Prime Minister Christopher Luxon and Social Development Minister Louise Upston announce Jobseeker changes. Photo: RNZ / Kim Baker Wilson
Parents earning more than $65,000 must support their 18-19-year-old children, with the government tightening eligibility for Jobseeker benefits.
From November 2026, there will be a parental assistance test for jobseekers and equivalent emergency benefits, with the government saying parents who can support their children should do so, instead of the state.
First announced at the Budget, the government had not decided where to draw the line at the time.
The policy was supposed to start from July 2027, but the government is bringing forward implementation.
Social Development and Employment Minister Louise Upston said the new Parental Assistance Test would comprise:
- a parental income test, demonstrating whether their parents earned income at or below the income limit, and/or
- a parental support gap test, demonstrating they could not reasonably be expected to rely on their parents for support
- the income limit would be set at an income cut-out point for a couple with children receiving the Supported Living Payment and would be adjusted annually
- currently this limit is $65,529 and is expected to rise to reflect the annual general adjustment of benefit payments
The government expected about 4300 young people would become ineligible for support and 4700 remained eligible in the 2027/28 financial year.
"We want to be clear with young people, 18 and 19-year-olds and their parents, our expectation is that they are in further education, training or a job, and welfare should be a long way away from their first option," Upston said. "It's about having much higher expectations for young people and their families."
Eighteen and 19-year-olds who had dependent children, or were estranged from their parents, could still access support.
As at June 2025, Upston said 15,045 18-19-year-olds were on Jobseeker support.
"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," she said.
Prime Minister Christopher Luxon said it was a "pretty simple deal" for parents and young people.
"Look, we are saying we care about you, we love you, but we really want you to realise all that potential that you've got," he said. "We're here to help and support as much as we can, but you also have to take responsibility for that and actually just consigning you to a life of welfare for 18 years is unacceptable.
"We're not doing our job, if we're letting that happen."
When originally announced, the policy was expected to save $163 million over four years.
In contrast, the student allowance income threshold is $69,935.32 before tax, with the rate going down, if parents earn more than that.
If the joint earnings are $127,701.81 (if the student lives with their parents) or $137,187.86 (if they do not), the student does not receive an allowance at all.
Upston also announced that 18-24-year-olds participating in the Ministry of Social Development's community job coaching service could apply for a $1000 bonus payment, if they found a job and stayed off the benefit for 12 months.
The policy will start in October, with the first payments available from October 2026.
Currently, 4000 places exist in the job-coaching scheme.
Luxon said the payments rewarded those who took responsibility for their own lives.
"This payment just says to those that go on a benefit young, but then opt for personal responsibility over dependency, 'good on you, you've made the right choice'."
Most recent data showed the unemployment rate was 5.2 percent in the June 2025 quarter, slightly below the Treasury's forecasts of 5.4 percent.
Treasury is forecasting the unemployment rate will be five percent in June 2026 and then 4.8 percent in June 2027.
Those forecasts were published in the Budget Economic and Fiscal Update in May, with the next forecasts to be revealed in the Half Year Economic and Fiscal Update later this year.
Upston insisted jobs were available for young people.
"It's great to see employers taking on a range of people that MSD has been working with," she said.
"We expect, as those new jobs come on-stream, there'll be even more possibilities open to them, but it's also about encouraging them to take on training or further education to take those steps, to get ready for employment."
Labour social development spokesperson Willie Jackson said Luxon was shutting young people out of the future they deserved.
"His decisions have driven record numbers overseas, sent the economy into reverse and pushed unemployment up. It's time the government fixed the mess it's made and backed good, well-paid jobs here in New Zealand."
ACT leader David Seymour said the change restored personal responsibility to the welfare system.
"The best way to get teenagers working is to stop paying them not to," he said. "If an 18-year-old is capable of working, they should be out earning, learning and building their future - not relying on the taxpayer."
