[John Key]...announced the first plank in what he said would be a series of welfare changes to be announced before the November election.

Key said the policy was 'focused fairly and squarely on the problem of young people who had recently left school but who are not in education, training or work'.

Government funding would go to organisations supporting young beneficiaries to 'transition' in to work or training. Funding would be paid on the basis of results achieved for the young people.

Anyone aged 16 or 17 on a benefit - other than the invalid benefit - would be also paid in a different way.

Details were still being worked through, but it was expected that changes would include:

* Essential costs like rent and power being paid directly on behalf of the young person;

* Money for basic living costs like food loaded on to a new payment card that could not be used for things like alcohol or cigarettes;

* A limited amount of money for young people to spend at their discretion.

"We are not going to simply hand over benefit money every fortnight," Key said.

"Instead, we will have a much more managed system of payment, with the young person's support provider, or MSD in some cases, paying bills on their behalf and helping them manage within their budget."

A 'support provider' for each young person would be 'very active' in helping them budget and teaching them how to manage money.

Young beneficiaries would have clear obligations to do things like attend budgeting or parenting programmes.

"Most importantly, each of these young people will have to be in education, training or work-based learning. That means everybody, including teen parents," Key said.

While teen parents would be expected to continue in education or training, the costs of childcare would be covered for them by the Government.

...

"We simply cannot continue to give them money and trust they will do the right things with it. That approach has not worked."

Key said he 'believed strongly in the welfare state'.

"But as a country, we need to have a hard look at where the welfare system has got to."

More than 10 per cent of the working population was on a benefit and about half of those had spent five out of the last ten years on a benefit.

"The Government spends $20m a day on benefits and hardship assistance."

"This is the beginning of what will be a radical overhaul of an outdated system that has for too long kept New Zealanders trapped in a life of limited choices," Bennett said.

Key said the policy was 'focused fairly and squarely on the problem of young people who had recently left school but who are not in education, training or work'.

Government funding would go to organisations supporting young beneficiaries to 'transition' in to work or training. Funding would be paid on the basis of results achieved for the young people.

Anyone aged 16 or 17 on a benefit - other than the invalid benefit - would be also paid in a different way.

Details were still being worked through, but it was expected that changes would include:

* Essential costs like rent and power being paid directly on behalf of the young person;

* Money for basic living costs like food loaded on to a new payment card that could not be used for things like alcohol or cigarettes;

* A limited amount of money for young people to spend at their discretion.

"We are not going to simply hand over benefit money every fortnight," Key said.

"Instead, we will have a much more managed system of payment, with the young person's support provider, or MSD in some cases, paying bills on their behalf and helping them manage within their budget."

A 'support provider' for each young person would be 'very active' in helping them budget and teaching them how to manage money.

Young beneficiaries would have clear obligations to do things like attend budgeting or parenting programmes.

"Most importantly, each of these young people will have to be in education, training or work-based learning. That means everybody, including teen parents," Key said.

While teen parents would be expected to continue in education or training, the costs of childcare would be covered for them by the Government.