Beneficiary advocates are hitting back at the National Party's criticism of the rise in jobseeker benefits.
About 134,000 people are receiving jobseeker support, an 8.3 percent jump from last year.
About 8500 sanctions were applied in the December 2018 quarter, a decrease of more than 6000 compared to the previous year.
National's Social Development spokesperson Louise Upston said the blame lay with the government, which was too soft on benefit sanctions.
"Over the past year there has been a 42 percent decline in the number of people who have been sanctioned for failing to meet the basic criteria which goes with receiving taxpayers' money. That includes simply turning up to appointments," Ms Upston said.
"Given that unemployment has decreased, it's inexplicable that the number of people on a jobseeker benefit would increase so rapidly and that the government would make it easier for people to avoid work."
On the other hand, the easing of disciplinary action is being applauded by Kay Brereton from the Beneficiary Advocacy Federation.
She said it was sad political parties thought a certain percentage of those with inadequate income should be punished.
Ms Brereton said she knew of people who had been docked for not attending an appointment, because they were at their part-time job.
The increase in people on the jobseeker benefit might be because more people were now being deemed eligible, she said.
However, Ms Upston said the government needed to explain why there was an increase in job seeker benefits, while the fruit picking industry struggled for workers.
"It's especially disappointing to see that the number of 18-24 year-olds receiving a benefit has increased by 10 percent. It's this age group which needs the most encouraging to get into work to avoid a lifetime of benefit dependency."
In 2016, then Labour leader Andrew Little announced a policy which would mean 18 to 24 year olds who had been on the jobseeker benefit for six months would be paid the minimum wage to work for six months, with the likes of the Department of Conservation or charity groups.
The latest benefit figures also show spending on food grants alone was almost $20 million, an increase of more than $5m compared to the last three months of 2017.
Increasing demand for food assistance was one of the leading contributors to the growth in hardship grants, the ministry said.
Ms Upston said this showed the impact of living cost increases was having on vulnerable people.
Social Development Minister Carmel Sepuloni said many people struggled to make ends meet over the Christmas period, particularly when they were trying to find jobs and affordable housing.
"Demand for hardship grants is related to the cost of housing," she said.
"In places like Auckland, where rents and housing costs remain high, there's been an increase in people seeking extra support from MSD."
In May last year, Ms Sepuloni announced the formation of an expert advisory group to review the welfare system.
The group is expected to report back to the government in February.