Budget 2015: Benefits rise in bid to tackle child poverty video

ROBERT KITCHIN/Stuff.co.nz

Finance minister Bill English announcing his 'Hardship' budget.

A $790 million package to lift children out of poverty will see benefits rise beyond inflation for the first time in 30 years, but it won't come for free.

The Government also imposing stricter work obligations.

The package, announced in the Governnment's Budget on Thursday, will give families on benefits with children a $25-a-week boost to their incomes, while-low income working families will get at least $12.50 a week extra.

ROBERT KITCHIN/Stuff.co.nz

Andrew Little, John Key, and Metiria Turei give their views on the budget.

The increase to benefits is the first, beyond inflation, since 1977.

A Stuff.co.nz data project highlighted the disparity between rises to superannuation compared with those in the most in the severe hardship since 2007.

READ MORE:
* Budget 2015: Benefits rise in bid to tackle child poverty
Our inequality story: Why New Zealand is one of the worst in the world
LIVE: Watch the Budget speech and debate in Parliament
* Full coverage
Modest tax cuts for 2017

What did you think of 2015 Budget?

Share your stories, photos and videos.

Thursday's package is expected to affect about 110,000 families, with 190,000 children, living in the most severe hardship.

But the Government has made it clear it expects more people working more hours, while it searches for ways to boost a lower-than-forecast tax revenue.

Most significantly, sole parents on a benefit will be forced to return to part-time work two years earlier, when their child turns three.

However, those parents would be eligible for increased childcare assistance.

Ad Feedback

Increased work obligations would apply to all beneficiaries - the main 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 the current age of five.

* All beneficiaries with part-time work obligations would be expected to find work for 20 hours a week, rather than current 15 hours.

* Benefit rates for families with children will raise by $25 a week after tax - the first time since 1972 that core benefits rates have been increased by more than inflation.

* Beneficiaries receiving Sole Parent Support will have to reapply for their benefit every year.

* Low-income working families earning $36,350 a year or less, before tax, will get $12.50 extra a week from Working for Families.

* Some very low-income working families will get $24.50 extra per week.

* Higher income families earning more than $88,000 a year would get slightly less from Working for Families - losing about  $3 a week from their pay packets.

Social Development Minister Anne Tolley said she was confident the package would not contribute to further welfare dependency, but would have a "positive impact" on New Zealand's poorest families.

"While two-thirds of children in more severe material hardship live in beneficiary families, the remaining third have working parents on low incomes, and the Government thinks those families could also do with extra support," she said.

The Government was expecting the package to have a "meaningful impact" on four different groups of families in New Zealand.

They were beneficiary families, low and very low-income working families as well as well as families earning more than $36,350 a year.

WHAT THIS MEANS FOR FAMILIES:

* Low income families will be eligible for a higher rate of Childcare Assistance for pre-school and out-of-school care, with the rate increasing from $4 per hour to $5 per hour.

* Working families earning less than $27,000 per year in gross income will get the full $12.50 a week extra, from the in-work tax credit, plus $12 a week from the minimum family tax credit - a total increase of $24.50 per week.

* Other working families earning $36,350 or less a year will get the full $12.50 a week extra, from the rise to the in-work tax credit.

* Working families earning more than $36,350 will get progressively smaller increases as their incomes get higher - a family earning $45,000, for example, would get an increase of $10.42 a week.

* Some families will get less than they did before, from Working for Families, most of those being higher income earners on more than $88,000 a year.

* Main benefit rates for all families with children will increase $25 per week. The main benefits are the Supported Living Payment, for people unable to work due to illness or disability; Sole Parent Support, for sole parents with children under 14, Jobseeker Support and the Emergency Benefit, for people in hardship who don't qualify for the other types of benefit.

* About nine in 10 of those families are sole parent families. The increase amounts to an 8.3 per cent increase in most sole parents' base rate of benefit (currently $301 a week).

*  Student Allowance rates for families with children will also increase by $25 a week.

THE CRITERIA:

* Beneficiaries receiving sole parent support will have to reapply for the benefit every year. This is expected to affect about 70,000 sole parents.

* Those on Jobseeker support already have to reapply for their benefits every year.

* Benefit families who pay income-related rents for social housing will pay slightly more. Their rent is set at 25 per cent of their income, so with a $25-per-week boost their rent would rise by $6.25 a week.

* From April 1, next year sole parents will be required to go into part-time work when their youngest child turns three.

* Part-time work is now considered a minimum of 20 hours, rather than the current 15. 

 - Stuff

Ad Feedback
special offers
Ad Feedback