Fact 4: Living on a benefit is not a ‘lifestyle choice’

  • Living on a benefit is not a ‘lifestyle choice’
  • Few women receiving a benefit are unmarried teenage mums
  • Most sole parents stay on benefits for a short period, and usually only while children are young
  • There is some concern about benefit fraud, but almost all debt to Work and Income is the result of negotiated ‘recoverable assistance’ loans or ‘Innocent Overpayment Debt’

Living on a benefit is not a ‘lifestyle choice’

Although it has been claimed that going onto a benefit is a ‘lifestyle choice‘ for most people circumstances beyond their control, such as illness, bereavement, relationship break-up or loss of employment, lead to them needing a benefit. Life on a benefit, as Presbyterian Support Otago clients tell it, is more about being in ‘survival mode’,  :

“You feel like a second-class citizen basically and a lot of energy goes into just surviving. You spend more time because of your really tight financial situation running around trying to get assistance to help you keep going all the time… it‟s a real catch-22. It‟s a really vicious cycle.”  (More Than Just Another Obstacle: Health, Domestic Purposes Beneficiaries, and the Transition to Work, p.104)

Few women receiving a benefit are unmarried teenage mums

It is a completely wrong to argue that teenage birth rates have swelled since the Domestic Purposes Benefit (DPB – now replaced by the Sole Parent Support)  was introduced in 1973. In fact, according to the Social Report 2010 in 2009, at 29.6 births per thousand women aged 15-19, the rate is less than half of the 1972 level of 69 in 1,000.

In fact, teenage mothers make up just 1.5% of DPB beneficiaries in June 2013.

Most sole parents stay on benefits for a short period

Ministry of Social Development publishes the Benefit Fact Sheets regularly and those from June 2013 showed that of those receiving the DPB:

  • Almost two-thirds (62.2%) receive the DPB for no more than 4 years
  • Only 10% receive the DPB for 10 years or more

…and usually only while children are young

More than half of those on the DPB  (62.9%) are caring for at least one child aged six or younger and nearly all (90.5%) are parenting someone under fourteen. It is illegal to leave children unsupervised until they are at least 14 years of age.

There is some concern about benefit fraud, but almost all debt to Work and Income is the result of negotiated ‘recoverable assistance’ loans or ‘Innocent Overpayments’

Benefit fraud is a miniscule problem. In 2012 around $31 million in benefit fraud prosecutions were made, which is about 0.3% of the around $10 billion spending on benefits (excluding NZ Super).

In 2010 the Auditor General reported that of the $501 million owed in welfare overpayments, by Work and Income clients only $65 million (13%) was suspected fraud.  The rest is either negotiated advances known as ‘recoverable assistance’ (46%) or overpayments (51%) that occur through people transferring to different benefits, or through late or incorrect actions by Work & Income staff. Most of the debts are relatively small (less than $1,000) and 96% of clients are making repayments.

Indeed, the Auditor General reports that only 3% of overpayments over the three years up to 2010 were the result of actual fraud.