Watch: Government further increases sanctions for beneficiaries

The government will double the period during which violations will be charged to beneficiaries, as a traffic light sanction system comes into force today.

Prime Minister Christopher Luxon and Minister for Social Development and Employment Louise Upston announced the changes in Auckland following their weekly Cabinet meeting.

They said the cabinet had agreed to a number of changes, including:

• Extension of the period during which the non-fulfilment of obligations is a burden on the beneficiary from one year to two years
• Requiring people receiving jobseeker support to re-apply every six months
• Requiring all beneficiaries with occupational responsibilities to have a job seeker profile before receiving benefits
• Half of the benefits will be transferred to a payment card that can only be used to purchase a limited range of essential products and services
• New community service sanction requiring beneficiaries to ‘develop skills and self-confidence’

Upston said the traffic light system that National announced in September would also be in place from today. Legislation to extend the system would be introduced by November and come into effect in early 2025.

As she explained, the costs of introducing the traffic light system and the six-monthly re-applications will be covered from the base funds of the Ministry of Social Development.

“Our welfare system will always be a safety net to catch people if they fall. But over the last few years, it has become a net that has caught too many people who could be working and allowed them to languish on unemployment benefits for too long,” Upston said.

“Our government will not tolerate people who claim JobSeeker Support but refuse to look for work – this is unfair to the hard-working New Zealanders who pay taxes to pay these benefits.”

In February, the government revealed an intensified use of sanctions and an increase in “labor controls.”

Mandatory job-seeker seminars were announced in May, and changes came into effect in June requiring jobseekers to attend a seminar after six months.

The government also launched a new telephone case management system in July, estimating it could help 4,000 more jobseekers.

Announcing the introduction of the traffic light system ahead of the election, Upston said it would help unemployed people better understand their benefits responsibilities and the consequences if they failed to meet them.

The program included three levels:

• Green (compatible) – Fulfilling obligations in order to prepare for or find work. No change in benefits
• Orange (some risk) – First or second breach of duty, resulting in additional requirements and support, such as more frequent reporting or participation in professional workshops
• Red (high risk) – Third breach of duty, the consequences of which include a reduction in benefits, suspension of benefits, money management and/or mandatory community service

Upston promised at the time that a rule preventing Jobseekers from being penalized by more than a 50 percent reduction in their benefits if they have children would also remain in place. Recipients who have not claimed benefits for more than a year would also be eligible for a $1,000 bonus.

She cited a report by the Welfare Expert Advisory Group (WEAG) which found that sanctions could be effective in encouraging transitions from benefits to employment, and that the lack of sanctions merely perpetuated benefit dependency.

That quote was not included in the report, however, and several former members of the group disagreed with Upston, saying she was referring to a minority view when most research has shown that tougher sanctions are counterproductive for low-income families.

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