April 1 changes to help New Zealand families

  • Bill English
Finance

More paid parental leave, stronger work expectations for beneficiary parents and the first non-inflation increase to benefits in 43 years are part of a raft of measures coming into force tomorrow to help families get ahead, Finance Minister Bill English says.  

Working for Families, the minimum wage and New Zealand Superannuation will also increase on 1 April, and ACC levies will be further reduced.

“These changes show that all New Zealanders continue to benefit from the strong, growing economy and the National-led Government’s responsible policy programme,” Mr English says.

The measures coming into force include:

  • Benefit rates for 100,000 families will rise by $25 a week after tax.
  • Working for Families will increase for low income working families by up to $12.50 a week, and $24.50 for very low income working families.
  • Paid parental leave will increase by a further two weeks to 18 weeks, and will be extended to more workers and primary caregivers.
  • Childcare assistance for 40,000 low-income families will increase, reducing barriers to moving off welfare and into work.
  • ACC levies will fall by $232 million, with a further $218 million reduction on 1 July. In total, annual levies have been cut by $2 billion since 2008.
  • New Zealand Superannuation will increase by 2.7 per cent. It is up 34 per cent since 2008, compared to inflation of 11.2 per cent.
  • The adult minimum wage will rise from $14.75 an hour to $15.25 an hour, a 3.4 per cent increase.

“Many of these changes are part of the Budget 2015 package to reduce hardship among children in New Zealand’s poorest families. The best thing we can do for these children is to get their parents into work.

“So from 1 April we are strengthening work requirements for parents on a benefit – requiring them to be available for work when their youngest child turns three, rather than five now. They will also be expected to find work for 20 hours a week rather than 15.

“The Government’s economic programme is supporting more jobs and higher incomes for New Zealand families. The average annual wage increased by 3.1 per cent in the last year to almost $58,000 and 175,000 jobs have been created in the last three years.

“The 1 April measures demonstrate the Government’s focus on ensuring everyone shares in the gains from a growing economy.”

Background notes on policies:

Budget 2015 Child Hardship Package

Strengthening work obligations for beneficiary parents.

Most sole parents, and partners of beneficiaries, will have to be available for part‑time work of 20 hours a week once their youngest child turns three. This is currently 15 hours a week once the youngest child turns five.

In addition, beneficiaries on Sole Parent Support will be required to reapply for their benefit every year, matching the current process for Jobseeker Support.

Raising benefit rates for families.

Benefit rates for families with children will rise by $25 a week after tax.

This is the first time since 1972 that core benefit rates have been increased by more than inflation. Around 100,000 families, with 180,000 children, will be better off as a result.

Increasing Working for Families payments.

Lower‑income working families not on a benefit will get up to $12.50 a week extra from Working for Families, and some very low‑income working families will get $24.50 extra.

This will benefit around 200,000 lower-income working families who are not dependent on benefit.

Increasing Childcare Assistance.

The subsidy rate for 40,000 low‑income families will increase from $4 an hour to $5 an hour for up to 50 hours of childcare a week per child.

ACC levy reductions

Average work levies paid by employers and self-employed people to cover the cost of work-related injuries will reduce by $171 million and the earners levy, paid by everyone in the paid workforce to help cover the cost of out-of-work injuries, will reduce by $61 million.

On 1 July, there will also be $218 million of cuts to motor vehicle levies. In total, ACC levy cuts in 2016 will see New Zealanders $450 million better off.

In total, annual levies have been cut by around $2 billion since 2008.

Superannuation payment increases

Superannuation and Veteran’s pension payments will see an increase of 2.7 per cent. This is in line with the Government’s commitment to maintain the married couple rate at 66 per cent of the average wage.

Superannuation will have increased by 34 per cent since National came into office in 2008, compared to inflation of 11 per cent.

Parental leave increases

Paid parental leave will increase from 16 weeks to 18 weeks. This is the second boost to Paid Parental Leave, following an increase from 14 to 16 weeks on 1 April 2015.

Parental leave payments will also be extended to non-standard workers (such as casual, seasonal, and employees with more than one employer) and those who have recently changed jobs

Primary carers other than just biological or formal adoptive parents will be able to apply for parental leave and payments. This includes eligible permanent primary carers such as, Home for Life carers, whāngai, and grandparents raising a child in place of the child’s parents.

Eligible parents of preterm babies will also receive additional weekly payments – which could be up to 13 weeks – for each week the baby was born prior to the 37 week gestation period

Increases to minimum and starting out wages

The adult minimum wage will increase from $14.55 to $15.25. This is a 3.4 per cent increase, which will directly benefit 152,700 workers and increase wages throughout the economy by $75 million per year.

The starting out and training hourly wage will increase to $12.20 an hour. This is set at 80 per cent of the adult minimum wage.

Since the Government took office in 2008 the minimum wage has increased by $3.25 - up 27 per cent compared to inflation of 11 per cent.