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Welfare system has failed to deliver for Māori

Māori have a unique relationship with the Crown as a partner to Te Tiriti o Waitangi (the Treaty of Waitangi). As such, they are entitled to rangatiratanga and to citizenship entitlements. Māori are a heterogenous population with increasing numbers succeeding at university and in business and others with no formal qualifications and few employment prospects. Intra-ethnic variation is greater than inter-ethnic variation (Cunningham & Durie, 2005). That said, economic restructuring in the 1980s hit Māori families particularly hard. Since then, many families and individuals have struggled to survive as the number of low-skilled jobs has decreased and wages for low-skilled jobs have continued to decline relative to the cost of living. Retraining and upskilling require considerable support and access to equity that is not readily available to these families and individuals.

While many Māori are doing well in education and the labour market, there is a persistent disparity in rates of unemployment and benefit receipt. Māori make up 36% of all working-age people receiving a benefit as a primary benefit recipient. Age standardised rates of receipt are more than three times higher for Māori than for non-Māori and are highest for Māori women.

Many of the reasons for this disparity are associated with other systems that influence job opportunity, such as the failure of the educational system to address Māori learning and higher incarceration rates for Māori. Demographic differences, such as a younger age of parenting, having fewer assets (including less stable, quality housing and increased debt), and being geographically concentrated in poor and rural areas, all contribute to a lessening of opportunities for Māori to enjoy the same level of wellbeing, access to employment, progression into more highly paid work and home ownership. While these other social and economic domains play a role, the simple fact is that the failures of the current welfare system will, and do, disproportionately affect Māori because of Māori people’s greater reliance on welfare. A benefit system that better promotes wellbeing would make a bigger difference to the Māori population, and addressing the inadequacies of the current system is a prerequisite for addressing child and family poverty among Māori.

"A lot of things haven’t worked for a very long time for our whānau. The system is currently broken. We have case managers who are absolutely judgmental as soon as whānau walk through the doors."


System is not responsive to the changed needs of families and whānau

Families, and arrangements for the care of children, are more diverse and fluid than in the past. Most families with children aged under 18 are two-parent families, but it is now common for children to spend some part of their childhood in a one-parent household. In families where both parents have well-paying jobs, this is less problematic, but where sole parenthood means reliance on benefit, it is associated with a high risk of poverty. New Zealand has a high rate of sole parenthood by OECD standards, a high rate of sole parent benefit receipt, and a high rate of poverty and child poverty among sole parent families. The proportion of families headed by a sole parent has been gradually declining since the mid-2000s after a period of rapid growth. However at 27% in 2013, the proportion remains high compared with other OECD countries - higher than all but two out of 39 OECD industrialised countries (MSD, 2018a, 2018b; Superu, 2018). In addition, Working for Families payments and thresholds, although adjusted periodically, have not been consistently and fully indexed to changes in costs or median incomes.

Current policy settings have also not been able to adapt to the prevalence of two earners in couple families. It is the norm now for both partners in two-parent households to be in employment. Around two-thirds of two-parent households with dependent children are dual-earner families (up from one in two in the early 1980s). For many families, two (or sometimes three or more) jobs are needed to provide an adequate income. Partnered people affected by job loss often do not qualify for income support if their partner is in paid work (even on minimum wage) because of a joint income test and the tight targeting of payments. The system is still based on a one-earner model where one income is enough for a family. Tight targeting worsens that problem. For sole parents and partners in two-parent families, benefit reforms since the early 1990s have extended stand-down and non-entitlement periods, which mean that moving on and off benefit is associated with larger breaks in income. These changes in parents’ employment patterns and in the labour market, together with the out-dated structure of the welfare system, have resulted in very few partnered people being eligible for a benefit. Only 7% of all benefit recipients are partnered (see figure 4).

Several recent studies asked families and whānau with high service needs how they experienced accessing benefits and other services (Auckland City Mission, 2014; Baker et al, 2012; Ministry for Women, 2018; Pipi & Torrie, 2018). For families and whānau in the studies, the level of financial assistance provided through the benefit system was often inadequate. To access support, families and whānau often needed to engage with multiple staff within MSD and across different government agencies. While some reported positive interactions, many found the experience unpleasant, time consuming, humiliating and frustrating. The system was seen as complicated. Some families and whānau were not aware of their entitlements and obligations. Some with a high need for support avoided engaging with MSD and other agencies.

