PM defends evidence behind beneficiary sanctions, Opposition labels welfare reset ‘politics of cruelty’

Prime Minister Christopher Luxon says he’s seen enough evidence to prove the use of sanctions should be ramped up to get more people off the benefit.

Labour and the Greens argue the opposite, echoing findings from a group of experts who deemed sanctions to be “problematic” and ineffective at getting beneficiaries into work.

It comes as Luxon looks to make good on a promise he made in his State of the Nation speech on Sunday that the “free ride” was over for beneficiaries who were taking advantage of the welfare system.

Luxon and Social Development Minister Louise Upston announced a return to a more strict regime of sanctions for those on the unemployment benefit. A sanction means someone’s benefit gets reduced or cut if they don’t comply with certain expectations like attending job interviews or completing training.

“In 2017, 60,588 sanctions were applied to beneficiaries who did not comply with their obligations to prepare and look for work. That nose-dived to 25,329 in 2023,” Upston said.

“Over that time, people on jobseeker benefits increased by about 70,000 and about 40,000 more people have been receiving this support for a year or more.”

Attacking former Social Development Minister Carmel Sepuloni, Upston said 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”.

Upston said she had written to the chief executive of the Ministry of Social Development “to make this Government’s view clear that we want to see all obligations and sanctions applied. If job seekers fail to attend job interviews, to complete their pre-employment tasks, or to take work that is available, then there needs to be consequences.”

She also announced that from June, the ministry will “begin work check-ins for job seekers who have been on benefit for six months, particularly young people”.

“These check-ins will make sure jobseeker beneficiaries are taking appropriate steps to find employment and are receiving the right help,” she said, later noting the checks would capture about 2500 per month.

Social Development and Employment Minister Louise Upston is defending the change in use of benefit sanctions. Photo / Mark Mitchell.

Under the existing sanctions if a person did not meet work preparation obligations without a “good and sufficient reason” their benefit would be reduced by 50 per cent for four weeks. After a second breach, that would be extended to 13 weeks for someone with dependent children, or suspended altogether if they did not have children.

Labour kept the ability to sanction beneficiaries who did not meet their work obligations, but on average sanctions were used at about a third of the rate as under National, as a percentage of the number of those on the Jobseeker benefit.

There were about 12,000 sanctions applied to people on Jobseeker benefits in the quarter before Labour came into Government in 2017. This remained relatively steady until the beginning of the pandemic in 2020, when they plummeted as the Ministry of Social Development adopted a much less punitive approach. Sanctions have increased since the end of 2020, with the latest June quarter at 6243 - roughly half the number under National.

The Welfare Expert Advisory Group, founded in 2018, considered the use of sanctions to be “problematic” as there was little evidence sanctions were effective in encouraging people back into work.

“Recent studies recommend moving away from such an approach towards more personalised services,” the group reported.

It found there was some evidence for “less severe” forms of sanctions that existed in New Zealand.

Luxon, however, said he had all the evidence he needed having seen more people spending longer on the Jobseeker benefit during a time when the frequency of sanctions being invoked had reduced.

National campaigned on a three strikes policy, under which those who breached their obligations to prepare for or look for work three or more times would face sanctions. The proposed sanctions included cuts to their payments, suspension of their benefit, community work experience or Work and Income acting as their money manager.

Prime Minister Christopher Luxon and Social Development and Employment Minister Louise Upston came together to lay out their plan. Photo / Mark Mitchell

It proposed using a traffic light system under which those with one or two breaches of their obligations (orange) would get extra requirements and targeted support, such as more frequent check-ins or job workshop attendance. Those with three or more were in the red setting, and those who met all their obligations were green.

It would also require jobseekers to reapply for the benefit every six months, and to provide documents showing they had applied for jobs and attended interviews to be able to continue receiving the benefit. It also proposed a one-month benefit stand-down for people evading arrest warrants.

A single person on the unemployment benefit could earn up to $24,000 per annum if they had a child. Single people without children could earn between $13,000 to $17,000 depending on their age and whether they lived with their parents.

A couple could receive between $15,000 and $31,000, depending on whether they had children or if a partner was on the benefit.

‘Politics of cruelty’ - Opposition respond to welfare changes

Sepuloni, Labour’s social development spokeswoman, claimed Monday’s announcement was “unfair” and “out of touch” as she criticised Luxon for speaking down to beneficiaries by assuming jobseekers didn’t want to work.

“People deserve to be supported into meaningful, long-term employment, and sanctions will not do this.”

Green Party social development spokesman Ricardo Menéndez March said the Government was quickly building a legacy of cruelty.

“Instead of supporting people to provide for themselves and their whānau, this Government has actively sought to push people further and further into poverty.

“Now, today, we have yet another measure to penalise the poorest people. It is a symptom of the politics of cruelty that is driving this coalition’s policies and steering New Zealand backwards.”

Adam Pearse is a political reporter in the NZ Herald Press Gallery team, based at Parliament. He has worked for NZME since 2018, covering sport and health for the Northern Advocate in Whangārei before moving to the NZ Herald in Auckland, covering Covid-19 and crime.