Social Development Minister Paula Bennett is warning that the debate over welfare reform could get ugly.
But the welfare system cannot sustainably continue to deal with the level of increased demand it has experienced in the last few decades, Ms Bennett says.
Currently 325,000 people receive a benefit - about one in eight of the working-age population.
The minister told the opening session of a two-day forum held by the Welfare Working Group at Victoria University that the time has come to ask basic questions about the design of the welfare system.
Saying that the Government is committed to a fair and sustainable benefit system, she challenged participants from the business, community and voluntary sectors to consider what the system might look like in 20 years.
She says the group needs to look at all options, including placing a limit on the length of time people can be on benefits, as some other countries do.
At this stage of the process, she says, nothing is ruled in or out.
Social insurance scheme an option
The group's chairperson, Paula Rebstock, says one option is the sort of social insurance scheme found in many other countries. She
says basing payments on workers' own contributions can create incentives to get back to work.
The working group is looking at possible reforms of the benefit system, with a focus on reducing long-term dependency and how the system should be funded. It is due to report to the Government in December.