Police end a fifteen-hour standoff, tragic end to search for five-year-old boy and fears for New Zealand's construction industry. Video / NZ Herald / Getty
On Monday, the Government announced a new benefit traffic light system and further changes to the social welfare system as part of wider reforms it says will reduce welfare dependency and get more people into work.
But advocacy groups and political opponents say the changes, which include new sanctions, simply won’t work and people receiving benefits need more support.
Here’s how the traffic light system works, what the new changes are, and who they will affect.
What is the traffic light system?
People who receive a benefit with work or social obligations, such as Jobseeker Support, will be given a green, orange or red status.
This colour depends on their compliance with their obligations:
Green: The benefit recipient is complying with their obligations
Orange: The recipient is on their first or second obligation breach and does not have a good reason for the transgression. They have five working days to contact the Ministry of Social Development to discuss the breach. If the person successfully disputes the obligation failure and the original decision is overturned, they will move back to green. If they don’t comply within five working days, they will move to red.
Red: Once someone is classed as red, they are sanctioned. This could include their benefit being reduced or stopped. New sanctions are being introduced next year for certain benefit recipients.
How do the new sanctions work?
From 2025, new “money management” and “community work experience” sanctions will be introduced as an option for some beneficiaries, such as those with dependent children or people under case management who are facing their first obligation failure.
Everyone else will continue to face financial sanctions.
Under the money management sanction, half of a person’s benefit goes onto an electronic payment card that can only be used at approved stores to purchase essentials.
Minister for Social Development Louise Upston described the money management sanction as people having access to the same amount of money, but with less “freedoms.”
The community work experience sanction requires the person to find and complete work experience at a community organisation before the sanction is lifted.
“Our new money management and community work experience sanctions will provide an alternative to financial penalties for first-time obligation failures in situations where this will help a job seeker onto a more productive pathway,” Upston said.
Beneficiaries are not able to access hardship assistance while under these sanctions.
Green MP Ricardo Menendez March is opposed to the Government's plans for benefit sanctions. Photo / RNZ
What else is new?
Currently, an obligation failure stays on a person’s record for 12 months. Upston announced on Monday this time period would be doubled to two years which would make it more likely a person’s benefit was cancelled if they continued to not meet their obligations.
From next year, Jobseeker Support recipients will need to re-apply for their benefit every six months. They will also need to create a “Jobseeker profile”, which includes details about their work experience, job choices and qualifications, before they are granted a benefit.
What are people saying about the changes?
Green Party Social Development and Employment spokesman Ricardo Menendez March said compulsory money management only took agency away from people who do not have enough to make ends meet.
He described the community service requirement as “a lazy reheated idea from the 90s” that does not help people get into permanent employment.
Labour leader Chris Hipkins said the new sanctions were “kicking people when they’re down” and benefit-bashing, and noted there were fewer jobs available for people.
“There are around 18,000 fewer jobs now than when the National Party became the lead party in Government. If you take building and construction, for example, in that sector alone there are 6000 fewer jobs than there were when National became the Government.
“They should be focused on getting people back into work rather than kicking people when they’re down.”
In a statement, youth development and social justice organisation Kick Back said sanctions and increased barriers to people accessing support would result in more young people sleeping on our streets or pushed into more dangerous and vulnerable situations.
“Our young people do not lack motivation, they lack access to their basic human rights.”
Brooke Pao Stanley, who runs Auckland Action Against Poverty, says the moves won’t help people get into work and will instead cause further stress to vulnerable people already living in stressful situations.
“It’s not going to work, we already know that sanctions don’t work. It’s going to do more harm than it is good in our communities.”
The Act Party welcomed the new money management sanction, which was part of the National-Act coalition agreement, but said the penalty could go further.
“Act would like to see full cash benefits be time-limited. If someone who can work fails to enter work after a period of months, electronic money management could be used as a sanction.”
Julia Gabel is a Wellington-based political reporter. She joined the Herald in 2020 and has most recently focused on data journalism.
