LINDSAY MITCHELL: Means-testing Jobseeker Benefits for 18-19 year-olds. What Does it Amount to?

As part of today's budget the Minister for Social Development announced:

"Parents rather than the state will be responsible for unemployed 18- and 19-year-olds who cannot support themselves under planned benefit changes announced in today’s Budget... That’s why from July 2027, eligibility for Jobseeker Support and the Emergency Benefit will be tightened for single unemployed 18- and 19-year-olds by introducing a parental assistance test."

At March 2025 there were 46,383    18-24 year-olds on a Jobseeker benefit.

So on matchbox calculations (necessary because the government hasn't provided numbers) 13,000 might be aged 18-19, costing around $240 million annually.

According to MSD, projected savings from the budget announcement are "$163.7 million over 4 years."  Or just over $40 million annually or 17% of the total.

Safe to say, only one in six Jobseeker beneficiaries will meet the parental means test.

That's because ...

Most 18-19 year-olds who go on the dole came out of benefit-dependent households. Their parent(s) won't be able to support them.

Here is some inter-generational evidence from New Zealand's benefit system:

Taylor Fry Evaluation

For Youth benefit clients as at 30 June 2014:

§  88% (9 in 10) were from beneficiary families, the majority of whom received a main benefit for most of their teen years.

§  51% were in beneficiary families for 80% or more of their teen years.The correlation is striking enough to believe that early entry may be a proxy for intergenerational benefit receipt (with the notable exception of teen-aged SLP [Supported Living Payment/Invalid] entrants).

Additionally, on NewstalkZB this afternoon Heather du Plessis-Allan suggested that loopholes will be found. For instance, singles will shack up because the new rule doesn't apply to those in de facto relationships. I would add that an unemployed single female aged 18-19 might also decide to become a parent in order to qualify for welfare. Well-intentioned policies are frequently beaten by the introduction of bad incentives and their outcomes.

Back to the budget imperative.  On the whole, in terms of savings, it's very small beer. 

When is the government going to look at time-limiting welfare assistance? Average expected future time on a main benefit right now for under 25 year-olds is 21.3 years

The savings from making welfare strictly temporary for those actually able to look after themselves would be massive. What is the government scared of?

Lindsay Mitchell blogs here

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