Government begins reset of welfare system

The Coalition Government is taking early action to curb the surge in welfare dependency that occurred under the previous government by setting out its expectations around employment and the use of benefit sanctions, Social Development and Employment Minister Louise Upston says.

In 2017, 60,588 sanctions were applied to beneficiaries who did not comply with their obligations to prepare and look for work. That nosedived to 25,329 in 2023. 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.

“I believe 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.

“I’ve written to the chief executive of MSD 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.

“I’m not prepared to accept the welfare system we inherited, where work-ready job seekers are forecast to spend an average of 13 years on a benefit, and teenagers could become trapped on welfare for 24 years of their working lives.

“I am also announcing that, from June, MSD 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 job seeker beneficiaries are taking appropriate steps to find employment and are receiving the right help.”

These actions are a precursor to the Coalition Government’s wider reset of the welfare system, which will include mandatory reapplication for Jobseeker Support every six months, community-provided job coaching, proper needs assessments, a traffic light system that makes obligations clear, new non-financial sanctions, and action being taken for those who repeatedly fail to comply with their work obligations.

Additional information on work check-ins

  • Of the roughly 189,000 people currently on jobseeker benefits, MSD only has strong visibility over the 60,000 or so who are receiving case management, including whether they are regularly applying for jobs.
  • From June, MSD will proactively book the target cohort into work check-ins after 26 weeks, focusing on those who are work-ready but do not have a dedicated Work and Income case manager.
  • This is expected to see an additional 2,500 job seekers a month reporting on their progress.
  • These check-ins will focus on making sure job seekers are taking sufficient steps to find work in line with their obligations and provide them with greater support, if needed, to help them into employment.
  • Jobseeker Support recipients will be required to attend as a work testable activity in line with current legislation. Failure to attend will result in a breach of obligations and ultimately means a sanction could be applied.
  • MSD will ensure attendees are advised of the requirement to attend these check-ins, and the consequences of non-attendance.
  • The work check-ins will cost $1.2 million each year and will be funded within MSD baselines.