Nearly 9000 young people will no longer be eligible for the unemployment benefit when the Government brings in stricter rules in 2027.
Budget 2025 includes a change which places the responsibility for financially supporting 18- and 19-year-olds back on parents, rather than the state.
Single people in this age group will no longer be eligible for income support if they are not in work or study – and if their parents are capable of supporting them.
The change will not be immediate. From July 2027, eligibility for two entitlements – Jobseeker Support and the Emergency Benefit – will be tightened up with the introduction of a parental assistance test.
The test would consider whether a young person “can reasonably be expected to rely on their parents or guardians for support”, according to Budget documents.
“With this announcement, we’re clearly saying that 18- and 19-year-olds who don’t study or work and can’t support themselves financially, should be supported by their parents or guardians, not by the taxpayer,” Social Development Minister Louise Upston said.
The minister’s office said around 17,800 people aged 18 and 19 would not be eligible for Jobseeker Support in the first two years after the change.
It would not apply to people under 20 years old who were married, in a civil union or de facto relationship.
Young people could not expect to automatically go on to a benefit, Upston said. The change would strengthen financial incentives to work or pursue education or training.
Explaining the rationale for the change, Upston said the purpose of the welfare system was to support those who needed it the most.
Budget documents showed that it was forecast to save the Government $84 million a year from 2027.
Upston cited forecasts which showed that people under the age of 25 on Jobseeker Support would spend an average of 18 or more years on a benefit over their lifetime.
“This is a human tragedy,” Upston said. “We need to focus on the potential of one of New Zealand’s most powerful assets – our young people, and that’s why we are taking action.”
The Government previously made several measures targeted at young beneficiaries, including a phone-based employment case management service, more places for job coaching, more work seminars and a traffic-light system designed to hold them to their obligations.
Green Party social development and employment spokesman Ricardo Menéndez March said the Government was “pulling the rug” on young people receiving income support.
“The Government has just told teenagers doing it tough that they are on their own. A lot of teenagers having to rely on benefits for support do not have family to lean on – the Government knows this, it just doesn’t care.”
It comes as Treasury expects unemployment to worsen over the next few years.
The jobless rate was now expected to be 5% over the next year, up from a forecast in December of 4.8%.
In 2027, unemployment is expected to be 4.8% – up from earlier forecasts of 4.5%.
Speaking on Newstalk ZB this evening, Labour leader Chris Hipkins criticised the planned changes.
Eligibility for those aged 18 and 19 based on their parents’ means was “basically saying you’re not an adult until you’re 20”, Hipkins told Heather du Plessis-Allan.
“You’re saying to parents ... you’re liable [for your children] till they’re 20? That’s a fairly high threshold.”
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Education got a $2.5 billion boost in Budget 2025.