New ‘Non-Financial' Benefit Sanctions Begin Today
Article – RNZ
A money management sanction putting the benefit on a card for approved spending, and a volunteer work requirement, could be put in place for four weeks., Political reporter
New 'non-financial' benefit sanctions starting today are about having 'more tools available' than the current options, says the minister for social development.
But the Greens spokesperson for social development says it's 'misleading' to label them as non-financial, because the impacts of those sanctions will be financial.
Ricardo Menendez March also criticised Louise Upston for going ahead with the change, despite a note by officials it could risk increasing financial hardship, a statement the Minister rejects.
From today, two new sanctions can be applied when someone on a main benefit does not meet their obligations.
The first was 'Money Management,' where someone who did not comply would have half their benefit put on a payment card for four weeks.
'The card can only be used at approved shops for groceries, transport, health, and education-related items,' said Upston.
People would still get the remainder of their benefit, as well as any supplementary assistance, directly into their bank account.
Upston called 'Money Management' a 'non-financial sanction' and said it would only be available to clients for their first offence, if they are in 'active case management' or have dependent children.
Those who do not meet that criteria would have a regular financial sanction imposed as before.
The other new sanction – 'Community Work Experience' – meant those who did not meet their work obligations might have to complete at least five hours per week for four weeks of work with community or voluntary sector organisations.
Ministry of Social Development staff will consider a client's circumstances before deciding on and imposing the new sanction to ensure it is the best option for a client.
'These very fair and reasonable sanctions will allow clients to continue receiving their full benefit, instead of the 50 per cent reduction they would have experienced with a financial sanction,' Upston said.
Upston said she had heard people were concerned, particularly if there was a household with children, if a benefit was reduced. This legislation provided more options, she said, and the new sanctions stay in place for four weeks, 'which will support their efforts to find a job.'
The Regulatory Impact Statement for the legislation had outlined a payment card 'exacerbates the risk of a client facing hardship'.
But Upston 'utterly rejects' that, 'because if you have 100 percent of your benefit with 50 percent of it on a card, that is still better than only getting half your benefit or no benefit' – referencing the previous sanction options available.
She called it a 'sensible move' and said the new measures will 'encourage people off welfare and into work,' but couldn't say exactly how many people would move into work as a result of this policy.
'The new sanctions will ensure accountability in the welfare system for people who don't meet their obligations, while also recognising that reducing benefits isn't the answer for everyone.'
But only about 1.2 percent of beneficiaries are currently not complying – about 4000 people at the end of April 2025 – and Upston said there are 'only 288' children affected within those 4000 people.
It was not possible to know exactly how many people would have these new sanctions imposed because it depended on decisions by case managers, but the intention is to get people into work, she said.
'I want them to realise we're serious about them taking the steps to find a job, and if they don't, there's a consequence,' said Upston.
'At the end of the day, we want fewer people on welfare and more people in work.'
When asked how many of those not complying would likely move into work as a result of a new 'non-financial' sanction, Upston referenced numbers from the past year showing an increase in the number of people leaving the benefit for work.
'It's up 11 percent on the same time a year ago' she said, which was 'great news', but was not able to quantify how this policy would make a difference.
Green MP Ricardo Menendez March has ridiculed the changes.
'The minister has been misleading the public around the impacts of this sanction not being financial, they are financial, and they will cause harm in our communities, which is why the Greens will repeal it as soon as we get into power.'
He said people would not be able to access financial assistance such as hardship grants, and the 'end result will be families unable to afford their rent, their bills and potentially leaving countless of families at risk of homelessness'.
RNZ reported in March that government data had showed beneficiaries sanctioned with money management cards will often be unable to pay rent, putting them at risk of homelessness.
March raised this issue, saying the average person on the job seeker benefit paid more than 50 percent of their income on rent, and those impacted by the sanction would be 'unable to afford to keep a roof over their head or put food on the table'.
Upston acknowledged some people may get supplementary financial assistance as well, to cover rent that was more than half their income, and if that was the case, 'they will not be an appropriate candidate for money management'. She said Community Work Experience might be a better option for them and those decisions were for MSD case managers.
March referenced the Regulatory Impact Statement for the Bill outlining the changes and the potential for hardship to increase, saying the Minister's heart was 'rotten to the core' for going ahead with the changes.
'She knows benefit sanctions do not work.
'She has been told by her own officials that things like compulsory money management can risk increasing hardship, has been told by beneficiaries that these kind of policies don't work, and she does not care.'
Upston said in response she did care for people, their futures and their opportunities.
'I'm very committed to ensuring more New Zealanders are in work than on welfare. And I care deeply.
'I don't want to see people trapped on welfare. I want to see them and their families get ahead. And that is because I care.'
In regards to the Community Work Experience sanction, Menendez March said community organisations did not support it. He said being subjected to these sanctions put people under more stress and made it harder for people to enter into employment.
'This just shows that sanctions like community work experience are all about cruelty and stamping down on the poor, rather than supporting people into employment.'
Labour leader Chris Hipkins also criticised the move, saying it was 'mean and petty' to impose sanctions on people in order to try and get them into jobs that 'don't actually exist'.
'Actually, they [the government] should be focused on creating jobs, rather than punishing people for not taking jobs that aren't there.'
He said things were 'getting harder under this government,' pointing to the Treasury forecasted unemployment getting higher.
ACT leader David Seymour, whose party campaigned on the policy, said the benefit is 'there for bad times, not for a long time,' and if someone wants the freedom to spend cash 'get a job like the other five out of six working age New Zealanders'.
Seymour said he was proud to see his party's policies reflected in the government's agenda, showing if you 'campaign hard' and release ideas and policy throughout opposition 'you really can make a difference'.
Seymour said no country can succeed with one in six working age people on a benefit, and ACT had long campaigned on giving 'money in kind instead of cash'.
'We've got to start introducing mutual obligation if you don't show up and actually look for work, we'll stop giving you cash, and we'll start giving you the things you need in kind on a plastic card.
'If it's not acceptable to stop the benefit altogether, then in kind payment is one way of sending the message: if you want the freedom to spend cash as if it's your own, then you should earn it yourself.'
Seymour acknowledged there should always be support if someone is facing a challenging time, but he expected people to 'meet the taxpayer who's paying for all this halfway'.
Also from today, some people and their partners will have to have a completed Jobseeker Profile before their benefit can be granted, and an obligation 'failure' will now count against a person for two years rather than one.
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