Figure 4: Benefits paid to people by family type as at June 2017

A pie chart shows the benefits paid to people by family type as at June 2017.

Source: MSD, 2018a.

Note: There is a small amount of imprecision in these figures because a partnered person is recorded as single when benefit is paid in Australia, and where the partners are on different benefits (but paid at half married rate each) – for instance, a couple where one is receiving Jobseeker Support and the other Supported Living Payment -Carer because they are caring for someone. 

Text alternative for figure 4

A pie chart shows the benefits paid to people by 4 family types as at June 2017.

  • Single without children - 63%
  • Single with children - 30%
  • Couple with children - 3.5%
  • Couple without children - 3.5%


Many adults receiving a benefit because they have or are caring for someone with a health condition or a disability have poor outcomes

Life outcomes for people with work-limiting health conditions or disabilities are poor, compared with outcomes for the general population. The welfare system plays an important role in supporting such people but is failing to do all that it could.

The number of people on health and disability benefits has remained high, despite efforts to reduce numbers. As at September 2018,[16] 58,234 received Jobseeker Support – Health Condition or Disability (JS-HCD) and 83,828 received Supported Living Payment (SLP) (MSD, 2018b) [17]. People receiving either benefit for a health condition or disability make up the largest group (49%) of working-age people receiving a benefit. A further 8,585 people receive SLP Carers because they care for someone with a health condition or disability [18]. People receiving a benefit because they have a health condition or disability or care for someone with a health condition or disability make up 53% of all working-age benefit recipients (WEAG, 2019k).

These figures are likely to underestimate the number of people receiving a benefit who have a health condition or disability or care for someone with a health condition or a disability. People receiving other working-age benefits (for example, Sole Parent Support, Jobseeker Work Ready) are not asked whether they have a health condition or disability. Research suggests that people on other benefits are likely to have health conditions or disabilities, especially mental health conditions (OECD, 2018b)

In New Zealand, the association between poverty and benefit receipt is strong, and Māori and Pacific People are disproportionately adversely affected. Poor quality housing, overcrowding, homelessness, alcohol and other drug addictions, and intergenerational trauma are additional factors. Māori are disproportionately represented among those receiving SLP (24%), JS-HCD (30%) and SLP Carers (38%). Māori represented 12.7% (or 340,100) of the total labour force in 2017 (MBIE, 2017). Pacific People make up a small proportion of people receiving JS-HCD (5%) and SLP (7%). Most recipients of health and disability benefits are aged over 40. Many have no educational qualifications. The majority are single and without dependent children. Few have earnings while on benefit, and long-term receipt of benefit is common (WEAG, 2019k).

The composition of the population on benefit for reasons of ill-health or disability has changed in recent decades. Proportionately more people now receive a benefit for a health condition or disability because they have a mental health condition. People with a mental health condition make up the largest proportion of those receiving both health and disability benefits (48% of JS-HCD and 36% of SLP recipients). Of concern, is that greater proportions of younger JS-HCD and SLP recipients have a mental health condition [19]. These figures are likely to underestimate the number of people receiving a benefit with a mental health condition because comorbidity is common and MSD often only reports on the primary incapacity listed on the medical certificate. Musculoskeletal disorders are also common among JS-HCD recipients. Among those receiving SLP, a large proportion has intellectual disabilities or congenital conditions (WEAG, 2019k).

Considerable research into the causes of the long-term increase in health and disability benefit receipt has not drawn conclusive findings. We can say ill-health and disability are caused by variety of social, economic, psychological and biomedical factors. These factors not only affect individuals to make them unwell or disabled but also produce highly patterned health differences in populations that reflect inequalities in society (Kelly et al, 2009). With increasing age, the risk of developing a work-limiting disability or chronic health condition increases. Lifestyle risk factors (for example, obesity) that contribute to poor health and disability have increased. Medical advances mean more people with previously fatal conditions survive, albeit with work-limiting health conditions or disability. Diagnostic improvements and changing attitudes mean conditions that have always existed are more widely recognised (for example, mental health conditions). More people are living in poor social and economic circumstances. Inadequate income (poverty) is linked to poor health outcomes, especially where poverty is long term (Kvalsvig, 2018). Evidence is considerable that unemployment has a detrimental impact on health and wellbeing, and so may contribute to these figures (Curnock et al, 2016; Waddell & Burton, 2006; Whitley & Popham, 2017).

