Bill English told a Hutt Valley Chamber of Commerce lunch that greater sharing of information between Government departments was revealing interesting facts.

Released prisoners make up a big proportion of those joining the sickness benefit, and their children are falling through the cracks, the deputy PM says.

Finance Minister Bill English said data sharing has revealed that 5500 of the 7500 prisoners released each year join the sickness benefit within 12 months, and nearly half of those go on to reoffend.

He was giving a post-Budget address to the Hutt Valley Chamber of Commerce in Heretaunga on Wednesday.

"They [the prisoners] left healthy, trained, probably in their heads not quite rehabilitated, and within 12 months two-thirds of them are on a sickness benefit which means they don't have to front up for a work test," Finance Minister English said.

"We've had [the prisoners] drug free, alcohol free, fed properly, insulated and warm.

"That is nuts. We didn't know that until about three months ago - that the main flow of people on to a sickness benefit is healthy former prisoners."

English said 48 per cent of former prisoners on a sickness benefit would reoffend within a year.

The data-sharing efforts had also revealed about 1000 children were also leaving school at age 14, often with family members in prison.

English said the government needed to do everything it could to stop young people getting on to benefits "because it's like a drug".

"It's part of the dependency culture - criminal offending, drug addiction, family violence, low income, no education."

"Once they're on it, even if we get them off once, they're by far the most likely to come back on."

"Their chances of getting NCEA Level 2 are actually zero," he said.

English said it was a "complete waste of time" to put additional money into the school those children had dropped out of.

"The main thing we need is to find them, because 1000 a year, over five years that's 5000 kids - their prospects are not that flash."

Gaining Level 2 qualifications was important as that level of education was a key determinant in a young person's employability, he said.

English said there were three factors above all others that would mean a young person could have "a very expensive life on the taxpayer".

Many were coming from a household that had a Child Youth and Family notification, usually as a result of child abuse, he said.

Their parents would often have been beneficiaries for more than two and a half years on a benefit, or family members were going through the Corrections system.

The latter was far more common than most people would expect, he said.

"Probably in the Hutt Valley 10 per cent of all kids have got a parent who has been in prison, or is in prison, or on parole.

English said the good news was that only one in 100 children came from households with those three characteristics.

"We can deal with these kids one by one," he said.

"We don't, but we could because we think there are thousands of them but there are not.

"There are 600 [per year]."

English said that was fewer than the roll of St Patrick's College Silverstream, his former school.

Of those "high risk kids", three out of ten would qualify with NCEA Level Two, he said.

"Despite the fact we spend hundreds of millions on policy advice, no-one can tell me how they do it."

The challenge for government now wasn't "understanding the customers", but rather with the public service.

"You know, we keep saying to a 17-year-old mum in Upper Hutt 'get your life together, get a qualification, look after your child, keep the dodgy boyfriend away, pay your rent' but you say to a mid-level departmental official 'change who you talk to' and [you're told] 'oh no, you can't do that'.

"Change in the public sector is pretty damned difficult."