$790m package for children in poorest families

Waitaki news
Friday, May 22, 2015

Budget 2015 includes a $790 million package to reduce hardship among children in New Zealand’s poorest families, as the next step in the Government’s commitment to address the long-term drivers of deprivation. 

The package will take effect from April 1 next year and includes increased work obligations for sole parents on a benefit, more childcare support for low-income families, a $25 a week increase in benefit rates for families with children and an increase in Working for Families payments to low-income families not on a benefit.

This package strikes a balance whereby it offers more support to low-income families with children but ensures there remains a strong incentive for parents to move from welfare to work which is still the best way to lift more families out of poverty.

Other changes include most sole parents and partners of beneficiaries will have to be available for part-time work once their youngest child turns three, rather than five as now.
All beneficiaries with part-time work obligations will be expected to find work for 20 hours a week, rather than 15 hours a week as now.

Benefit rates for families with children will rise by $25 a week after tax -  the first time since 1972 that core benefit rates have been increased by more than inflation.
Beneficiaries receiving Sole Parent Support will have to re-apply for their benefit every year – as people receiving Jobseeker Support already do.  Around 110,000 families with 190,000 children will receive the higher benefit rates.

Low-income working families earning $36,350 a year or less, before tax, will get $12.50 extra a week from Working for Families, and some very low-income families will get $24.50 extra. Working families earning more than $36,350 will get extra from Working for Families but it will be less than $12.50 a week, with the exact amount dependent on their family income.

Some higher-income families earning more than $88,000 a year will get slightly less from Working for Families, with the average reduction being around $3 a week. The tax credit changes will benefit around 200,000 working families with 380,000 children. Around 50,000 of those families earn $36,350 or less a year will get the full $12.50 a week increase.