Tens of thousands of New Zealanders will be jobless as a result of the Covid-19 outbreak. Many of them will be experiencing the welfare system for the first time. What can they expect, and will the system cope?

Until three weeks ago, Auckland bar owner Jane* had never imagined lining up for a benefit.

Covid-19 changed her life quickly. Her landlord increased her rent - before a national rent increase freeze was introduced - then the business closed because of the Government-imposed lockdown. Her income evaporated overnight, and she is now seeking help just to put food on the table.

"I don't even know where to start," she said. "This is so far removed that it's really foreign to me.


"I feel this deep sense of shame. Even though I know it shouldn't be there. There's this stigma and shame attached to the fact that I can't provide for my family or my kids."

Jane worked full-time at the bar, and her husband worked part-time. After it closed, they applied for the Government's wage subsidy. They received $691, just enough to cover the $650 rent at their Avondale home where they live with three children.

An Auckland bar owner says she never imagined she would have to depend on the welfare system. She has been forced to seek a hardship grant after her business was closed by the lockdown. Photo / 123rf
An Auckland bar owner says she never imagined she would have to depend on the welfare system. She has been forced to seek a hardship grant after her business was closed by the lockdown. Photo / 123rf

They have been forced to apply for a hardship grant from the Ministry of Social Development (MSD) to pay for groceries. The grants are only available to people who have zero cash in their bank account, which Jane expected to be in two or three weeks.

"This is just unforeseeable," she said. "Nobody was prepared for it. We're not. And without some sort of help from Winz we won't get through it."

Her family is among thousands who are now lining up for help from Work and Income because of the Covid-19 outbreak. For many of them, it is their first experience of the welfare system.

"A lot of people that have never had to struggle and never had to learn their rights are going to really struggle at this time," said Chloe Ann-King, a hospitality worker and welfare advocate.

"If you don't know how to navigate Winz already, it is going to be quite tricky."

New applicants were often surprised at how low the payments were, Ann-King said - even after the Government lifted payments by $25 a week this month.


"Some people will be horrified, and say how am I meant to live?"

Welfare advocate Chloe Ann-King said workers who have been made jobless by Covid-19 could be surprised by how little they are paid on welfare. Photo / Supplied
Welfare advocate Chloe Ann-King said workers who have been made jobless by Covid-19 could be surprised by how little they are paid on welfare. Photo / Supplied

People who had worked their whole lives in one sector might find themselves obliged to work in a completely new industry - and risk getting their benefit cut if they refused.

"It can be a shock," King said.


New Zealand's unemployment rate is expected to rise from 4 per cent in December to as high as double digits - as bad as the Great Depression. That would mean at least 100,000 more people on benefits.

The surge in jobless numbers and people seeking the wage subsidy is already putting MSD under huge pressure.


"I know a lot of people are trying to get hold of us," said Vic Rickard, deputy chief executive of service delivery in a video on the ministry's Facebook page this week. "I'm really sorry it's taken so long to get hold of our lines."

Viv Rickard Message 1 April 2020

We wanted to say thank you to everyone who has reached out to us. We really appreciate your patience and are doing our best to assist as quickly as possible 💙 More on this from: Viv Rickard – Deputy Chief Executive, Service Delivery

Posted by Ministry of Social Development NZ on Tuesday, 31 March 2020

MSD's call centre is getting 20,000 calls a day, twice its usual workload. The average wait time is 34 minutes, though many are waiting up to 90 minutes. Others said they had waited longer.

"Been trying to get through for a week," one person wrote below Rickard's video.

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Social Development Minister Carmel Sepuloni said changes were being considered to make it faster and easier to receive financial assistance.

Some obligations, like work seminars, have also been deferred for six months because of the lockdown. A stand-down period for people who have been made redundant has also been removed. As well as a lift to core benefits, winter power subsidies have been doubled.


Welfare advocates believe the public health crisis warrants wholesale changes, starting with a doubling of core benefits. They note that Australia's more conservative government has already doubled baseline payments in response to the economic shock of Covid-19.

Auckland Action Against Poverty co-ordinator Ricardo Menendez said lifting core benefits in New Zealand would reduce the need for beneficiaries to continuously apply for hardship grants.

Applications for the grants were the main cause of delays and bureaucracy within the welfare system, he said. The grants were capped and to get more than the limit beneficiaries needed to prove exceptional circumstances.

This had become more difficult during lockdown, because beneficiaries could no longer make their case for more support in person.

"For many people, exceptional circumstances is just a part of their everyday life," Menendez said.

MSD expects to provide the first snapshot of jobless claims before Easter. In the United States, 6.6 million people - 4 per cent of the working population - filed new claims in the last week.


Advocates hope the huge growth in the number of people who need a benefit will lead New Zealanders to look at beneficiaries differently.

"At the moment, beneficiary-bashing is a blood sport," Ann-King said.

Jane said she hoped for a "huge social shift" which meant people seeking help didn't need to feel shame.

"Lots of things are out of our control," she said. "Nobody is going to come out the other side without needing some support."


Most people made redundant because of Covid-19 will qualify for a main benefit like Jobseeker Support.


Payments start at $175 a week for a single person living at home and increase up to $428 a week for a person with a family.

People on Jobseeker Support are expected to be looking for work, though some obligations like work seminars and appointments have been deferred. If they are offered a job they are expected to take it, and can face sanctions if they refuse.

They can work part-time, but their benefit starts being reduced once they earn more than a specific amount - such as $90 for a single person.

Over and above a benefit, people may be eligible for the accommodation supplement to help pay their rent or mortgage. Workers who are receiving the Government's wage subsidy may also qualify for the accommodation supplement.

If beneficiaries need further support, they can apply for hardship grants, which are capped. The money, which can go towards food or sudden, one-off bills, is put on a "green card" which limits where the money can be spent and the type of products which can be purchased.

*Name changed for privacy reasons