The welfare system will be overhauled to remove 'excessive sanctions' and make sure people can live in dignity, as part of the Green Party's support deal with Labour.
James Shaw and Jacinda Ardern seal the deal with a handshake Photo: RNZ / Richard Tindiller
Other major policy wins for the Greens, announced in today's confidence and supply agreement, included establishing an independent Climate Commission and increased public transport funding.
The deal also confirmed a referendum on legalising cannabis, which was announced last Thursday when the new government was formed.
Read the full agreement here.
The signing ceremony between Greens leader James Shaw and incoming Prime Minister Jacinda Ardern was held this afternoon.
The agreement laid the foundation for a "solid, fantastic working relationship", Ms Ardern said.
The policies within the agreements with New Zealand First and the Greens showed there was a consensus between the three parties, she said.
Mr Shaw paid tribute to Ms Ardern's skill in bringing together the separate agreements and said they showed what the governing parties had in common.
"One of the things that she and her team have done particularly skilfully ... is to make sure that those agreements are consistent with each other.
"There's actually a huge amount of crossover ... so this is one of those cases where we have been looking for what is common between us and I think that the two agreements represent that."
The support agreement contains a commitment to a welfare system overhaul, which will "ensure access to entitlements, remove excessive sanctions and
review Working For Families so that everyone has a standard of living and income that enables them to live in dignity".
Former Greens co-leader Metiria Turei stepped down during the election campaign after she admitted committing benefit fraud as a solo mother in the 1990s.
Ms Turei and the Greens said her admission was an attempt to draw attention to the plight of many beneficiaries under the current system.
The Greens will hold the climate change portfolio, but it will be a position outside cabinet.
Ms Ardern said that did not diminish the importance of the issue, and she would be drawing on the Green Party's expertise in this area.
The deal contains major wins for public transport, too.
The new government will starting building a light rail line from Auckland's downtown to the airport, and will re-prioritise the National Land Transport Fund to increase spending on rail, cycling, and walking infrastructure.
It also puts a hold on a major East-West highway across southern Auckland, that was backed by the trucking industry and the former government.