Government tightens welfare rules for young jobseekers and homeowners

Parliament has passed legislation tightening access to welfare payments for some young New Zealanders and changing how housing assistance is calculated for homeowners, as the Government moves to reduce benefit dependency and contain welfare spending.

The Social Security (Jobseeker Support and Accommodation Supplement) Amendment Bill passed its third reading, putting into effect two measures announced as part of Budget 2025.

Under the changes, 18- and 19-year-olds seeking Jobseeker Support, or the equivalent Emergency Benefit, will be required to satisfy the Parental Assistance Test before becoming eligible. The measure is intended to establish whether a young person’s parents are reasonably able to provide financial support before taxpayers are required to do so.

Social Development and Employment Minister Louise Upston said the change reinforced the Government’s expectation that parents should remain primarily responsible for supporting young people who are not working, studying or training.

“New Zealanders deserve a welfare system that is firm, fair and simple,” Upston said.

“This legislation reinforces the expectation that young people who are not in employment, education or training should be financially supported by their parents, not by taxpayers through the welfare system.”

The legislation also changes the Accommodation Supplement calculation for homeowners. Currently, homeowners can qualify for assistance based on housing costs exceeding a threshold equivalent to 30 percent of their income. Under the new system, that contribution threshold will increase to 40 percent before a subsidy becomes available.

Upston said the higher threshold would better direct government assistance towards households considered to be most in need while improving the long-term fiscal sustainability of the welfare system.

“Changes to the calculation for the Accommodation Supplement better target that support to those who need it most,” she said.

However, several groups will be exempt from the Accommodation Supplement change. It will not apply to homeowners receiving New Zealand Superannuation, the Veteran’s Pension, Supported Living Payment or an Emergency Benefit equivalent to the Supported Living Payment.

Spouses and partners of people receiving those payments will also be exempt from the new calculation.

The Government says the overall package is designed to sharpen the distinction between people expected to support themselves or receive assistance from their families and those who require greater financial support from the state.