New sanctions for beneficiaries, but minister doesn’t know what happens post-sanction

Monday, 12 August 2024

Social Development Minister Louise Upston said she wasn’t sure what happened to people after their benefits got cut, during a press conference outlining a new swathe of possible sanctions for beneficiaries.

Upston said 1500 people had their benefit fully cut in the last three months. She said some of those people would have been parents, but told Stuff she didn’t know what happened to them after the Ministry of Social Development ended their benefit payments by way of sanction.

Upston and Prime Minister Christopher Luxon announced new criteria for Jobseeker beneficiaries on Monday, which would make it easier for the Government to introduce sanctions. They promised “a harder line” on those receiving state income support.

Why it matters

The Government is aiming to have 50,000 fewer people on Jobseeker benefits by 2030. In June, the Ministry of Social Development said there were 196,000 people on Jobseeker - which included people who were deemed “work ready” and others who had disabilities and health issues.

But while it has set that goal, unemployment in New Zealand has grown - and is forecast to continue to do so. Last week, the unemployment rate rose to 4.6%. It was 3.6% this time last year.

Upston said there had been a steady increase of benefit sanctions since she became minister.

In Monday’s announcement, the Government announced plans to use two new sanctions: “money management” and “community work experience”.

Who said what

Stuff asked the prime minister and Upston how many beneficiaries were likely to be sanctioned, and have their benefits cut, as part of the new “traffic light system” and reforms detailed on Monday.

Luxon said sanctions were up 35% on the previous year.

Upston said there had been 1500 people lose all of their benefit as part of a sanction, over the previous quarter.

Asked what happens to people whose benefits are entirely cut, Upston replied: “Not sure.”

Stuff asked if she knew how many sole parents had their benefits fully cut. She replied: “Very, very low numbers. The numbers are predominately on the Jobseeker benefit.”

Upston confirmed there had been parents whose benefits were cut.

“Yip. So I’d say to those parents, it’s pretty simple. We’ve got common-sense rules around what you need to do to comply,” she said.

Following the press conference, Upston’s office clarified that the maximum sanction for a sole parent’s benefit was a 50% reduction.

The breakdown

The Government is implementing a new “traffic light system” for the welfare system.

On Monday, Upston outlined the next steps for that system. Key changes included a new sanction, where the Government could require Jobseeker beneficiaries to do community work, and requiring those on Jobseeker to re-apply if they’ve been on it for longer than six months.

There would also be increased use of money management cards, Upston said.

“This will see half a person’s benefit placed onto a payment card that can be only used at approved shops to buy essentials,” she said.

The Government would also extend the period over which an obligation failure counts against a beneficiary. It would take two years, instead of a year, to get a clean slate.

The arguments

Labour leader Chris Hipkins said the Government was “governing by slogan”.

He said it was an especially bad time to implement such policies, given the economy was unstable and unemployment was increasing. He said it was unfair to amp up pressure on job seekers, given there were fewer jobs to go into.

“The Government loves to kick beneficiaries,” he said.

Green Party social development spokesperson Ricardo Menéndez March said the policies would remove dignity from those on welfare.

By the numbers

The Ministry of Social Development said there had been a further 17,00 people join the Jobseeker benefit since 2017.

If the Government meets the 2030 target, it estimated it would save $2.3 billion in welfare payments.