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    Following the Money
    Budget 98

    from The Jobs Letter No.79 / 27 May 1998

    The main decisions in Treasurer Winston Peter's second budget

  • Anyone who becomes a sickness beneficiary after July 1st will be paid the same as the unemployment benefit. The rates for existing beneficiaries will not change, but within a year it is expected the new rate will effect about half those receiving a benefit. The sickness benefit will be merged into the community wage on October 1st and will be subject to the work test.

    "A child-care subsidy for low-income working parents and sole parents will be part of measures to help people get back into the workforce. A sole parent with two school-age children who takes up work will have child-care subsidised by up to $72 a week during the school term and by up to $108 a week during the school holidays."

  • Invalids and sickness beneficiaries will be assessed on a case-by-case basis to see if they are capable of doing even five hours work. These work capacity trials start in November.

  • People on the Domestic Purposes Benefit whose youngest child is between six and 13 years will be expected to look for part-time work. Those with their youngest child 14 years and older will have to look for full-time jobs.

  • A child-care subsidy for low-income working parents and sole parents will be part of measures to help people get back into the workforce. A sole parent with two school-age children who takes up work will have child-care subsidised by up to $72 a week during the school term and by up to $108 a week during the school holidays. Sole parents with no access to sick leave in their first six months of full-time work may be eligible for financial help if they or their children are sick.

  • The Budget predicts that the unemployment rate will peak at just over 7% in mid 1998 and then reduce to 5.6% by the year 2000-2001. Next year, the government expects to be spending $1.46 billion on paying the community wage (replacing the unemployment, training and sickness benefits).

  • Employment programmes overall get a $142m boost in the 1998/99 year and a $125m boost in 1999/2000. This includes however a transfer of money (from Vote Education) of the money for Training Opportunity Programmes. The Education Ministry is left with only 40% of the previous TOPS funding and expects to provide 5,000 training places this year, compared with the 15,000 training places in the last year.

  • The big boost in funding goes to "services to minimise the duration of unemployment and maximise participation in community work and training", which is Treasury's way of describing measures to tackle long-term unemployment and create community wage schemes. Target for the next year: 63,000 job-seekers to take part in these initiatives, or between 22,000 and 26,500 people at any one time. Balancing the massive increase in funding community wage initiatives is a cut to many other Labour Department-funded programmes:

    Subsidised work schemes (eg Job Plus) have been trimmed back $24m to $108m.

    Community employment and enterprise development projects (eg Be Your Own Boss) have had just under $5m trimmed from their budget to $13.5m

    The Army's Limited Service volunteer scheme, which takes young people on to a six-week military training course, has been slashed from $2.7m to $1.7m, now providing placements for 700 job-seekers.

  • The Youth Affairs programmes Conservation Corps and Youth Service Corps receive much the same amounts as in the last Budget. Conservation Corps is funded $9.73m to run 123 projects for 1,670 young people; and Youth Service Corps are funded $1.09m to run 10 projects for 133 young people.

  • Employment Support for people with disabilities (eg Workbridge) gets a 30% increase in budget to $16.225m.

  • Student Placement Services keeps the same budget at $1.9m, as does the Careers Service at $5.45m.

  • The Education and Training Support Agency funding is cut by about half, reflecting the transfer of funding previously allocated to TOPS to Vote Employment.

  • Only students receiving a student allowance during the academic year will continue to have access to the emergency benefit from July 1st.

  • Also from July 1st, unemployment, training or sickness beneficiaries aged 18-19 years with no dependents and living with their parents will receive a new "at-home" rate of benefit _ a cut for up to 8,000 people.

  • $50m has been set aside for families who have become "trapped in a cycle of disadvantage from one generation to the next". They will be targeted for intensive home-based assistance from the birth of a child until he or she is five.

  • New migrants to NZ from July 1st must be resident for two years before they can access welfare benefits.

  • The Business Development Board grants scheme is finally closed, while a total of $14.4m is earmarked for business development measures in the next year.

  • The Accident Compensation Corporation has been opened up for private competition. Employers and the self-employed will be able to buy private accident insurance from July next year.

  • Producer Boards will be de-regulated, and they have been given until November to come up with a plan.

  • The 22.5% vehicle tariff on imported cars has been removed from Budget night, ahead of the previous deadline of the year 2000. This will cost the government $285m in lost tariff revenue, and is the final nail in the coffin of local car assembly plants. Car importers will receive at least $30m in duty refunds for their unsold vehicles.

    " The government's employment strategy is about assisting people into unsubsidised work. It aims to strengthen the focus of employment assistance by encouraging people to work to their full potential. In particular, it aims to reduce the number of long-term unemployed by moving job seekers into unsubsidised work.

    " Requiring job seekers to undertake work in the community will be one option available where it is the best way to assist job seekers into unsubsidised employment quickly and cost effectively. We must avoid letting the unemployed become alienated from the labour market.

    " With this strategy, the coalition government is recognising that unemployment affects individuals, families and communities. Our aim is to assist New Zealanders to move from state-reliance to self-reliance..." -- Treasurer Winston Peters, from his 1998 Budget speech

    Sources _ Budget papers from Treasurer Winston Peters; The Daily News 14 May 1998 "Peter's Budget may crack down on beneficiaries"; Sunday Star Times 17 May 1998 "The ghost of Budgets past" ; National Business Review Budget Special 15 May 1998; The Dominion Budget Special 15 May 1998; New Zealand Herald Budget Special 15 May 1998; The Daily News 15 May 1998 beneficiaries squeezed as Budget tightens belt"

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