Govt Unveils Reforms to Jobseeker Support System with New Sanctions

Starting today, a new Traffic Light System will be implemented to clarify the requirements for maintaining a benefit and to notify recipients when they fall short of these expectations.

Social Development and Employment Minister Louise Upston has announced a comprehensive overhaul of the Jobseeker Support system, aimed at boosting employment and introducing stricter consequences for those who fail to meet their benefit obligations.

Starting today, a new Traffic Light System will be implemented to clarify the requirements for maintaining a benefit and to notify recipients when they fall short of these expectations.

"There are clear responsibilities associated with receiving a benefit, and job seekers will no longer have any excuse for not understanding these obligations," Upston said.

Cabinet has approved a range of new measures to increase obligations and enforce consequences for job seekers beginning early next year, including:

Extending Obligation Failures: The period during which an obligation failure affects a beneficiary will be extended from 12 months to two years.

Regular Reapplications: Jobseeker Support recipients will be required to reapply for their benefits every six months.

Mandatory Jobseeker Profile: Beneficiaries with work obligations must create a jobseeker profile before their benefit is granted.

Money Management Sanction: A new sanction will see half of a beneficiary's support placed onto a payment card restricted to essential goods and services, fulfilling a coalition commitment.

Community Work Experience Sanction: Beneficiaries will be required to participate in community work to develop skills and confidence to aid their job search.

To support these changes, the government is introducing additional resources, including a new phone-based case management service for 4,000 job seekers aged 18 to 24 and 2,100 extra places for community job coaching for young people.

"Our welfare system is meant to be a safety net, but it has become a drag net, capturing those who could work and allowing them to remain on Jobseeker Support for too long," Upston remarked.

She noted that the number of Jobseeker Support recipients rose by 70,000 under the previous administration as sanctions were reduced, with nearly two-thirds of beneficiaries receiving support for over a year.

"This Government will not accept that those who can work are not making reasonable efforts to find employment," Upston asserted. "It's unfair to taxpayers who fund these benefits."

Since the current administration took office, the use of sanctions has increased, with about 3,700 sanctions imposed in the June quarter of this year, compared to the same period in 2023. Most of these sanctions were due to non-compliance with appointments or work preparation requirements.

The new "Welfare that Works" strategy aims to heighten job-seeking obligations and provide active support to prevent long-term dependency. The reforms will include:

Extended Sanction Periods: Past failures will be counted for twice as long, making it more likely that benefits will be cancelled if the non-compliance continues beyond 12 months.

Alternative Sanctions: New money management and community work experience sanctions will offer alternatives to financial penalties for first-time obligation failures.

The requirement to reapply for Jobseeker Support every six months will allow the Ministry of Social Development (MSD) to provide more frequent checks and tailored support to overcome barriers to employment, while also ensuring continued eligibility for benefits.

By demanding job seekers provide their work experience, qualifications, and job preferences before receiving benefits, MSD aims to facilitate faster connections to job opportunities.

These changes are part of the Government's goal to reduce the number of people on Jobseeker Support by 50,000 by 2030, potentially saving the country $2.3 billion in welfare payments.