.

Three-quarters of income earners have a tax rate no higher than 17.5 per cent.

We are delivering over 20,000 more elective surgery operations a year.

We are putting 600 more Police on the front line.

We are making the biggest-ever investment in State Highways to get this country moving.

We are rolling out ultra-fast broadband for a modern economy that is connected to the world.

We have introduced National Standards in our schools to lift achievement and help those kids who are falling behind.

And we have supported New Zealanders through the difficult times this country has faced, from the global financial crisis to the Canterbury earthquakes.

Fellow National Party members, we have delivered for New Zealand and we will keep delivering.

When I stood before you at last year’s annual conference none of us could have imagined the disasters that were about to strike Canterbury.

Those images of destruction will stay with us forever.

I have visited my home city many times since the earthquakes.

I have seen a community that has been dealt the harshest of blows, but one that has pulled together and shown great heart and resilience.

I know it is still tough and I know people are working hard to rebuild their lives.

It will be a long journey. But as I have said repeatedly to Cantabrians, it is a journey that we are determined to walk with you.

I’d like to give special thanks here to our Minister Responsible for Canterbury Earthquake Recovery, Gerry Brownlee.

The people of the West Coast, too, have been struck by tragedy over the past year.

We continue to mourn the 29 men who lost their lives in the Pike River mine.

And we continue to support the Royal Commission now underway to find answers for their families and for the whole country.

Fellow National Party members, it is just over 100 days until the General Election.

This election comes at a critical time for our country.

Around the world, financial markets continue to be volatile and uncertain.

Some of the world’s biggest economies are struggling with high debt and low growth.

It is unclear how the European debt situation and the downgrade of the United States will ultimately play out.

And over the past week we have seen just how volatile the world’s financial markets can be.

The good news is that here in New Zealand things are looking up.

Compared to most other developed economies, we are very well placed.

Employment is rising.

Wages are growing.

Households and businesses have been saving more and paying off debt.

And despite the earthquake, the economy is growing more strongly than anyone had predicted.

In the first quarter of this year the New Zealand economy grew 0.8 per cent while the Australian economy shrank 1.2 percent.

The Government has a very strong Budget plan.

In only three years we will be one of the first developed countries back in surplus.

After that, we will be repaying debt while other countries keep borrowing.

Government debt will peak at less than 30 per cent of GDP, thanks to the measures we have taken over three successive Budgets.

In comparison, the average government debt of developed countries will soon be approaching 80 per cent of GDP.

New Zealand has the chance to stand out from the crowd of debt-laden countries, but only if we stick to our plan.

And our economic policies are making the country more competitive, so we can make the most of the opportunities coming our way.

Interest rates in New Zealand are low, commodity prices are strong and our trade with Asia is booming.

With sound economic management, we are in a good position to grow solidly over the next three years, create more jobs and increase wages.

Fellow National Party members, New Zealand is on the right path.

We are building the brighter future that New Zealanders want and deserve.

But we must stay on track.

New Zealand simply cannot afford to do what our political opponents are advocating – borrow more at a time of global uncertainty, spend it on ineffective and wasteful policies, and hope that things will get better sometime way out in the future.

That is simply irresponsible.

Fellow National Party members, this election is critical for the future of our country.

New Zealanders have a clear choice on November 26.

They can go backwards – towards higher debt, wasteful spending and the politics of envy.

Or they can vote for our strong plan to move forward – to make the most of our emerging opportunities, protect our gains, lift the amount of money in Kiwis’ pockets, give kids a good education, boost frontline health services, stay tough on criminals and reduce long-term welfare dependency.

National Party members, I want to talk about this last point today – long-term welfare dependency.

I believe very strongly in the welfare state.

My mother was for a time on the Widows Benefit and we lived in a state house.

I will always be grateful for the opportunities that gave me, and I make sure this is reflected in the policies I sign off on as Prime Minister.

Paula Bennett, too, was helped by the welfare system when she was a young teen mother on the Domestic Purposes Benefit.

