Government calls for the full force of benefit sanctions

Monday, 19 February 2024

PM Christopher Luxon says there is evidence for new beneficiary rules.

PM Christopher Luxon focused on welfare payments during Monday’s post-Cabinet news conference, calling for the full sanctions system to be applied.
MSD is to increase check-ins with Jobseeker beneficiaries, who will eventually need to re-apply every six months.
The Green Party says the Government is establishing a “legacy of cruelty”.

Prime Minister Christopher Luxon says he expects officials to impose the full force of benefit sanctions, as he promises more reform is on the way for the welfare system.

Prime Minister Chris Luxon and Social Development Minister Louise Upston turned the Government’s attention to welfare during Monday’s post-Cabinet press conference.

Benefit sanctions have proven to be a controversial measure, both in terms of efficacy and also the impact on cutting families’ income. The Ministry of Social Development (MSD) currently can cut benefit rates for people who fail work ready and social obligations.

Social Development Minister Louise Upston insisted there was evidence supporting the Government's plan for increased sanctions.

Social Development Minister Louise Upston says there is ample evidence supporting her approach to welfare sanctions.

Stuff asked Upston if there was any evidence support this policy, given MSD's own research - from 2018 - said there was scant evidence to show benefit sanctions led to more people getting into work.

Upston responded with a 2010 OECD paper, showing imposing sanctions - or even the threat of sanctions - led to more 'work exits', people leaving welfare for employment.

'Evidence from February 2010 … says the use of sanctions and the threat of sanctions does actually improve working exits. That's what we focused on,' Upston said.

Asked why they were relying on older research, rather than MSD's most recent research, both Upston and Luxon said the recent welfare statistics and policies showed the previous Government's approach had not worked.

'The statistics, that is the most the strongest empirical evidence,' she said.

'70,000 more people are on the Job Seeker benefit at the same time that we've seen a 58% reduction in the use of sanctions. That's evidence enough for me to be deeply worried.'

Last year, MSD imposed sanctions on 25,329 people - down from more than 60,000 when Labour and NZ First came into power in 2017.

Upston said this policy would not apply to those receiving Sole Parent Support payments, or people who were deemed unable to work due to disability.

Upston hit out at the former Government, saying its “soft” approach had failed beneficiaries.

“The previous minister set the tone for a lighter touch to benefit sanctions by saying they needed to be used ‘sparingly’ and as a ‘last resort’, dampening their effectiveness as an incentive to fulfil work obligations,” she said.

Luxon said Upston’s letter, requesting MSD to fully impose benefit sanctions and obligations, would be just the start of planned changes to the welfare system.

Green Party social development spokesperson Ricardo Menéndez March (right) said the Government’s approach to welfare was ‘cruel’.

From June, Upston said MSD would begin more thorough “check-ins” with Jobseeker beneficiaries.

She said there would be an extra 2500 check-in meetings each month, and those on Jobseeker would also need to re-apply if they have remained on the work ready benefit for six months.

Further policies, including implementing the 'traffic light' benefits policy, would follow later in the year.

During the election campaign, Luxon and Upston campaigned on a new sanctions system which would lead to severe sanctions if beneficiaries were found to have failed three or more obligations.

Opposition parties said the Government was embarking on a “cruel” path.

Green Party welfare spokesperson Ricardo Menéndez March said more sanctions would fuel poverty.

“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,” he said, in a statement.

March criticised the Government’s post-Cabinet announcement, saying it was building “a legacy of cruelty”.

Labour social development spokesperson Carmel Sepuloni said the Government was relying on out-of-date advice to inform its decisions.

“The Government today pointed to evidence more than a decade old. The most recent research which MSD trusts comes from the Welfare Expert Advisory Group and suggests obligations and sanctions are problematic,” she said.