Changes in policy have influenced recipiency rates for health and disability benefits. In New Zealand, until the late 2000s, little policy focused on people receiving health and disability benefits. In the past decade, the growth in the number of people receiving health and disability benefits has slowed but numbers remain high. The slowing in the increase can, in part, be attributed to a greater focus on moving benefit recipients with work-limiting health conditions and disabilities into work. However, as in other OECD countries, in New Zealand, increased activation policies had limited impact on improving outcomes for recipients of health and disability benefits. Long-term benefit receipt remains common – especially among SLP recipients. Rates of engagement in part-time work while on benefit are low for both JS-HCD and SLP recipients. Many recipients of health and disability benefits who do leave benefit for work later return (WEAG, 2019k).

Many New Zealanders will take on a caring role at some stage of their lives [20]. Individual, family, whānau and āiga carers are crucial for enabling those who require additional help to develop, live and participate in their communities, with greater independence, autonomy, quality of life and social inclusion. Experiences across caregiving roles are common, but caregiving trajectories vary in duration and intensity[21].

As is the case with the wider population of carers, carers in the welfare system are most likely to be women of working age who are caring for an older relative or a child with a health condition or disability (WEAG, 2019l).

Overall, the welfare system lacks accurate data about carers, who they care for within the welfare system and their experiences. The population is broader than that receiving SLP Carers benefit (for example, sole parents and grandparents caring for ill or disabled children who do not qualify for SLP Carers, partners of SLP recipients[22], those caring for adult children but on benefit for another reason). Some people are likely to be under-represented in the welfare system as carers (for example, young carers, working partners of people with significant health conditions or disabilities, carers of people with intermittent conditions).

Many Pacific families face multiple disadvantage

“Pacific people have crafted vibrant and dynamic communities, effectively at lower cost, with less capital, and with limited government assistance” (Salesa, 2017). Nevertheless, the struggles faced by many Pacific People are very real.

High proportions of Pacific families (31.6%) face multiple disadvantages (MSD, 2016). Pacific People had the lowest real median hourly earnings of all ethnic groups in the June 2014 quarter, with earnings remaining essentially unchanged in the past 5 years (MSD, 2016). Moreover, Pacific People are largely concentrated in communities characterised by high levels of deprivation (Joynt et al, 2016; Marriot & Sim, 2014; Salesa, 2017). These communities lack many of the supports and services available in wealthier suburbs and often have higher numbers of liquor, fast food and convenience stores. Living in deprived neighbourhoods is associated with negative social outcomes (Cunningham & MacDonald, 2012; Van Ham et al, 2014).

Pacific People have low rates of home ownership and are more likely to reside in state housing (WEAG, 2019i). Most Pacific homeowners are legacy homeowners with homes passed onto future generations to live in. Overcrowding is much more common among the Pacific population (MSD, 2016; 2018a). Pacific People often live in extended families. The family is the centre of the community and way of life and enhances identity and belonging. The availability of affordable housing that supports Pacific ways of living is limited, especially in Auckland. The concentration of two-thirds of the Pacific population in Auckland means this population is disproportionately exposed to the expensive Auckland housing market.

High levels of household debt, which, in many cases, have become intergenerational, significantly affect the wellbeing of Pacific People such that they are unable to participate appropriately in their communities (Stuart et al, 2012). The reliance on short-term loans with excessively high interest rates is a significant contributor to household debt (Stuart et al, 2012; Thomsen et al, 2018). Having sufficient income to fulfil cultural contributions is very important, and not being able to do this is seen as shameful for individuals and the wider family. This shame serves as a barrier for people accessing the welfare system and contributes to engagement with predatory lenders who are seen as more approachable.

The economic reforms in the 1980s had a significant impact on the employment of Pacific People. In 1987, the Pacific population had the highest employment rate of any of the measured ethnic groups. Two decades later, their employment rate was lower than that of Māori and Pākehā (Fletcher, 2009; MSD, 2016).

The Pacific population is young, with almost half (46.1%) aged under 20, compared with 27.4% for the total population. This represents both an opportunity for the future and a challenge. Educational outcomes for Pacific People have improved (MSD, 2016). However, Pacific youth remain more likely than the population as a whole to have characteristics associated with disadvantage in the labour market (Rea & Callister, 2009).

