Welfare Traffic Light System Shows Early Success; 98% of Beneficiaries Meeting Obligations

By the end of September, 331,530 beneficiaries were enrolled in the system, with 98% meeting their work-related or social obligations, earning them a green light.

Data from the first full month of the Government’s welfare traffic light system indicates that most beneficiaries are fulfilling their obligations, Social Development and Employment Minister Louise Upston has reported. Introduced in August, the system is designed to improve clarity for benefit recipients regarding their responsibilities and consequences for non-compliance.

By the end of September, 331,530 beneficiaries were enrolled in the system, with 98% meeting their work-related or social obligations, earning them a green light. Only 2%, or 5,922 individuals, were flagged with orange or red lights for failing to meet these requirements. These obligations include tasks like actively looking for work or preparing for employment, which are necessary for continuing to receive benefits.

In September, 6,975 obligation failures were recorded, with 4,662 resulting in benefit sanctions. This marked a slight improvement from August, which saw 7,491 obligation failures and 5,268 sanctions. The sanctions typically affect job-seekers who are not taking the required steps toward employment.

“The traffic light system makes it easier for beneficiaries to understand their obligations and where they stand. While it’s still early days, it’s encouraging to see a reduction in people failing to uphold their obligations,” Minister Upston said.

She added that nearly 98% of those sanctioned were job-ready individuals on Jobseeker Support who were not actively pursuing work. "The Government has made it clear that we support motivated job seekers fully, but we will not tolerate inaction from those who receive a Jobseeker benefit and fail to search for employment," she emphasized.

Clarity and Accountability at the Core of the Traffic Light System

The welfare traffic light system, introduced on August 12, uses a simple green, orange, and red indicator to show beneficiaries their status regarding benefit obligations. When beneficiaries log into their MyMSD accounts or receive correspondence from the Ministry of Social Development (MSD), they can see where they stand and are warned if they are at risk of sanctions.

Minister Upston emphasized the importance of personal responsibility when receiving benefits. “These obligations are not difficult to comply with. They reflect the expectations of hardworking New Zealanders whose taxes contribute to these payments. If someone genuinely can't find a job, their benefits will not be cut. But we do expect those who can work to actively seek employment," she explained.

Future Expansions and Reforms

The traffic light system is part of broader welfare reforms aimed at reducing long-term dependency on government assistance. In 2024, the system will be expanded to include new non-financial sanctions, and greater accountability measures for those who repeatedly fail to meet their obligations. Additionally, beneficiaries receiving Jobseeker Support will be required to reapply every six months to continue receiving payments.

The Government’s long-term welfare reform plan also aims to significantly reduce the number of people on Jobseeker Support, with a goal of having 50,000 fewer beneficiaries by 2030.

“Our Government has greater aspirations for New Zealanders than a life spent on welfare,” said Upston. “We want to empower people, support them into work, and create a more sustainable welfare system for the future.”

With early signs of improvement in compliance rates, the Government sees the traffic light system as a promising step toward a more engaged and accountable welfare system. The expansion of the system next year is expected to further strengthen efforts to transition more New Zealanders from welfare to work.