Drug testing of beneficiaries will come into force next year, with penalties for those who fail tests - including have to reimburse the cost of the test and having welfare payments stopped.
Social Development Minister Paula Bennett announced today pre-employment drug testing will take effect from next July and beneficiaries with work expectations will face sanctions if they refuse to apply for drug-tested jobs.
Around 40 per cent of the jobs listed with Work and Income require drug tests and the policy will apply only to people with a work expectation attached to their benefit and only for available work opportunities requiring drug tests.
Currently an unemployment beneficiary can decline to apply for an available drug-tested job, because they won't pass the test, without consequence.
Work and Income will reimburse employers for test failures but beneficiaries who fail a test will have the cost of the drug test deducted from their benefit.
Mrs Bennett said experts will carry out robust clinical assessments to determine whether people are recreational users or have a drug dependency.
Mrs Bennett said estimates at the high end put the cost of enforcing the policy at $10 million.
"We really think the real cost is around $3 million for those that will be known as dependent, once this testing comes in. The savings are estimated to be around $10.5 million,'' she said.
She said the crackdown would involve up to 1300 beneficiaries a year getting treatment for drug dependency.
Mrs Bennett said a Ministry of Health report from 2007/2008 said beneficiaries were three times more likely to be cannabis users.
"That would put them at around 20 per cent of beneficiaries, if you went by that number.
"The UN says that New Zealand and Australia have the highest use of cannabis anywhere in the world,'' she said.
Up to 41 per cent of all jobs that go through Work and Income's books require a drug test.
Mrs Bennett said there was 100 per cent drug testing on anyone working on the Christchurch rebuild.
She said the Ministry of Social Development spent $130 million on addiction programmes.
"We do think we can get help for those that need it,'' she said.
Some people on prescribed medicine will be exempt and people with addiction will be supported with their dependency.