The Government is introducing a $1000 incentive to keep young people on their new job coaching service off the dole, amid efforts to tackle the “trap” of starting on welfare at a young age.

A previously-announced plan to cut the dole for 18- and 19-year-olds who could be supported by their parents is also being brought forward to the end of next year - and it has now been revealed how much money parents can make before they are expected to support them.

If parents are earning a little over $65,000 they will be required to support their unemployed 18 and 19-year-olds, rather than the teens receiving the benefit.

Social Development and Employment Minister Louise Upston has today announced a carrot on the stick alongside the stricter rules: a $1000 bonus for certain young people who stay off the benefit for long enough.

“Young people participating in the Ministry of Social Development’s new Community Job Coaching service can apply for a $1000 bonus payment if they get a job and stay off the benefit for 12 months,” Upston said.

“Going on welfare when you’re young is a trap, with recent modelling suggesting that people under the age of 25 on Jobseeker Support will spend an average of 18 or more years on a benefit over their lifetimes.

There are more than 15,000 people aged 18 and 19 who are on the Jobseeker benefit right now, she said.

“I have far greater hopes and aspirations for those young Kiwis than a life on welfare.”

Upston outlined further details around the earlier announcement that young people would stop being eligible for the benefit if their parents could support them.

“Today, I can confirm that we are bringing our Budget initiative forward for implementation to November 2026. From then, all young people aged 18 and 19 without dependent children will have to pass a Parental Assistance Test in order to access Jobseeker Support or the equivalent Emergency Benefit,” she said.

“This targets welfare assistance to those who need it the most, as young people will be expected to first be supported by their parents.”

The new Parental Assistance Test will kick in when young people apply for a benefit and comprises:

• A parental income test, demonstrating whether their parents earn income at or below the income limit, and/or;
• A parental support gap test, demonstrating they cannot reasonably be expected to rely on their parents for support.
• The income limit will be set at an income cut-out point for a couple with children receiving the Supported Living Payment and will be adjusted annually.
• Currently this limit is $65,529 and it is expected to rise to reflect the Annual General Adjustment of benefit payments.
• This limit will ensure that young people from very low-income families will still be able to access support if required.

Eligibility for the new $1000 bonus payment will apply to people aged from 18 to 24 on Jobseeker Support:

• who have worked with Community Job Coaching after being on the benefit for at least 12 months
• who find work
• who stay off the benefit for 12 months
• who are in work at the time of their application

The payment will be available for eligible young people 12 months later, from October 2026, and is part of National’s Welfare that Works policy.

“Our Government is focused on reducing benefit dependency in young people, and we have already introduced a number of initiatives such as a new phone-based employment case management service,” Upston said.

“We’ve got 4000 places for young people to get community job coaching. We’ve also got more regular work seminars and a traffic light system to help them stay on track with their benefit obligations.

“I am determined that young New Zealanders see education, work and training as their best options for the future.”

As of June this year, 15,045 18- and 19-year-olds were on Jobseeker Support, and more than 4000 are expected to become ineligible when the changes kick in.

The change was originally planned to happen in July 2027.

The Government announced part of the plan in Budget 2025.

“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,” Upston said at the time.

Budget documents showed that it was forecast to save the Government $84 million a year from 2027.

Green Party social development and employment spokesman Ricardo Menéndez March said at the time 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.”

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%.