Key’s speech on welfare


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.


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.

I wonder how long on average they stay on a benefit for?

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 dependency is.

It staggers me that up until now, the Government was unable to even identify who these 16 and 17 year olds are.

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.

Incentives tend to work.

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.

I imagine this will cost the taxpayer more money in the short to medium term. But I’m happy for my taxes to be spent on stuff like this, if it really does lead to fewer young people spending years or longer on benefits.

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.

And they are:

  1. first is that we are going to fund community and other organisations to provide comprehensive and concentrated support to these teen beneficiaries
  2. 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
  3. 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

The details of (2) are likely to be:

  • 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.

And details of (3) are:

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. …

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.

The cost of the package is estimated to be $25 million a year. I think that is an investment worth making if it produces results.

Being a parent can be bloody tough, even for professional couples in their 30s. Our current system of just paying a benefit to a couple of 17 year olds, and hoping they’ll be okay as parents has been benign neglect. I welcome these changes, and think they’ll be good for both the teenagers, and for their kids.

A Q&A on the policy is below:


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