The Government will delay parts of its welfare changes following warnings from the Treasury that the system could be exploited by private providers.
The Treasury says the speed of reforms to youth welfare is ambitious and could lead to private providers making big profits at the expense of young people.
Under the changes, private agencies are to be contracted to help young beneficiaries into work or training.
In Cabinet papers released under the Official Information Act, the Treasury questions their capability.
It warns that private providers could abuse the system by classifying young people they are responsible for at a higher level of risk than they really are, and receiving incentive payments for working with them.
Opposition parties say the Government needs to stop making changes to the welfare system amid the concerns.
Prime Minister John Key says the Government had intended to introduce the changes in July, but that has been delayed slightly to address the Treasury's concerns.
Mr Key says the Ministry of Social Development is capable of auditing private providers.
Earlier, Social Development Minister Paula Bennett told Morning Report there are always risks associated with change, but these are being worked through.
Ms Bennett says there will be little chance for private contractors to cheat the system. She says most are not for profit and they will not be tasked with classifying these young people.
Information on those young people will be collected from schools and government departments, she says.
