Only 4 per cent of quota refugees found employment within six months of arriving in New Zealand and 12 per cent after two years.
The average annual hospitalisation rates between 2004 and 2007 ranged between 29,962 and 36,392 per 100,000 refugees, which were "much higher" than for other New Zealanders, including Maori and Pasifika.
There were 6000 refugee tenancies in state houses in 2009.
"Refugees have poor resettlement outcome... many still struggle to live independently or reach their full potential, creating significant long-term costs for the Crown," the Cabinet paper said.
A lack of overarching framework to co-ordinate policy and delivery, limited ownership and governance and gaps in resourcing and co-ordination were blamed as constraints to improving settlement outcomes.
A new "whole-of-government approach" will aim to get refugees "participating fully and integrated socially and economically as soon as possible" and "undertaking the same responsibilities and exercising the same rights as other New Zealanders".
Details of how the strategy will be delivered and implemented were withheld.
Immigration Minister Nathan Guy said the new strategy was part of the National Party's election promise to get better outcomes for refugees and "roll out a whole-of-government strategy that improves outcomes for refugees and reduces state dependency".
Marking World Refugee Day yesterday, Mr Guy said New Zealand could be "proud" of the role it plays in helping people who have had their lives torn apart.
"New Zealand began resettling Polish refugees in 1944 and since then has given around 33,000 refugees the opportunity to seek a better future," he said.
"We continue to give refugees an opportunity to start a new life, to put down roots, and to make New Zealand their new home."
Arif Saeid, manager of Refugees as Survivors New Zealand, said finding employment was "most critical" for settlement and hoped the new resettlement strategy would recognise refugees' "traumatic past".
"We are dealing with people who have witnessed loved ones being killed, escaping bullets in war zones and who are maybe even victims of violence and abuse," said Dr Saeid, himself a refugee.
"They have lost all their trust and confidence, so it's not so simple providing them with training and improving their English and they can find a job."
The organisation had recently launched a project, called Ryan or Refugee Youth Action Network, to help young refugees with training, career planning and job placement.
Ahmad Firoz Zareh, 26, a refugee from Afghanistan who is now a pharmacy manager at Unichem St Lukes, plays the role of mentor in the project.
"I use myself as a living example to tell other refugee youth that if I can do it, there is no excuse why you cannot make a success of yourself in New Zealand," he said.
University of Auckland psychology student Shabnam Sharifi, 20, who arrived eight years ago from Afghanistan, said Project Ryan and people like Mr Zareh helped her see that "it didn't matter that I'm a refugee" and believe that "we can live our dream in New Zealand".
