Benefit rise for struggling families matches Cullen package of 2005
Fighting poverty
New Zealand’s poorest families will get their biggest income boost in a decade when the Budget antipoverty package kicks in next April. Benefits for families on welfare will rise by $25 a week, and in-work tax credits for working families will rise by up to $12.50 a week depending on incomes.
The benefit increase is the biggest since family tax credits for all children were raised by the same $25 a week in April 2005 in Sir Michael Cullen’s Working for Families package, although it will still leave benefit rates including tax credits lower in real terms than they were before soleparent benefits were cut by about $43 a week in today’s dollar terms in 1991.
The in-work tax credit for working families was introduced at $60 a week in 2006 and next April’s rise will be the first time it has gone up since.
But Bill English’s package is much more tightly targeted than the Cullen scheme, which cost an initial $1.5 billion a year. The cost of yesterday’s package will peak at less than a sixth of that, $244 million in 2016-17, and will fall after that as inflation pushes more families above the cut-off incomes for tax credits.
Childcare subsidies for low income families will rise from $4 an hour to $5 an hour for up to 50 hours childcare a week — a change expected to benefit 18,000 families by about $23 a week. The subsidy is aimed at making it easier for beneficiaries and low-income workers to get and stay in work. It is available to those in employment, education or training and pays for pre-school, after school and holiday programmes.
Those with one child will get the extra if they earn less than $41,600 while those with three or more receive it if they earn less than $53,560.
Children’s Commissioner Dr Russell Wills, who has pushed for a plan to cut the country’s 24 per cent child poverty rate, said the package was a welcome surprise, but not enough.
“A weekly rise in benefits of up to $25 for families at the hardest end will be helpful for a family with one child, though less so for those with more children, as the increase is per family, rather than per child. It’s also a pity these children have to wait another year — a year is a long time in the life of a child,” Dr Wills said.
“Let’s be clear, a one-off increase is not a plan for child poverty. For example, will the increase in incomes be linked to median incomes, as national superannuation is, or will the value be lost over time? Where is the plan to improve crowding and quality of housing for children?
“What we need is a comprehensive