Is this the blueprint for Australia's new welfare system?

Here's a primer on New Zealand's reformed welfare system, which has been identified as a role model for Canberra's own plans.

It’s set to be the next issue shaping the political debate in Australia and our government is turning its gaze across the Tasman, borrowing aspects of New Zealand’s welfare policy for its reforms.

Little has been detailed about our Kiwi neighbours' relatively new social support system.  The most controversial factoid about it -- that it forces welfare recipients to pass drug tests to receive payments -- made headlines yesterday, but that’s about it.

So to give us all an idea of what The Coalition may be getting us into, here’s a brief history of New Zealand’s welfare policy.

New Zealand implemented its social welfare reform after the conservative party -- the Nationals -- won a second term in office in the 2011 election. The plan, which was leaked to the press prior to the November 28 poll, aimed to pull 46,000 recipients off welfare altogether and pushing 11,000 into part-time work in four years. In the same period, it aimed to save the government $NZ1 billion in welfare costs.

Current Prime Minister John Keys and Social Development Minister Paula Bennett argued that the old system created a cycle of dependency. This was an election issue during the 2011 poll and in holding office the Keys government essentially received a mandate to act on welfare.

The reforms were rolled out quickly after the election. The first bill – which was introduced into parliament four months after the poll – tacked youth support and parent entitlements. The most controversial part of the bill was a managed payments system that would take government funds out of the hands of youth and teen parents and instead see the government pay their costs directly. The bill also forced parents on benefits with children to seek part-time or full-time work once their children reached certain ages.

Six months later, the Keys government introduced its second round of reforms. This legislation was aimed at streamlining several categories of government support in New Zealand into three separate streams.

Graph for Is this the blueprint for Australia's new welfare system?

Source: OECD

This bill also introduced that controversial drug test criteria that we’ve recently seen reported in the Australian press, along with rules that would see the government pull parental payments if recipients were arrested or fail place their children into appropriate health or education programs. 

A year later, the government reported that welfare recipient numbers had hit a five-year low, with 15,000 fewer people on support than in 2013. From this point, the political debate seemingly turned into a numbers game. The New Zealand Labour opposition opposed the reforms on the grounds that government was "using every technicality and excuse they can to get people off benefits and make themselves look good".

The reforms drew criticism from welfare groups – largely spearheaded by the Child Poverty Action Group. Their main argument was that the structure of the reforms stigmatised the community, and by regimenting and penalising non-compliant parents the reform consequentially disadvantages children.

But it has been held up as a system that delivers results. A 2013 report into New Zealand from the OECD (PDF) praised the system as “an active ‘investment approach’ that focuses on reducing long-term benefit dependency”.

It added: “Although the unemployment rate may temporarily increase as more people enter the labour force, the reforms are likely to boost growth in the long term as the structural unemployment rate declines”.

It seems we won’t have a carbon copy of the New Zealand system, as the Coalition government has already started ruling out aspects of it – such as its controversial drug test policy. One point is certain however, the Coalition will streamline the number of social payments and plans available to the public, down from 20 payments and 50 supplements to around four or five streams of payments.

It's easy to see why the Coalition is taking its cues from New Zealand. The director of ANU social policy institute Peter Whiteford says that the similar structure of the Australian and New Zealand welfare systems leave them open to comparisons, more so that comparing Australia to any other developed nation.

But he cautions that social-economic factors have shaped the decisions tied to each system. For instance, Whiteford says that there is a greater level of inequality with New Zealand’s Islander and Maori population than with Australia’s own indigenous community. Inequality has been more of an issue for New Zealand than Australia, he says. Inequality in New Zealand peaked back in the '80s and '90s.

Whiteford also adds that welfare in Australia is already declining, saying that the country is currently experience the second lowest period of welfare receipt among people of a working age in the past two decades.

In terms of the politics of the matter, there’s one key difference between Australia and New Zealand's reforms: the New Zealand government promised its welfare reforms during its 2011 election. This Coalition government has mentioned it will act on welfare in the past, but didn’t promise action last year during the poll.

Such reforms may be part of its overall plan to rectify the budget, but can the Coalition swallow more controversial welfare reforms on top of its tough budget measures? That is the greatest unknown.

Got a question? Let us know in the comments below or contact the reporter @HarrisonPolites on Twitter.