Drug testing of beneficiaries will come into force next year, with penalties for those who fail tests - including having to reimburse the cost of the test and having welfare payments stopped.

Social Development Minister Paula Bennett yesterday announced 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 those 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 has announced it will reimburse employers for test failures but beneficiaries who fail a test will have the cost of the drug test deducted from their benefit.

"Where people fail a drug test or refuse to apply for a drug-tested job, they must agree to stop using drugs or their benefit will be cut by 50 per cent. They will be given 30 days to allow any drugs they have taken to leave their system.

"Where they fail a test or refuse a second time, they will have their benefit suspended until they agree that they will provide a 'clean' drug test within 30 days. If they do not do this their benefit will be cancelled.

"People will be given a warning and reasonable period of time to stop using drugs before having to take another drug test. But further failures will result in benefit reduction and possible cancellation," said Ms Bennett.

She 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."

The crackdown would involve up to 13,000 beneficiaries a year getting treatment for drug dependency.

Ms 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.


Ms Bennett said there was 100 per cent drug testing on anyone working on the Christchurch rebuild.

Labour leader David Shearer said the announcement was a cynical distraction from the expert panels' advice on solutions to child poverty.

"It's hugely cynical that the very date the Children's Commissioner is coming out with a report on children, Paula Bennett has chosen to re-announce this policy. It's moving the debate away from the real issues about poverty and on to something she's already talked about before," said Mr Shearer.