A comprehensive package of reforms to the benefit system unveiled today will shift more people off Jobseeker Support into employment and introduce tougher consequences for those who repeatedly do not meet their benefit obligations.

Social Development and Employment Minister Louise Upston says a new Traffic Light System comes into effect today to inform people what is required of them to continue receiving a benefit under the current system and warn them when they are not meeting those expectations.

“There are responsibilities that come with receiving a benefit, and there will be no more excuses for job seekers not knowing what those responsibilities are.”

Cabinet has also agreed to progress a suite of new initiatives that will increase obligations and consequences for job seekers from early next year, including:

• Extending the period over which an obligation failure counts against a beneficiary from 12 months to two years
• Requiring Jobseeker Support recipients to reapply every six months
• Making it mandatory for all beneficiaries with work obligations to have a jobseeker profile before their benefit is granted
• A new money management sanction that will see half a person’s benefit go onto a payment card that can only be used for a limited range of essential products and services (fulfilling a National-ACT coalition commitment)
• A new community work experience sanction that will require beneficiaries to build their skills and confidence to help them get a job

“These changes come with increased support in the form of a new phone-based case management service for 4000 job seekers aged 18 to 24, and 2100 extra places for young people to get community job coaching,” Louise Upston says.

“Our welfare system will always be a safety net that catches people if they fall. But in the past few years it has become a drag net that has captured too many people who can work and allowed them to languish on Jobseeker Support for too long.

“The number of people on Jobseeker Support increased by 70,000 under the previous government as the use of sanctions significantly decreased, and almost two-thirds of the people receiving this benefit have been for over a year.

“Our Government will not tolerate people who accept the Jobseeker Support benefit but refuse to uphold their obligation to seek a job – it is not fair on hardworking Kiwis who pay their taxes that go towards those benefit payments.

“We will continue supporting those who permanently or temporarily cannot work. But our expectation will be that those who can work should be taking reasonable steps to find a job, and those who don’t will face consequences.

“The use of sanctions has risen notably since we came into Government. The June quarter saw about 3700 sanctions of either reduced or suspended benefits compared to the same period in 2023. About 97 per cent of sanctions were applied to Jobseeker Support recipients with the main reasons being people not attending appointments or failing to prepare for work.

“Our Welfare that Works approach will increase obligations for job seekers and ensure they are being actively supported rather than getting stuck in the system.

“A harder line will be taken against those who repeatedly fail their obligations by counting past failures for twice as long, making it more likely their benefits will be cancelled if they continue this behaviour for longer than 12 months.

“Our new money management and community work experience sanctions will provide an alternative to financial penalties for first-time obligation failures in situations where this will help a job seeker onto a more productive pathway.

“Reapplying for Jobseeker Support every six months will allow MSD to check on job seekers more often and provide a greater level of support to overcome their barriers to work, while also ensuring they are still eligible for benefit.

“Having job seekers provide their work experience, qualifications and job preferences before their benefit can be granted will allow MSD to have earlier work conversations and connect people to its job vacancies straight away.

“These changes are critical components of the Government's efforts to support people into work and have 50,000 fewer people on Jobseeker Support by 2030, which is forecast to save the country $2.3 billion in welfare payments.”

Notes:

• Costs associated with introducing the Traffic Light System and 26-week reapplications for Jobseeker Support will be funded within MSD’s baseline.
• Legislation to enable expansion of the Traffic Light System and 26-week reapplications for Jobseeker Support is expected to be introduced by November and start coming into force from early next year.
• Factsheet

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