24 Years on Welfare: New Zealand PM Introduces New Penalties to Break Dependency

Auckland City Mission volunteers bring out parcels of food and presents for families over Christmas in Auckland, New Zealand on Dec. 13, 2017. Phil Walter/Getty Images

New Zealand Prime Minister Christopher Luxon has announced a strict regime of sanctions to “reset” the nation’s welfare system.

The prime minister on Feb. 19, said the sanctions could see benefits gets reduced or cut entirely if requirements are not met, like attending job interviews.

Speaking at his post-Cabinet press conference, Mr. Luxon said on average, New Zealanders were spending 13 years on a benefit, and teenagers on welfare were trapped there for an average of 24 years of their working life.

“Twenty-four years languishing on welfare means no hope. It means no opportunity. It means no dignity from work,” Mr. Luxon said.

He said there was “great evidence” of the need for further welfare sanctions, saying the previous Labour government’s decision to drop them, led to more time spent on unemployment benefits.

A Lifetime of Benefits: Minister

Social Development Minister Louise Upston added that “remaining on a benefit has become the rational choice for far too many people ... It is right that our welfare system acts as a safety net for those who need it. But that support comes with certain responsibilities.”

Ms. Upston complained that under Labour, the number of sanctions “nose-dived.”

“In 2017, 60,588 sanctions were applied ... That nosedived to 25,329 in 2023. Over that time, people on Jobseeker benefits increased by about 70,000, and about 40,000 more people have been receiving this support for a year or more,” she said.

Ms. Upston added she didn’t believe it was fair to let beneficiaries become accustomed to a “life of handouts,” and nor was it fair on taxpayers.

National MP Louise Upston arrives prior to a caucus meeting at Parliament in Wellington, New Zealand on May 22, 2020. Hagen Hopkins/Getty Images

In fact, official figures from the Ministry of Social Development show there were about 12,000 sanctions applied in the quarter before Labour assumed government in 2017, when National was still in power.

This remained relatively steady until the beginning of the pandemic in 2020, when they significantly reduced as the ministry adopted a less punitive approach. They have increased since the end of 2020, with the latest (June) quarter recording 6,243, roughly half the number applied under National.

The existing system provides that sanctions will be imposed if a person does not meet work preparation obligations without a “good and sufficient reason,” meaning their benefit would be reduced by 50 percent for four weeks.

A second breach would result in that reduction being extended to 13 weeks for someone with dependent children, or the benefit suspended altogether if they do not have children.

The New Rules for Welfare Recipients

Going into the election, the National Party proposed a “traffic light” system, with those who met all their obligations set at green; those with one or two breaches of their obligations would be on orange, and would have extra requirements imposed along with targeted support, such as more frequent check-ins or job workshop attendance; finally, those with three or more would be on the red setting.

The proposed sanctions included cuts to their payments, suspension of their benefit, community work experience, or the Work and Income department taking over their money and spending it on their behalf.

Jobseekers will need to reapply for the benefit every six months, and provide evidence that they had applied for jobs and attended interviews to be able to continue receiving the benefit. From June, the Ministry will begin “work check-ins” for job seekers who have been on benefits for six months, “particularly young people.”

The latest Statistics New Zealand figures show the NEET (not in employment, education or training) rate for 15 to 24-year-olds is 11.7 percent, or 76,500 people; a seasonally adjusted increase of 2,600. In comparison, the overall unemployment rate stands at four percent.

The new regime comes on top of a decision to return to indexing, and aligning benefits to inflation, which will mean someone on a disability benefit will receive $2,000 less in 2028 than they would have received under the existing system.

The Response From Opposition Parties

Labour MP Carmel Sepuloni, the former social development minister, said the change would affect Māori, women, Pasifika and disabled people the most.

“They should be ashamed of themselves,” she said of the government.

“That the minister stands up in the house and says they will continue to increase benefits; we know that the minister is being disingenuous.”

She said the National-led government was only implementing the measures because it had promised tax cuts before the election without knowing how they would be paid for it.

“[So] where is that money coming from? It is coming from the poorest New Zealanders who are struggling more than anyone else in this country during a difficult time with the cost of living, and they feel no shame about the fact that they are doing it?”

Labour MP Carmel Sepuloni speaks during the Labour Party Congress at Te Papa in Wellington, New Zealand. Hagen Hopkins/Getty Images

Te Pāti Māori MP Tarsh Kemp said Indigenous families “deserve better” and challenged the government to visit a marae or speak to the Auckland City Mission to gain an accurate picture of poverty in New Zealand.

The Green Party’s spokesperson for Social Development and Employment, Ricardo Menéndez March said the announcement “confirms the government’s goal of pushing more people into poverty via benefit sanctions.

“Sanctions do not work. They do not support people into meaningful employment, nor support them to participate fully in their communities. Taking away people’s incomes only makes it harder for people to get by. This government is quickly building a legacy of cruelty.”