The Government is likely to press ahead with further welfare reform aimed at reducing long-term welfare dependency which has become entrenched in as many as four generations in some families, says Prime Minister John Key.
An initial report by the Government's working group on welfare dependency, released yesterday, described NZ's benefit system system as outdated, financially unsustainable and lacking incentives to get beneficiaries back into the workforce.
The Government has already moved on the issue with its Future Focus Bill, under which recipients of the domestic purposes benefit (DPB) will lose half of it if they twice refuse work within a month of their youngest child turning 6. It is set to become law next week.
And while the welfare working group has yet to make any recommendations to address the problems it identified, Mr Key said that when it did, the Government was likely to pick up at least some of them.
"In some parts of New Zealand you are seeing intergenerational welfare dependency that's taking place not just over one or two generations but often now into third and potentially a fourth generation and I think that is of great concern to those communities and those individual New Zealanders.
"I think we do need to provide some encouragement to break that cycle of dependency. Let's see what alternatives are out there."
The group, headed by economist Paula Rebstock, found the 356,000 New Zealanders on a benefit at the time of its analysis would cost the country $50 billion if they stayed on welfare for life.
Also, 170,000 had spent five or more of the past 10 years on a benefit.
Yesterday, Mr Key noted the numbers had now increased to 377,000: "That's too large for an economy the size of New Zealand's."
However, the Prime Minister faced questions over the group's findings relating to the scale of the problem, particularly about the unemployment benefit - those who had drawn it for more than 10 years made up just 0.3 per cent of the total.
While the number drawing the unemployment benefit "depends on state of economy at the time" and the total on the DPB was stable, Mr Key said, those drawing invalids' and sickness benefits were "trending up".
He was not prepared to endorse the working group's view that welfare spending was unsustainable.
Labour leader Phil Goff said that rather than a culture of long-term welfare dependency, the numbers on benefits reflected economic conditions.
"It's not that people don't want to work; the jobs simply aren't there at the moment and the situation's getting worse."
Green Party co-leader Metiria Turei also said the real issue was insufficient jobs and criticised the working group as being primarily about "giving the Government justification for its policy" on welfare reform.
Also yesterday, the PM said the Government would not reduce the state housing stock. He was commenting on a report which recommended encouraging non-profit organisations to provide low-cost homes while the Crown concentrated on families with high needs.
Mr Key said the Government was in fact looking to increase the quantity and quality of state housing, "which is very often run down".