Young people entering the welfare system often have poor long-term outcomes

Individuals who experience significantly poor outcomes as young people (for example, state care or benefit receipt) tend to come from disadvantaged backgrounds and remain highly disadvantaged throughout their adult lives (Gluckman, 2011; Rea & Callister, 2009; Scarpetta et al, 2010). Our current welfare system contributes to perpetuating this cycle. In New Zealand, those most at risk of poor longer-term outcomes have low or no qualifications, left school early, received a benefit at a young age (16 or 17 years), have been (or are) a teenage parent, have a parent with a prison or community sentence and have been exposed to poverty and adversity in childhood. Māori and Pacific youth are more likely to have characteristics associated with disadvantage in the labour market (Rea & Callister, 2009).

The longer-term social and economic cost of a young person who does not successfully transition to work or further education can be large. A significant number of young people leave the labour market, or never really enter it, by moving onto a benefit. Clear evidence of the failure of the welfare and education systems is that the number of 15- to 24-year-olds not in employment, education or training (NEET) has remained the same since 2009, at around 75,000 (Johnson, 2016). In recent years, the focus has been on re-engaging young people in education and training, but the interventions have not addressed many of the underlying causes of youth unemployment. 

Young people who are on benefit are at risk of long-term benefit receipt and, generally, poorer outcomes. Only a small number of young people go onto a benefit as a 16- or 17-year-old. These young people are currently provided a different service designed to support and mentor them to achieve better outcomes. The service is geared towards keeping them engaged in education and training.

Youth on benefit often have complex needs and trauma to cope with, and they require an unconditionally supportive and trusting environment to support them to achieve their potential. To be granted a benefit, youth often have to prove that their relationship with their parents has broken down, which in itself can be retraumatising. Services to young people must support a pathway to independence. Such services should not put a person who is in a ‘youth coach’ role into a quasi-parental role, controlling the young person’s money and choices.

Women are significantly affected by the welfare system

“Most women’s lives have been touched in some way by the state’s social security legislation, as they have given birth and raised children, become sick, disabled or unemployed, lost partners and reached old age” (Beaglehole, 1994).

As at December 2018, women had higher rates (compared with men) of main benefit receipt for the population aged 18 to 64 years (56.7% compared with 43.3% men). This can be mainly attributed to the number of female recipients of Sole Parent Support (91.5% or 54,778). The majority of families with children supported by main benefits are sole parent families. While the numbers are small, most (89.9%) Youth Payment and Young Parent Payment recipients are women. Proportionately more men receive Jobseeker Support (55% compared with 45% women) but a large number of women receive this benefit (60,382). Almost the same number of women as men receive SLP (46,733 men compared with 45,954 women) [23]. Most people receiving SLP Carers are women.

Sole parent families face disproportionate levels of disadvantage (MSD, 2018a; Superu, 2018). Sole parenthood has been associated with poor child outcomes, but a causal relationship is not clear. Becoming a sole parent is common, with half of mothers experiencing it before the age of 50 (MSD, 2018a). The sole parent population in receipt of a benefit is diverse, reflecting the variety of pathways into sole parenthood (for example, becoming a teen parent, separation or divorce, death of a partner, imprisonment of a partner). Sole parenthood is also a situation that parents move in and out of, depending on life circumstances (Hutt, 2012 in MSD, 2018a).

When the system of main benefits was created it was based on an assumption that a woman’s primary role was the care of children. Over the past 20 years, like other OECD countries, New Zealand has introduced measures to move sole parents on benefit into work. Sole parents have increasingly been treated as workers first, rather than parents (Haux, 2012). However, the state’s policies have been uneven and at times contradictory. The differing perceptions of the role of women as mothers can be seen in the way job search obligations for sole parents and partners of primary benefit recipients receiving welfare benefits have been applied and removed at various times over the past two decades.

At present, aspects of the system do not support women’s role as carers.

  • There are penalties for having a subsequent child when on benefit. Work expectations are reset to their former level after one year for parents having a subsequent child while on benefit.
  • Sole parents receiving a main benefit cannot currently receive child support payments.
  • Section 70A of the Social Security Act 1964[24] requires that the rate of a sole parent’s benefit be reduced for each dependent child for whom the person does not seek Child Support, subject to some exemptions.
  • The expectation that sole parents should be working as well as parenting, just as many partnered women do, fails to recognise that sole parents often have no one to help carry the extra load of parenting, and it is difficult to find employment flexible enough to cater for children staying home sick and school holidays.
  • Navigating the welfare system to get benefits and entitlements is difficult for many. The stress is compounded if they or their child have a health condition or a disability, live in substandard housing and lack childcare support (Ministry for Women, 2018; MSD, 2018a; WEAG, 2019l).

