About 4000 beneficiaries aged between 16 and 18 would have their benefit payments managed on their behalf, and would have to work with an adult support provider, under new National Party policy.
Prime Minister John Key revealed the initiatives aimed at youth unemployment at the party's conference on Sunday, where he said National would campaign on a range of welfare reforms.
National's policy would apply to 16 and 17-year-old beneficiaries, other than those on an invalid benefit, and to 18-year-old beneficiaries who have children.
The teenagers would have to work directly with a support provider who would be tasked with getting the young person into work, education or some type of training.
Their benefits would be managed by the provider or the Ministry of Social Development. Basics like rent and power would be paid directly and a payment card would be used to buy groceries. The card could not be used to purchase cigarettes or alcohol.
A certain, limited amount of discretionary spending would be left.
Privacy law change
Mr Key said up to 13,000 16 and 17-year-olds are not in education, work or training, but the problem is that the Government isn't able to identify where they are.
Under the new policy, schools would be required to inform authorities if 16 and 17-year-olds leave school during the year. That information would be shared with the Ministry of Social Development.
Mr Key said that would require a change to the Education Act and the Privacy Act.
He said National would fund more training and, overall, the policy would will cost $20 - $25 million extra per year, though he said it would save money in the long term if it reduced the number of young people on benefits.
Mr Key says the approach is much more hands on and said the young people need essentially parental help to stop them becoming dependent on benefits.