Labour’s Families Package will kick in from July next year and is forecast to almost halve the number of children living in poverty.
The final details of the package were released this morning in advance of Labour introducing legislation under urgency today to pass them into law.
The changes are expected to benefit 384,000 families with children by an average of $75 a week. A further 650,000 families without children are expected to benefit by an average of $14 a week through the increases in Accommodation Supplement and Winter Energy Payment.
It is projected to lift 88,000 children out of poverty through a combination of higher Accommodation Supplement changes, more generous Working for Families scheme, a “Best Start” payment for parents of young babies, and a “Winter Warmer” grant for beneficiaries and superannuitants.
The package is expected to cost $5.3 billion over four years and would be paid for by cancelling National’s tax cuts -a step that will free up $8.4b over all.
The Government will introduce legislation to bring in the package today and pass it under urgency. It will also introduce a new requirement to report on child poverty numbers as part of the Budget process – the first time that would be used was in Budget 2018.
Prime Minister Jacinda Ardern said she had made reducing child poverty a priority and the package would provide a significant boost for low and middle income families.
“No family will be worse off than they are today and most families with children will be better off.
“We know working families struggle at times to provide the very best for their children. The early years of a child’s life are critically important to their long term well-being and development.”
Finance Minister Grant Robertson said it would transform the lives of many and was a far better way to improve the lives of children than across the board tax cuts.
“This is one of the most significant packages to reduce child poverty in recent memory, We are very, very proud of this package.”
He said Labour had ruled out means testing elements of the package such as the winter energy payment, saying it had wanted to make it as simple to administer as possible.
“If someone doesn’t feel they need it they can opt out.”
Labour proposed the changes as its counter to National’s package last year.
National had forecast its Families Incomes Package of tax cuts, changes to the Accommodation Supplement and Working for Families would lift 50,000 children out of poverty.
The definition of poverty was families on incomes lower than 50 per cent of the median household income.
Labour kept National’s proposed Accommodation Supplement changes but offered more generous support in Working for Families and the new baby payments and winter heating subsidies as its trade off for cancelling the tax cuts.
The overall cost of $5.3b is $700 million more than Labour forecast. Part of that difference was the later decision to increase the rates of the Foster Care Allowance and Orphan’s and Unsupported Child benefits by $20.31 a week as well.
Treasury also used different assumptions for the take up of the Winter Warm scheme, which Labour had costed based on 80 per cent of those eligible applying for while Treasury costed it at 100 per cent after the decision was made to make it an auto enrolment scheme.
PEOPLE WITH CHILDREN
- Working for Families payments will increase by $1056 a year for children under 16 and $575 for 16-18 years olds.
- 26,000 more families will be eligible after the abatement threshold is lifted from $36,350 to $42,700. The abatement rate will increase from 22.5 to 25 per cent.
- For low income families the threshold for family tax credits will increase from $23,816 to $26,156 – the increase was made to ensure people with children would be better off working fulltime than on the benefit.
- The Foster Care Allowance, Orphan’s Benefit, and Unsupported Child’s benefit will increase by $20.31 a week.
PEOPLE WITH BABIES:
- Available for babies born on or after July 1, 2018.
- The Best Start payment of $60 a week for those not on paid parental leave until the baby turns one.
- Low and middle income earners get it until baby turns 3 – it abates over $79,000 income.
- Also available to foster parents and the carers of orphans and unsupported children.
- About 65,000 newborns a year will qualify.
LOW INCOME HOUSEHOLDS ON ACCOMMODATION SUPPLEMENT:
- Significant increases to Accommodation Supplement, especially for those living in areas such as cities with high cost of living. Changes take effect April 2018.
SUPERANNUITANTS and BENEFICIARIES:
- A Winter Energy Payment of $450 a year for singles and $700 for couples.
- Paid to superannuitants fortnightly and beneficiaries weekly from May to September.
- Expected to benefit about one million people, including 710,000 superannuitants.
- It is auto-enrolment – people can opt out.
- Does not need to be spent on heating.
- Begins July 2018.
SINGLES AND THOSE WITHOUT CHILDREN:
- Independent Earners’ Tax Credit of up to $10 a week will be retained for low income earners on $24,000 to $48,000 a year.