The consultation and previous research reveal that people often find it hard to distinguish where their relationship fits within confusing and intrusive system definitions (MSD, 2018a; WEAG, 2019a). Parents, often women, can find themselves in situations that are deemed ‘relationship fraud’. In these situations, they are vulnerable to investigation, penalties, long-term debt and, in some cases, prosecution and imprisonment, with negative effects on the wellbeing of children (MSD, 2018a; St John et al, 2014).

People who have engaged with the justice system are at substantial risk of entering or re-entering the welfare system

Over the past 30 years, New Zealand has seen consistent increases in its prison population even while crime rates have fallen (Gluckman & Lambie, 2018). Māori and Pacific People are disproportionally affected. This has implications for the number of people coming into the welfare system. Equally, the failure of the welfare system to properly support children as they grow up contributes to the number of people going into the justice system.

New Zealand has an incarceration rate of 214 out of 100,000 people (June 2018). This makes it one of the highest incarceration rates in the world. If the data is disaggregated for ethnicity, the rate for Māori is 717 per 100,000. Around 10,000 people are incarcerated at any one time, and the Department of Corrections manages 30,000 people on community-based sentences. Around 16,000 people are released from prison every year into the community (Department of Corrections, 2018).

The impact of the welfare system on these individuals is significant. Barriers to accessing benefits and critical support are documented. This population has significant difficulty securing sufficient income, secure and adequate housing, and good and appropriate employment. They are likely to have large amounts of formal and informal debt. A welfare system that is not adequately responsive to this population may contribute to recidivism, perpetuating a criminogenic cycle.

The effect of incarceration is not purely limited to the individual who is imprisoned. The impact on families and whānau can be devastating and also has implications for the welfare system. Having a parent who has received a community or custodial sentence is highly correlated with long-term benefit receipt [25]. A person with such a parent is four times more likely to receive a benefit for more than 5 years when they are aged 25–34 years than a person without (21% compared with 5%) (Ball et al, 2016).

People in rural or remote  locations require different services and policies that meet their needs

People in remote and rural locations have different, and often overlooked, issues compared with others on benefit. Housing is generally cheaper in rural areas,[26] so the rate of Accommodation Supplement is lower, but cheaper housing is offset by higher costs for items like fuel and food, longer travel distances and poor internet or mobile coverage. The availability of some services can be restricted, for example, childcare and out of school programmes.

Without a rural population available for work, rural businesses are limited in their capacity for development. MSD’s remote location policy discourages people from moving to rural areas, which may have the perverse effect of contracting the rural labour market further.


16 Quarterly Working-Age Benefit Numbers – September 2018 ( link)).
17 JS-HCD replaced Sickness Benefit, introduced in 1939, and SLP replaced Invalid’s Benefit, introduced in 1939.
18 Accurate data is lacking about carers, who they care for in the welfare system and their experiences. The population of carers is broader than those receiving the SLP Carers. Some people are likely to be under-represented in the welfare system as carers (for example, young carers, carers of adult children and carers of people with intermittent conditions).
19 Among SLP clients, mental health conditions are the primary incapacity for 48% of clients aged 24 or younger and 34% of clients aged over 40. Among JS-HCD clients, mental health conditions are the primary incapacity for 70% of clients aged 24 or younger and 42% of clients aged over 40
20 Following deinstitutionalisation, the expectation that individuals, families, whānau and āiga would provide care grew (WEAG, 2019l).
21 For example, some carers engage in long-term care of people with significant but stable disabilities. Some carers experience increasing care responsibilities punctuated with episodic events, such as hospitalisation and placement in rehabilitation or long-term care facilities. For others, the care trajectory may begin with sudden intensity, then gradually decrease as the person’s health improves. Other carers have a non-linear care trajectory (for example, caring for someone with cancer) (WEAG, 2019l).
22 Currently, where a spouse or partner is caring for someone receiving SLP, they will receive this payment at the couple rate but not as a carer.
23 MSD benefit fact sheets, December 2018 ( link)).
24 Now covered by Section 192 of the Social Security Act 2018.
25 Other indicators include having a finding of abuse or neglect, having spent time in the care of child protection services, having spent most of their lifetime supported by benefits, and having a mother who has no formal education qualifications (Ball et al, 2016).

26 This is not always the case. The cost of housing in some rural locations is high (for example, Central Otago) and supply of rental accommodation can be limited.

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