Ministry of Social Development told to use sanctions available against beneficiaries not fulfilling obligations

The Government has told the Ministry of Social Development to make use of "all obligations and sanctions" it has available against beneficiaries who fail to fulfil their requirements.

National campaigned on a 'traffic light system' policy, where the consequences of beneficiaries not fulfilling their obligations to try and find employment would be made clear.

However in a letter to chief executive Debbie Power on Friday, Minister for Social Development Louise Upston said this will take some time to develop.

"In advance of that substantive piece, it is my expectation that the Ministry apply the obligations and sanctions that already exist," she said.

Upston said she wanted to see a "much stronger focus on the obligations of jobseekers to actively look for work and to take all practical steps to prepare themselves for work".

"If they fail to take work that is available, to attend interviews or to complete their pre-employment tasks, there needs to be consequences. This could encourage people to then meet work obligations and gain the benefits from being in employment."

In her letter, Upston said she intended to take a paper to Cabinet on Monday telling her ministerial colleagues of the "early progress" made in implementing National's policy.

"This Cabinet paper confirms my expectations of MSD actively using all levers available to encourage and support people off benefit and into work."

In a statement on Monday afternoon, Upston said the number of sanctions applied to beneficiaries who aren't complying with their obligations has "nosedived" during the last six years while the number of people on the Jobseeker benefit increased by about 70,000 (much of this increase happened during COVID).

Upston also announced that from June, the ministry will begin work check-ins for jobseekers who have been on the benefit for six months, particularly young people. These will cost about $1.2 million each year, funded from the ministry's baselines.

"These check-ins will make sure job seeker beneficiaries are taking appropriate steps to find employment and are receiving the right help," she said.

The Government said that while there are about 189,000 people receiving the Jobseeker benefit, the ministry only has strong visibility over about 60,000 who are receiving case management.

From June, the ministry will proactively book a cohort into these check-ins after 26 weeks, with a focus on those who are work-ready but don't yet have a case manager. This is expected to see an additional 2500 jobseekers a month report on their progress, the Government said.

The job seekers will be required to attend the check-ins, and failure to attend will result in a breach of obligations and a sanction could be applied.

The National Party's Reducing Benefit Dependency policy includes a traffic light system for those on the Jobseeker benefit to make clear the consequences of not fulfilling their obligations.

The 'green' light is for those who are compliant with their obligations to find or prepare to find work. They receive their benefit as normal and are not subject to any further requirements or sanctions.

Those under the 'orange light' are at "some risk", according to the National policy document. These are clients who have received one or two warnings that they aren't fulfilling their obligations. As a result, they may be made to have more frequent check-ins with WINZ or have to do mandatory training.

The 'red' light is for those at "high risk", meaning they have had three or more warnings. A number of sanctions can be applied to these people, including either cutting or suspending their benefit, subjecting them to money management or making them do community work.

Money management is a new sanction National is proposing. WINZ would pay the person's rent, bills and debt directly, put some of their benefit into their bank account, and then add the rest to a special card that can only be used for food and groceries at approved stores.

Other changes National wants to make include a one-month standdown for any beneficiary persistently evading an arrest warrant, and requiring clients to reapply for the Jobseeker Benefit every six months instead of every year.

In his State of the Nation speech on Sunday, Prime Minister Christopher Luxon said he would "not apologise for tough love".

"All Kiwis, of course, have a right to support when times are tough. But with that right also comes responsibility. The responsibility to look for a job, or to train for new opportunities," he said

"And if you don't - make no mistake - there will be consequences. Our government will support you - but there will be sanctions if you don't take that support seriously."

Already, the Government has introduced legislation to index benefit increases to inflation, rather than to wage growth. Forecasts have found that over the long term this will see beneficiaries receive less money.