Opposition parties say the Government shouldn't celebrate statistics showing people moving off benefits because many are "falling between the cracks" and the number on the domestic purposes benefit (DPB) has risen.
Social Development Minister Paula Bennett said yesterday 7400 people had dropped off the unemployment benefit since the Government introduced a policy in September last year forcing them to reapply every 12 months.
About half of the 7400 did not complete the process, more than 2000 were in work and 1400 had left the country, were studying or failed the work test, she said.
Ms Bennett said the new rule making people on the DPB seek part-time work when their children were six had also had a positive impact.
The Green Party said today the Government should be pleased only if people were clearly shown to have moved off benefits and into work.
"If people are falling through the cracks because they are too scared to reapply under the new annual test, that is no cause for celebration," said the party's work and income spokeswoman Catherine Delahunty.
"We need to ask what is happening to these people. It is no use celebrating that they are off the benefit if they are slipping through the cracks and ending up homeless, sick, or in the criminal justice system."
In Parliament, Labour's welfare spokeswoman Annette King asked Ms Bennett why she was claiming success when the number of people on the DPB had reached a 10-year high and the cost to taxpayers had increased by nearly $200 million since she became minister.
"Because there has been a thing called the global recession," Ms Bennett replied.
"Things have been a little bit tough in the last three years."
The Beneficiary Advocacy Federation said Work and Income staff weren't helping people find jobs.
"These figures show that in fact this proactive engagement is not happening and what is happening instead is that beneficiaries are being demonised and accused of fraud," said spokeswoman Kay Brereton.
"People with very limited employment prospects due to literacy, criminal convictions, language and other barriers are being failed at reapplication because they don't have the skills and the paperwork to satisfy the case manager that they have been actively seeking work."