But as a country we need to have a hard look at where the welfare system has got to.

Currently, 328,000 people are receiving a benefit – more than 10 per cent of the entire working age population.

More than 170,000 of those have spent at least five out of the past 10 years on a benefit.

There are 222,000 children living in benefit-dependent homes.

The government spends $20 million a day on benefits and hardship assistance.

The fundamental question you have to ask yourself is, “Is this what the architects of the welfare state had in mind”?

I don’t think it is.

I’ve often said that you measure a society by how it looks after its most vulnerable.

But you also measure a society by how many vulnerable people it creates.

At the moment it is creating too many, so we are going to make changes.

The Welfare Working Group has made an extensive list of recommendations for reducing long-term benefit dependency.

The Government has been working through those recommendations and we will clearly set out our intentions for welfare reform before the election.

We will be making a series of policy announcements on the different aspects of the welfare system.

As we do so, officials will continue to work on the complex policy details that underpin them.

Today I want to make the first of these announcements.

It is focused fairly and squarely on the problem of young people who have recently left school but who are not in education, training or work.

These are kids who are already watching their lives slip away.

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.

What we know is that when these young people turn 18, 90 per cent of them will go onto a fully-fledged adult benefit, unless we do something to intervene.

That’s why we are making this group the first priority – because 90 per cent of them are on a collision course with the benefit system.

Some are already there.

Around 1,600 of these young people are on a special 16- and 17-year-olds’ benefit, either because they are teen parents or because the relationship with their parents has seriously broken down.

These young people will almost certainly go onto an adult benefit at age 18.

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

More importantly, there is the human cost of wasted potential and poor social outcomes.

It is therefore worth investing money up front, when these kids are young, to get them back on track.

That principle is at the heart of the Government’s approach to welfare reform.

National Party members, the way the government works with this group of vulnerable young New Zealanders is going to change.

Whatever their circumstances, these young people deserve the opportunity to have healthy, productive lives.

It’s what we would want for our own children.

But, because of their backgrounds, we cannot realistically expect these young people to do it alone.

They need guidance and support.

There are two major parts to the policy I am announcing today.

The first part applies to all disengaged 16- and 17-year olds, whether or not they are receiving a benefit.

We want to see these young people back in some form of education or training, so they are better placed to move into the workforce, not onto a benefit.

The Government already funds a number of organisations which advise young people on training options, as part of the Youth Transitions Service.

That has been a good start, but we are going to make significant changes.

The first change is to find out who all these young people are.

At the moment we simply don’t know, because we lose track of them when they leave school.

That has to change.

The Government is going to amend the Privacy Act and the Education Act to allow two things to happen:

·                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 all 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.

We are then going to fund community and other organisations to provide a transitions service, similar in some ways to the current service, but one which:

·                much more closely targets the young people most at risk of long-term welfare dependency

·                and has a greater range of tools available, such as being able to arrange access to social services like drug and alcohol or counselling services

·                and, most importantly, is focused on results.

 

For the first time, a considerable part of the government’s funding of transitions services will depend on something actually changing.

That could include goals like the young person successfully completing a training programme, or not being on a benefit at age 18.

Put simply, we are going to make it worth someone’s while to get these young people back on track.

At the same time, the government will provide a lot more training places.

Next year there will be 7,500 places available under the Government’s Youth Guarantee policy, which provides free study towards school-level qualifications in places like polytechnics and wananga.

And in two years’ time we will have built up the number of Trades Academies so that 4,500 places in free, work-focused trades and technology training are being offered.

So there will be plenty of options available.

In the end, of course, it will be up to the kids themselves.

But no-one will be able to claim that they weren’t offered every opportunity to get back on the rails.

So that is the first major part of our new approach.

The second part concerns those young people who are receiving benefits in their own right.

I need to make it clear that today’s announcements will not affect the Invalids Benefit, which can be received by people as young as 16.

