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Thousands of solo parents are having their benefits cut, and it is their children who are suffering, critics say.
After the biggest welfare shake-up in 50 years in July, more than 2700 parents have been financially punished for not seeking work while on the benefit.
Ministry of Social Development officials faced scrutiny over the sanctions from opposition MPs yesterday, who questioned how vulnerable children could be protected while their parents' incomes were being halved.
"One of the biggest threats to children at the moment is loss of income through these sanctions," Green MP Jan Logie said during the ministry's financial review yesterday.
Hundreds of children were being pushed into poverty, and the sanctions were at odds with the Government's plans to protect vulnerable kids, she said.
Figures released by the ministry to Fairfax Media show that from July 15 till the end of September, 2706 parents had their benefits halved for failing "work obligations".
This could be anything from missing a work seminar to not giving Work and Income a CV.
In addition, more than 8600 other beneficiaries had their payments cut or cancelled for failing work obligations.
Speaking before MPs, Work and Income deputy chief executive Debbie Power said the ministry was concerned about parents on the "50 per cent regime," and monitored them.
"[We] make sure we are doing everything we can to make sure they are able to recomply."
Some had chosen to survive on a reduced benefit because of a "number of scenarios", she said.
But the convener of the Child Poverty Action Group, Associate Professor Mike O'Brien, called the sanctions "ruthless".
"The tragic irony is this group of kids are the most vulnerable anyway," he said.
"These sanctions just make their life that much more miserable."
In October, the group published a report claiming that, since new work obligations were introduced in 2010, tens of thousands of parents had been punished.
O'Brien said the ministry had provided scant information about how the regime worked, how the sanctions were being applied, and for how long.
The Government has made sweeping welfare changes in the past three years, aimed at pushing more people into work and slashing $1.6 billion from the benefits bill over four years.
These have included "obligations" for more people to look for work - including solo parents - and cutting or cancelling benefits if they fail to do so.
People with children can have their main benefit halved, not cancelled.
The biggest changes came on July 15, with the main benefit categories renamed and reduced to three, along with new "social obligations" and corresponding sanctions.
People can now have their benefits cut for failing to enrol children in education and healthcare, refusing to undergo a work drug test, or ignoring a warrant for arrest.
So far the figures show that no parents have been punished for not enrolling their kids, six for failing or refusing a drug test, and 158 for ignoring an arrest warrant.
Social Development Minister Paula Bennett stood by the changes yesterday, saying "getting into work and making sure children have access to health and education is the best thing for beneficiaries and their families".
"Where people fall down on these obligations, they have time and opportunities to recomply, with sanctions only coming into play after repeated failures."
- Fairfax Media