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National focuses on work in Benefits Policy

John Key MP
National Party Leader

11 August 2008

National focuses on work in Benefits Policy

National’s Benefits Policy will have an unrelenting focus on getting beneficiaries into employment, says National Party Leader John Key.

“National is committed to a benefit system that is a genuine safety net in times of need. We also recognise that many people on a benefit will never be able to work because of illness or disability,” Mr Key said today in a speech.

“National is going to have an unrelenting focus on work.

“Paid work is the route to independence and well-being for most people and is the best way to reduce child poverty. Long-term welfare dependency locks people into a life of limited income and limited choices.

“National will extend the part-time work obligation to two groups of beneficiaries – DPB recipients, once their youngest dependent child is aged six or over, and people on sickness and invalid benefits who have been assessed as being able to work part-time. About 5,600 sickness and invalid beneficiaries have been categorized as capable of working right now.

“These beneficiaries will be required to spend at least 15 hours per week in employment, training, or job-seeking activities.

“National will not be introducing a ‘work for dole’ or ‘community wage’ scheme. Instead, we will be going one better and will focus on long-term unemployed by requiring them to get paid work and get off the benefit.

“Within 12 months of taking office, National will require everyone who has been on the dole for more than a year to re-apply for their benefit and undergo a comprehensive work assessment.

“All long-term unemployment beneficiaries will be required to do what it takes to secure employment. This may include practical training, attending a basic skills course, or attending drug and alcohol rehabilitation.

“After that, they will be required to actively look for a job, go to any job interview they are referred to, and accept any suitable offer of employment. If they don’t comply with these obligations, their benefits will be reduced in the first instance; then suspended, then cancelled.

“Currently, Work and Income case managers have, with few exceptions, only one option and that is to stop payments of a person’s benefit altogether.

“This is a severe sanction, and has very significant effects on people’s lives. Case managers have to think long and hard about whether they apply this sanction, especially to single people and those who have only part-time work obligations.

“Therefore, National is going to introduce a more graduated system of sanctions for people who do not comply with their work obligations. We will introduce at least one intermediate step which will be a reduction in benefit, before a full suspension.

“This step, or steps, will give Work and Income case managers more flexibility and additional tools to encourage beneficiaries to comply with their work obligations. Details of these graduated sanctions will take some working through, given the complexity of the benefit system.

“National also wants appropriate incentives in the benefit system so those on benefits actually want to work. National will therefore make the benefit abatement regime more generous.

“Beneficiaries and their partners can currently earn up to $80 a week before their benefit is affected. Above that level of earnings, benefits are reduced at the rate of 70 cents for every dollar earned, unless they are on the DPB or Invalids Benefit, in which case it is initially reduced at 30 cents in the dollar.

“Benefit abatement is a necessary part of the system, but the high marginal tax rates it creates are a disincentive for people to work even a few hours a week. So, National will raise the earnings threshold and allow beneficiaries to earn up to $100 a week before their benefit begins to be abated.”

National will also:

• Introduce more frequent reassessment during the first few months a person is on a sickness benefit. Anyone on a sickness benefit continuously for 12 months will automatically be sent to a ‘designated doctor’ for a second opinion on their work prospects.

• Enshrine in legislation CPI adjustments to welfare benefits so they rise each year in line with inflation. Currently this is only done by convention.

• Reject Labour’s planned new benefit terminology. Labour’s pursuit of a ‘single core benefit’ has ended in a complete farce.

• Require the most frequent applicants for benefit advances to attend a budget advisory service at the Government’s expense to get qualified, experienced, non-judgmental budgeting advice to help them manage their finances. Those not attending will not be eligible for any further benefit advances.

“At a later date, National will announce policies on other aspects of the wider welfare system, including vulnerable children and families, child support, and the community and voluntary sector.”

For background document go to:


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