A beneficiary advocate says proposals to contract out welfare services will create an industry out of misery.
The Welfare Working Group has said savings could be made by establishing a new government agency, Employment and Support New Zealand, to farm out services.
Auckland Action Against Poverty spokesperson Sue Bradford says private companies should not be able to make money out of core state services.
She says contracting out will lead to a loss in accountability and quality of services and partial privatisation undermines the state's role in the welfare system.
Ms Bradford says some members of the Welfare Working Group are used as contractors by the Ministry of Social Development, and that creates a conflict of interest.