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Labour Party: Benefits Policy

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The benefit abatement system

Working for Families has helped create full-time work incentives for families with children. With these full-time work incentives in place, there is now an opportunity for strengthening incentives for part-time work.

The purpose of benefit abatement is to withdraw the benefit from people as their income increases and their ability to make ends meet by their own means improves. This helps ensure there is an incentive to move off a benefit altogether. Providing a threshold of income that may be earned before abatement begins is important in providing incentives for beneficiaries to stay connected to the labour market and also recognises that people can face additional costs (e.g. transport costs) when they enter a job.

Labour will, within five years, lift the weekly earnings threshold so that beneficiaries can earn the equivalent of ten hours on the minimum wage before their benefit income starts to reduce.

Any fixed level of abatement-free income runs the risk of becoming outdated and reducing work incentives. A stronger and clearer regime is to tie the level of abatement to the minimum wage. This will create a long-term and robust system that sends a clear message about the connection between hours worked and the abatement of benefits.

Labour is also committed to ongoing increases in the minimum wage to at least keep pace with changes in the average wage. After the five years, the earnings threshold will continue to increase in line with minimum wage changes.

Labour’s path for increases to the weekly earnings threshold is as follows:

* By 1 April 2010, the weekly earnings threshold at which benefit abatement begins will be lifted to $100 from the current $80
* By 1 April 2011, the abatement threshold will be lifted to $120
* By 1 April 2012, the abatement threshold will be lifted to $140

We also recently announced a new secondary tax rate of 12.5% which will apply to those earning income as well as receiving a benefit. This will ensure that those with second incomes do not have too much tax deducted from their pay packet.

Labour will change the treatment of ACC payments for those receiving benefits so that they are treated as income, rather than directly deducted from the benefit.

This affects people whose level of weekly ACC compensation is sufficiently low that they are also entitled to some benefit. Using the same approach for ACC payments as applies to other forms of income is a fairer way to treat people in this situation.

Vocational support and training

Labour will continue to support people into paid work. We will continue our investment in wage subsidies, intensive case management, and increased availability of training and supported employment (where people with disabilities are hired in jobs and provided with ongoing support). Under this approach, even those who are unable to work in the short term are encouraged to plan for the future. We will not force someone into work when a doctor has certified they are sick, but we will not prevent them from having a go. We will also continue to offer support for personal development and participation in voluntary work for those who cannot access paid work.

This will include expanding and accelerating the roll-out of Providing Access to Health Solutions (PATHS) and the Health Innovation Fund that offers health services for those seeking to move into work.

Labour will also expand access to training and vocational support for people who aren’t on benefit but want to return to the workforce. We want to encourage and support all New Zealanders into work. We don’t believe that people should have to start receiving a benefit before they can get help. Current work assistance training has been successful in preventing many people from ever needing the unemployment benefit, and we want to extend that support to other groups.

We will make sure support is available for women with a partner in work who have been full-time caregivers but who now wish to go back into paid work.

Labour will introduce a retraining allowance available to those who have been in the workforce for ten years and wish to upgrade their skills or retrain in a new area.

Periods as a full-time caregiver to a child or a sick or infirm relative will also count towards the ten years total.

This retraining allowance will provide an alternative to the Student Allowance for people who have used their 200 weeks Student Allowance entitlement. This allowance will be available for up to a year for enrolment in a recognised full time course. The course will generally need to be of at least twelve full-time weeks duration. The Unemployment Benefit (in training) is already available for courses of up to twelve weeks.

In addition, greater efforts will be made to ensure new migrants are enabled to secure employment appropriate for their interests and their qualifications and skills.We will also ensure that young people continue to get supported when making the transition into paid work as part of our broader Schools Plus policy.

Reforming the benefit system

The ‘Working New Zealand’ programme has delivered a range of policy, legislation and service delivery changes to significantly move the focus of support and services from main benefit types to individual circumstances. This is the first phase in the move towards a Core Benefit.

Labour will continue to shift the social security system towards a focus on individual circumstances rather than benefit category, completing the implementation of the Core Benefit.

This includes the Job Search Service, changes to employment and training programmes to make them more widely available and the alignment of benefit rules to make the system easier to understand. All clients receive a service that helps them plan for their future, whether it is about work or participation in their community.

The idea behind the Core Benefit is that the type of income support a person is receiving will not be relevant to the service and support that they receive. Rather, the service delivery model will have evolved to remove unnecessary compliance around benefit types. The Social Security system will be focused on delivering a tailored set of services to individuals based on their circumstances and those of their family, to move them towards achieving the goals of participation in work and community life.

There is now one medical certificate for people applying for Sickness and Invalid’s Benefits and people receiving an Invalid’s Benefit don’t have to re-affirm their condition at regular intervals if it is unlikely to change. Specialist health and disability advisors work alongside case managers and clients, health and disability co-ordinators support health practitioners and there are more staff working directly with employers in their workplace.

Further service enhancements will focus on a simplified approach that continues the focus on the client first, reducing compliance and focusing on providing the appropriate support services to enable clients to achieve positive outcomes in their lives.

Labour will continue to put a strong emphasis on ensuring that all beneficiaries receive their full and correct entitlement. We will encourage anyone who is struggling to make ends meet to talk to Work and Income, which can provide a range of emergency assistance and support. In order to ensure that all New Zealanders have access to government and community services, we will continue to bring those services together for people who live in rural areas and small towns through Heartland Services.

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