19th December 2017

Tax cuts proposed by the National party are now being scrapped. In their place, the Labour party will roll out their Families package legislation, which will cost an estimated $5.3 billion over four years.

The package is aligned with Prime Minister Jacinda Ardern’s priority to reduce child poverty. As for the package’s benefits, they are expected to lift 88,000 children above the poverty line by providing a ‘Best Start’ payment for parents of babies, higher Accommodation Supplement changes, a ‘Winter Warmer’ grant for superannuitants and beneficiaries, and a more liberal Working for Families scheme.

While the National parties Families Income Package was originally expected to bring 50,000 children out of poverty, the Labour party made some additional changes, offering more benefits to raise that estimate by 38,000 children. To do this, the Labour party had to exchange National’s tax cuts for more liberal support in Working for Families, winter heating subsidies and new baby payments.

Details of the Family package
The package will help many people who live in poverty and are struggling to survive. The word ‘poverty’ is defined as families who live on an income of less than 50% of the median household income. However, the Families package legislation will help more than just families, benefitting five core groups of people: people with children, people with babies, low income households on accommodation supplement, superannuitants and beneficiaries, and singles and those without children.

The following are some of the core details the Family package legislation will support.

People with babies
For this group, an estimated 65,000 newborns will qualify a year. New mothers not on paid parent leave will receive a Best Start payment of $60 a week. Those who are low and middle income earners will receive the benefit until the baby reaches 3 years old.

People with children
For children under the age of 16, Working for Families payments will increase by $1056 a year. For teens 16 – 18 years old, payments will increase by $575 a year. Additionally, the Orphan’s Benefit, Foster Care Allowance and Unsupported Child’s benefit will increase $20.31 a week.

Low income households on accommodation supplement
This group will see a notable increase in Accommodation Supplement. Particularly, people who live in cities with a high cost of living will see a significant increase in this benefit change, which will go into effect April of 2018.

People without children and singles
For low income earners who make $24,000 to $48,000 a year, they will receive up to $10 a week as part of the Independent Earners’ Tax Credit.

Beneficiaries and Superannuitants
This benefit, which is projected to help an estimated one million people, will provide singles a Winter Energy Payment of $450 a year. For couples, the payment will be $700 a year. The benefit, which doesn’t need to be spent on heating, will take effect in July of 2018.

The above is a summary of the benefits provided by the Families package. To learn more about the details of the legislation, see this article by the New Zealand Herald.