John Key

Wellington, July 20 NZPA - Labour's call for the dole to be paid to redundant workers even if their partners were on high incomes would cost about $1 billion over three years, Prime Minister John Key said today.

"It demonstrates (Labour) haven't got their heads around what's happening in 2009," Mr Key said.

"It's not that I don't have sympathy for those people but in the end someone has to pay the bill -- and there aren't little pixies at the bottom of the garden printing cash."

Mr Key was reacting at his post-cabinet press conference to Labour leader Phil Goff's suggestion that the measure would be temporary and would help ease the pain of increasing unemployment during the recession.

He said he wasn't talking about people bludging off the system, but about those who had often never been unemployed in their lives and lost their job through no fault of their own.

Mr Key said it amounted to a major extension of the welfare system.

"It could potentially turn every New Zealander into a beneficiary, if they wanted that, and I don't think that's right."

Labour confirmed today it was changing its policies and would soon announce details of a "recession response package" aimed at getting unemployed workers off the dole.

"Significant changes are needed to better protect New Zealanders from the downturn and ensure we have a highly-skilled workforce ready to go when the recession comes to an end," Mr Goff said.

"Our recession response package, which will be detailed shortly, represents insurance against the recession for hard working New Zealand families."

Mr Goff said the new policies would include extending the time the Job Search Allowance was available to redundant workers to help ease financial pressures while they were looking for work.

Under current policy the Job Search Allowance lasts for 13 weeks for redundant workers who have been in the workforce for five years or more.

The five year threshold was likely to be significantly reduced, Mr Goff said.

The Job Training Allowance would be available to many more workers by reducing the amount of time people had to have been in the workforce before qualifying.