But there will be changes for young people who receive other sorts of benefits.

At the moment these young people are largely left to their own devices.

But I believe this hands-off approach has failed this group of young people.

We can do a lot better.

So the policy on benefits for young people is going change.

These changes will apply to all young people who get the special 16- and 17-year-olds’ benefits, and also to 18-year-old teen parents.

This has three elements.

The first is that we are going to fund community and other organisations to provide comprehensive and concentrated support to these teen beneficiaries.

Think about who these young people are.

They are very vulnerable, many of whom have a child.

They typically come from disadvantaged backgrounds and many have complex and multiple problems.

While some of them have supportive parents or other good role models in their lives, many have grown up with little access to positive adult guidance.

They need a competent adult to walk alongside them, support them and help them access the educational and social services they require.

They need a competent adult to help them manage their money.

They need a competent adult to help them meet the obligations and responsibilities that come with receiving financial assistance from the State.

And they need a competent adult to help raise their aspirations above the here-and-now.

That is why we are going to fund these support providers to be the competent adults in these young people’s lives – to provide intensive case-management and mentoring support.

Second, we are not going to simply hand over benefit money every fortnight.

Instead, we will have a much more managed system of payments, with the young person’s support provider, or MSD in some cases, paying bills on their behalf and helping them manage within their budget.

While there is still a lot of detail for officials and ministers to work through, we envisage that:

·                some essential costs, like rent and power, will be paid directly on the young person’s behalf

·                money for basic living costs like food and groceries will be loaded onto 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

·                and that a certain, limited amount will be available for the young person to spend at their own discretion.

The support provider for each young person will be very active in helping them budget and teaching them how to manage money.

Third, there is a deal involved here.

Young people who are receiving these payments will have clear obligations, for example; to attend budgeting or parenting programmes.

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

That means everybody, including teen parents.

We have carefully considered the interests of the children here.

And we absolutely believe that a child’s interests are best served if their parent continues with her own education, and if the child is in good-quality childcare.

So we will be insisting that teen parents continue with education or training, and we will cover the costs of the childcare involved.

Some of that education will be in Teen Parent Units, and we envisage there will be more of these established.

But that is only one option among many.

Innovative programmes are already being developed in communities around New Zealand.

So there will be flexibility to respond to each teen parent’s individual circumstances, and that also includes the timing of when that education or training will commence.

For the most part, that will be up to support providers to determine.

However, we envisage that by the time their child is one year old, most teen parents will be in some form of education or training.

So the three parts of this new benefit policy – which will apply to all young people the government supports financially – are intensive support and mentoring; money management; and new obligations, including to continue with education or training.

If all this sounds a bit hands-on, I make no apologies.

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.

We owe it to those young people, and to the rest of New Zealand, to take a new approach and get better results.

Yes, this new approach will cost money up front.

We expect the costs to be in the order of $20 to $25 million a year at the outset.

These costs will be firmed up once more of the details of the package are worked through.

But if we can reduce the number of young people who go onto a benefit at age 18, we save the government future welfare, justice and health payments.

What is more, we improve the social and economic outcomes for those young people over the course of their lives.

National Party members, our new direction for welfare is just one part of this Government’s plan to build a brighter future for all New Zealanders.

On November 26, Kiwis will have the opportunity to choose the government they want to lead this country for the next three years.

They can choose a forward-looking National-led Government that is focused on its economic plan for the future, or a rag-tag Labour-led coalition that will take us back in time to the days of tax and spend, and borrow and hope.

New Zealand is on the right track.

It is critical for the future of this country that we stay on that track and make the most of the opportunities that are emerging.

In these times of global uncertainty, New Zealand needs a strong and stable government.

National has a tried and tested team.

We have a talented and energetic Cabinet and Caucus.

We have a strong Party built on solid and enduring values.

We are building a brighter future for all New Zealanders.

There are just over 100 days to go.

Let’s get out there every day, sell our case, and win that election.