Social Security Amendment Bill Expands Welfare System to Include Non-Financial Sanctions

In a significant step to strengthen New Zealand’s welfare system, the Social Security Amendment Bill has successfully passed its third reading in Parliament today. This bill, which builds upon the welfare Traffic Light System introduced in August 2024, aims to ensure that beneficiaries meet their obligations to seek or prepare for work, where able, while also providing new tools to encourage compliance.

New Non-Financial Sanctions to Promote Employment

Starting on 26 May 2025, the government will introduce two new non-financial sanctions as part of the Social Security Amendment Bill. These sanctions, aimed at motivating jobseekers to engage with the system more actively, will not affect the financial benefits of those involved. Instead, they will focus on behaviour modification by requiring beneficiaries to participate in specific activities.

1. Money Management: Under this sanction, half of an individual's benefit will be placed on a Ministry of Social Development (MSD) payment card. This card can only be used in approved shops for essential items, including groceries, transportation, healthcare, and educational supplies. This restriction will last for four weeks.

2. Community Work Experience: Beneficiaries subject to this sanction will be given up to two weeks to find suitable work experience. They will then be required to undertake at least five hours of work per week for four weeks with one or more community or voluntary organisations.

These two measures are designed to ensure that individuals receiving benefits are actively working toward their employment obligations, while also assisting in their personal development and integration into the workforce.

Expanded Sanctions to Begin in October 2025

As part of the ongoing changes, the government will introduce two additional non-financial sanctions starting from 20 October 2025:

1. Upskilling: Jobseekers will be required to attend and participate in employment-related training courses or programmes, with a minimum commitment of five hours per week for a four-week period. This is aimed at enhancing the skills of beneficiaries and improving their chances of finding meaningful employment.

2. Report Job Search: Jobseekers will need to complete at least three job-search activities each week, and they must report on their progress to MSD weekly. This measure is designed to keep beneficiaries accountable and ensure that they are actively seeking employment.

New Policy Settings to Strengthen Jobseeker Support

Alongside the introduction of new sanctions, several policy changes will be implemented from 26 May 2025, further enhancing the work-readiness of individuals on welfare:

• Jobseeker Profile Requirement: Applicants for certain benefits, and their partners where relevant, will be required to complete a Jobseeker Profile before being granted any benefit. This will provide MSD with more comprehensive information about each individual’s employment readiness and any barriers they might face in securing work.

• Extended Obligation Failures: Individuals who fail to meet their obligations will face longer penalties, as new obligation failures will carry over for two years instead of the previous one year. This is designed to discourage repeated non-compliance and to ensure that individuals make serious efforts to find employment.

• More Frequent Reapplications for Jobseeker Support: Starting 1 July 2025, Jobseeker Support recipients will need to reapply for their benefits every 26 weeks, instead of the current 52-week requirement. This change will encourage more regular interaction with MSD, allowing for a more proactive approach to assisting people in their journey toward employment.

Aiming for Stronger Employment Outcomes

The changes are part of the Government’s broader strategy to reduce the number of people receiving Jobseeker Support and to promote higher levels of employment across New Zealand. The Government’s target is to reduce the number of people on Jobseeker Support by 50,000 by 2030, with savings of over two billion dollars in welfare payments forecast as a result.

According to Social Development and Employment Minister Louise Upston, the purpose of these reforms is to encourage self-sufficiency and empower beneficiaries to take control of their financial futures.

“This bill brings new tools to ensure beneficiaries stay on track with their obligations to find or prepare for work if they are able,” Upston explained. “Having a job is the best way for people to lift themselves and their families out of hardship, and the Government is setting a clear expectation that those who can work, should work.”

By expanding the welfare Traffic Light System, the government aims to create a culture of employment where all able-bodied individuals are given the opportunity and support to participate in the workforce. “Our economy is stronger when more people are in work, and as we look to unleash economic growth, it’s important that as many Kiwis as possible share in the benefits of work,” Upston added.

The Path Ahead

The passage of this bill marks a new chapter in New Zealand’s welfare reform efforts. While critics have raised concerns about the potential impact on vulnerable individuals, the Government remains steadfast in its belief that these measures will ultimately benefit both individuals and the country as a whole. With these changes set to roll out in stages throughout 2025, New Zealand is moving towards a more active and employment-focused welfare system designed to help as many people as possible lift themselves out of financial dependency.