Part 7 : Ministry of Social Development: Changes to the case management of sickness and invalids' beneficiaries

Public entities’ progress in implementing the Auditor-General’s recommendations 2012.


In 2007/08, the Ministry of Social Development (the Ministry) spent about $1.8 billion on sickness benefits and invalids' benefits. In December 2008, there were 83,501 people receiving an invalid's benefit and 50,896 people receiving a sickness benefit.

We carried out a performance audit to assure Parliament and the public that the Ministry – through its service delivery arm, Work and Income – was effectively managing sickness and invalids' beneficiaries.

The scope of our performance audit

Our performance audit focused on how the Ministry assessed a person's eligibility for a sickness or invalid's benefit following the Working New Zealand changes that were introduced in September 2007. Our audit was completed during the last quarter of 2008 and the first quarter of 2009. We also looked at how effectively the new approach to comprehensive case management helped sickness and invalids' beneficiaries into work or provided them with ongoing support and services.

Our recommendations

In October 2009, when we published our performance audit report, the planned changes had begun but were not being delivered consistently. Our report contained 18 recommendations, covering three main themes:

  • working out eligibility for sickness and invalids' benefits – this included obtaining better quality information through the medical certificates, and using the regional health advisors and medical disability providers more effectively when assessing eligibility (especially for long-term and complex problems);
  • comprehensive case management – this included more actively identifying and working with sickness and invalids' beneficiaries to provide work planning and employment-focused services if the information available suggested that they were ready to return to work; and
  • monitoring the changes and evaluating how effective they were.

The Ministry of Social Development's response to our recommendations

In last year's progress report, we noted that a comprehensive package of reforms had been introduced since our 2009 report. The package is known as Future Focus.

The package has been introduced in two stages, with the first changes being implemented in September 2010. The medical certificate used for sickness and invalids' benefit applications was changed to collect more information about the person's capacity for work and to ensure that people received the right benefit for their circumstances.

On 1 May 2011, the second set of changes under Future Focus for sickness beneficiaries was introduced. These changes required:

  • sickness beneficiaries to have an additional medical reassessment eight weeks after they start receiving the sickness benefit, so that Ministry staff can gather more relevant information about a person's progress and ability to re-enter the workforce;
  • Ministry staff to carry out a compulsory review of all sickness beneficiaries who have received the benefit for longer than 12 months (when appropriate, this will include a second medical opinion);
  • sickness beneficiaries who have been assessed as able to work part-time (15 to 29 hours a week) to look for suitable part-time work; and
  • graduated sanctions (progressively reducing the amount of benefit paid) if sickness beneficiaries do not meet their obligations.

On 1 November 2011, the Government announced that New Zealand's welfare system would be reformed over the next three years. Under the reforms, three benefits (Jobseeker Support, Sole Parent Support, and Supported Living Payment) will replace all of the current main benefit payments (including the sickness and invalids' benefits). These reforms are to be progressively implemented from July 2012, and it is planned that all changes will be in place by late 2013.

The Ministry told us that the welfare reforms will include reshaping case management practice.

In this changing policy environment, we are not able to form a conclusion about progress in improving comprehensive case management of sickness and invalids' beneficiaries. We still consider that it is important that there is active case management through regular and effective contact with people who receive a benefit because of sickness. In her future work programme, the Auditor-General will look again at how cases are managed.

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