New sanctions are on the way for beneficiaries who do not meet their obligations, including putting half a person’s benefit on a payment card for a limited range of “essential” products and services, and community work experience.
It’s a move the Social Development Minister Louise Upston said will move people into work and provide tougher consequences for those who repeatedly fail to meet benefit obligations.
“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,” she said.
Labour says the approach is “punitive” and kicks people while they’re down, while the Greens say it inflicts “pain and misery” on people in poverty.
The Government announced the changes today following Cabinet approval, alongside the introduction of a “traffic light” warning system for beneficiaries, which comes into effect today.
The traffic light system was one proposed and campaigned on by the National Party ahead of last year’s general election.
The changes announced today include extending the period over which an obligation failure counts against a beneficiary from a year to two years, and requiring Jobseeker Support recipients to reapply to receive their benefit every six months.
Government announces further crackdown on beneficiaries with introduction of traffic light system. (Source: 1News)
It will also become mandatory for all beneficiaries with work obligations to have a Jobseeker profile – an online work profile on the Ministry’s website aimed at helping beneficiaries find work – before their benefit is granted.
A commitment from the National-ACT coalition agreement will also come into force: a new money management sanction that would put half a person’s benefit on a payment card, which can only be used for “a limited range of essential products and services”, according to a statement from Upston’s office.
There would also be a community work experience sanction, which would “require beneficiaries to build their skills and confidence to help them get a job”.
Upston said the changes came alongside increased support – a phone-based case management service for 4000 job seekers aged 18 to 24, as well a 2100 more places for community job coaching for young people.
“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.”
Upston said the use of sanctions had “risen notably” since the new Government came into power – in the June quarter, there were about 3700 sanctions of reduced or suspended benefits compared to the same period in 2023, she said.
About 97% of sanctions were applied to Jobseeker Support recipients with the main reasons being people not attending appointments or failing to prepare for work, she said.
Last month, Upston said she “stuffed up” when she failed to show up for the reading of her own bill in Parliament – noting perhaps it was her “first strike”.
It comes as the new traffic light system of benefit obligations comes into effect today. (Source: 1News)
Today’s she said the Government’s “Welfare that Works” approach would increase obligations for job seekers and ensure they were “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.”
Upston said having job seekers provide their CV through their Jobseeker profile before their benefit was granted would allow the Ministry of Social Development to have earlier work conversations and connect people to its job vacancies straightaway.
“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.”
In April, 1News revealed the Government’s target to have 50,000 fewer people on a benefit by 2030 will include those who go to prison, move overseas, and those who die, not just those who enter the workforce.
A statement from Upston’s office said costs to introduce the traffic light system and reapplications for Jobseeker Support would be funded from the Ministry’s baseline.
Legislation to enable expansion of the traffic light system and more frequent Jobseeker Support reapplications was expected to be introduced by November and start coming into force from early next year, it said.
‘Pain and misery’ – opposition parties respond
Greens social development and employment spokesperson Ricardo Menéndez March said people in poverty deserved “so much better than the pain and misery this Government is inflicting upon them”.
“People deserve to live in dignity, they deserve to be supported in times of need.”
He said the Government had shown “little ambition or interest” to address poverty and instead made life harder for people, taking away the resources to put food on the table and pay their bills.
“Compulsory money management only serves to take further agency away from people who simply do not have enough to properly make ends meet and regularly have to get into debt to cover the essentials.
He vowed the Greens would overturn the policies should they be in the position to do so, instead introducing an “Income Guarantee”.
In the last election the Greens campaigned on the policy, where everyone would have an income of no less than $385 per week – enabled by a raft of changes including a tax-free threshold of $10,000.
Labour leader Chris Hipkins said the Government’s announcement showed its “willingness to kick people when they’re down” rather than focusing on getting people back into work, and that the approach was “punitive”.
He said there were about 18,000 fewer jobs now than when the Government came to power.
“They like to pick on people on benefits rather than actually focusing on creating jobs, growing the economy and getting people into good, well-paid work. They don’t have a plan for that.”
Of the new money management system, he said taking away people’s autonomy and independence made them more dependent on the state.
He said the more “subservient” people were treated, the less likely they were to end up in sustainable, long-term employment.
